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Agglomerations and firm performance: how does it work, who benefits and how much?

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  • Hervas-Oliver,Jose-Luis
  • Sempere-Ripoll,Francisca

Abstract

Agglomeration can generate gains. If it does, how does it work and how are those gains distributed across agglomerated firms? Despite the existence of an important body of research on this topic, the evidence is inconclusive. We examine the effect of localization externalities on a firmâs innovativeness. By analyzing a large dataset of 6,697 firms integrated with another regional agglomeration-related dataset, we obtain results which show that (i) location in an agglomeration has a positive influence on a firmâs absorptive capacity and innovativeness, and, (ii) firms benefit heterogeneously from being located in agglomerations, with benefits being distributed asymmetrically. Agglomeration gains exist but not all firms benefit equally: the least innovative firms gain the most.

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  • Hervas-Oliver,Jose-Luis & Sempere-Ripoll,Francisca, 2014. "Agglomerations and firm performance: how does it work, who benefits and how much?," INGENIO (CSIC-UPV) Working Paper Series 201411, INGENIO (CSIC-UPV), revised 01 Dec 2014.
    • Handle: RePEc:ing:wpaper:201411
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    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration

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