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Geographical clustering and the effectiveness of public innovation programs

Author

Listed:
  • Dirk Crass

    () (Landesbank Hessen-Thueringen Girozentrale)

  • Christian Rammer

    () (Centre for European Economic Research (ZEW))

  • Birgit Aschhoff

    () (Landesbank Baden-Wuerttemberg)

Abstract

Abstract The paper analyses how geographical clustering of beneficiaries might affect the effectiveness of public innovation support programs. The geographical proximity of firms operating in the same industry or field of technology is expected to facilitate innovation through knowledge spillovers and other localization advantages. Public innovation support programs may leverage these advantages by focusing on firms that operate in a cluster. We investigate this link using data from a large German program that co-funds R&D projects of SMEs in key technology areas called ‘Innovative SMEs’. We employ three alternative cluster measures which capture industry, technology and knowledge dimensions of clusters. Regardless of the measure, firms located in a geographical cluster are more likely to participate in the program. Firms being part of a knowledge-based cluster significantly increase their chance of receiving public financial support. We find no effects, however, of geographical clustering on the program’s effectiveness in terms of input or output additionality.

Suggested Citation

  • Dirk Crass & Christian Rammer & Birgit Aschhoff, 2019. "Geographical clustering and the effectiveness of public innovation programs," The Journal of Technology Transfer, Springer, vol. 44(6), pages 1784-1815, December.
  • Handle: RePEc:kap:jtecht:v:44:y:2019:i:6:d:10.1007_s10961-017-9584-x
    DOI: 10.1007/s10961-017-9584-x
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    Keywords

    Geographical clustering; Effectiveness of public programs; Innovation;

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • R59 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Other

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