Hard and Soft Locational Factors, Innovativeness and Firm Performance: An Empirical Test of Porter's Diamond Model at the Micro-Level
AbstractThis paper investigates predictions of Porter's Diamond model regarding the impact of locational factors on innovativeness and performance at the firm level. We formulate a structural equation model based on the relationships between locational conditions, e.g., transportation infrastructure, proximity to universities and research institutes, qualified labour, on the one hand, and innovativeness measured by new product or process development, number of patents, and firm performance in terms of market growth or profit assessment, on the other hand. Based on a sample of about 2,100 East German firms, we apply the partial least squares path modelling approach to test the proposed relationships. We find that particularly cooperation intensity at the local level spurs the innovativeness of firms; whereas in contrast to Porter's predictions, our results indicate that strong local competition and a locally focused market appear to impede the innovativeness and performance of firms.
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Bibliographic InfoPaper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 723.
Length: 22 p.
Date of creation: 2007
Date of revision:
Hard and soft locational factors; innovativeness; firm performance; East German firms; structural equation modelling; partial least squares approach;
Other versions of this item:
- Eickelpasch, Alexander & Lejpras, Anna & Stephan, Andreas, 2007. "HARD AND SOFT LOCATIONAL FACTORS,INNOVATIVENESS AND FIRM PERFORMANCE - an empirical test of Porter’s diamond model at the micro-level," Working Paper Series in Economics and Institutions of Innovation 109, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
- R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Production Analysis, and Firm Location - - - General
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
- O30 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-10-20 (All new papers)
- NEP-BEC-2007-10-20 (Business Economics)
- NEP-CSE-2007-10-20 (Economics of Strategic Management)
- NEP-INO-2007-10-20 (Innovation)
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- Lejpras, Anna & Stephan, Andreas, 2008.
"Locational Conditions, Cooperation, and Innovativeness: evidence from research and company spin-offs,"
Working Paper Series in Economics and Institutions of Innovation
136, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
- Anna Lejpras & Andreas Stephan, 2011. "Locational conditions, cooperation, and innovativeness: evidence from research and company spin-offs," The Annals of Regional Science, Springer, vol. 46(3), pages 543-575, June.
- Anna Lejpras & Andreas Stephan, 2008. "Locational Conditions, Cooperation, and Innovativeness: Evidence from Research and Company Spin-offs," Discussion Papers of DIW Berlin 804, DIW Berlin, German Institute for Economic Research.
- Andreas Stephan, 2011. "Locational conditions and firm performance: introduction to the special issue," The Annals of Regional Science, Springer, vol. 46(3), pages 487-494, June.
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