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Clusters and intercluster spillovers: their influence on the growth and survival of Canadian information technology firms

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  • Steven Globerman
  • Daniel Shapiro
  • Aidan Vining

Abstract

We estimate the effects of clustering on the growth and survival of information technology (IT) firms in Canada, after controlling for firm-specific factors that might determine growth rates and survival. The results suggest that, in general, agglomeration at the regional and metropolitan levels does not influence growth rates or survival probability. However, we do find evidence that firms located in the Toronto CMA, and more specifically those located in a relatively small area within the Toronto CMA (defined by postal codes) experience faster growth. Moreover, we find that the greater the distance of other firms from these postal codes, the lower are their growth rates. In other words, the impact of clustering on growth performance is highly localized, at least for our sample period and firms. We find some limited evidence that proximity to US IT clusters has a positive effect on growth rates of Canadian IT firms. Finally, we find only very limited survivorship impacts related to location. On balance, our results suggest that the Canadian economy is too small to support many diversified clusters, and that policies directed at creating such diversity are likely to be misplaced. Copyright 2005, Oxford University Press.

Suggested Citation

  • Steven Globerman & Daniel Shapiro & Aidan Vining, 2005. "Clusters and intercluster spillovers: their influence on the growth and survival of Canadian information technology firms," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 14(1), pages 27-60, February.
    • Handle: RePEc:oup:indcch:v:14:y:2005:i:1:p:27-60
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    Cited by:

    1. Cote, Christine & Estrin, Saul & Shapiro, Daniel, 2020. "Expanding the international trade and investment policy agenda: the role of cities and services," LSE Research Online Documents on Economics 104003, London School of Economics and Political Science, LSE Library.
    2. Power Bernadette & Ryan Geraldine & Doran Justin, 2020. "A micro-analysis of Irish firm deaths during the financial crisis (2006–2010)," The Irish Journal of Management, Sciendo, vol. 39(1), pages 1-16, August.
    3. Elisabet Viladecans-Marsal & Josep-Maria Arauzo-Carod, 2012. "Can a knowledge-based cluster be created? The case of the Barcelona 22@ district," Papers in Regional Science, Wiley Blackwell, vol. 91(2), pages 377-400, June.
    4. Enrico Santarelli & Marco Vivarelli, 2007. "Entrepreneurship and the process of firms’ entry, survival and growth," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 16(3), pages 455-488, June.
    5. Nils Grashof, 2019. "Firm-specific cluster effects - A meta-analysis," Bremen Papers on Economics & Innovation 1906, University of Bremen, Faculty of Business Studies and Economics.
    6. Elicia Maine & Daniel Shapiro & Aidan Vining, 2010. "The role of clustering in the growth of new technology-based firms," Small Business Economics, Springer, vol. 34(2), pages 127-146, February.
    7. Cheng Shu & Sharon A. Simmons, 2018. "Firm survival in traded industries: does localization moderate the effects of founding team experience?," Small Business Economics, Springer, vol. 50(3), pages 643-655, March.
    8. van Oort, F.G. & Stam, F.C., 2006. "Agglomeration Economies and Entrepreneurship in the ICT Industry," ERIM Report Series Research in Management ERS-2006-016-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    9. Nils Grashof, 2020. "Firm‐specific cluster effects: A meta‐analysis," Papers in Regional Science, Wiley Blackwell, vol. 99(5), pages 1237-1260, October.
    10. Chen, Victor Zitian & Li, Jing & Shapiro, Daniel M., 2012. "International reverse spillover effects on parent firms: Evidences from emerging-market MNEs in developed markets," European Management Journal, Elsevier, vol. 30(3), pages 204-218.
    11. Sam Tavassoli & Viroj Jienwatcharamongkhol, 2016. "Survival of entrepreneurial firms: the role of agglomeration externalities," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 28(9-10), pages 746-767, October.
    12. Aharonson, Barak S. & Baum, Joel A.C. & Plunket, Anne, 2008. "Inventive and uninventive clusters: The case of Canadian biotechnology," Research Policy, Elsevier, vol. 37(6-7), pages 1108-1131, July.
    13. Karl Wennberg & Göran Lindqvist, 2010. "The effect of clusters on the survival and performance of new firms," Small Business Economics, Springer, vol. 34(3), pages 221-241, April.
    14. Christine Côté & Saul Estrin & Daniel Shapiro, 0. "Expanding the international trade and investment policy agenda: The role of cities and services," Journal of International Business Policy, Palgrave Macmillan, vol. 0, pages 1-25.
    15. Grashof, Nils, 2021. "Putting the watering can away –Towards a targeted (problem-oriented) cluster policy framework," Research Policy, Elsevier, vol. 50(9).
    16. Nils Grashof & Dirk Fornahl, 2020. "To be or not to be located in a cluster? A descriptive meta-analysis of the firm-specific cluster effect," Working Papers on Innovation and Space 2020-01, Philipps University Marburg, Department of Geography.
    17. Avenel, E. & Corolleur, F. & Gauthier, C. & Rieu, C., 2005. "Start-ups, firm growth and the consolidation of the French biotech industry," Working Papers 200503, Grenoble Applied Economics Laboratory (GAEL).
    18. Elisabet Viladecans-Marsal & Josep-Maria Arauzo-Carod, 2012. "Can a knowledge-based cluster be created? The case of the Barcelona 22@ district," Papers in Regional Science, Wiley Blackwell, vol. 91(2), pages 377-400, June.
    19. Lee, Chang-Yang, 2018. "Geographical clustering and firm growth: Differential growth performance among clustered firms," Research Policy, Elsevier, vol. 47(6), pages 1173-1184.
    20. Carles Méndez-Ortega & Josep-Maria Arauzo-Carod, 2020. "Do software and video game firms share location patterns across cities? Evidence from Barcelona, Lyon and Hamburg," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 64(3), pages 641-666, June.
    21. Christine Côté & Saul Estrin & Daniel Shapiro, 2020. "Expanding the international trade and investment policy agenda: The role of cities and services," Journal of International Business Policy, Palgrave Macmillan, vol. 3(3), pages 199-223, September.
    22. Nils Grashof & Dirk Fornahl, 2021. "“To be or not to be” located in a cluster?—A descriptive meta-analysis of the firm-specific cluster effect," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 67(3), pages 541-591, December.
    23. Guo, Di & Jiang, Kun & Xu, Chenggang & Yang, Xiyi, 2023. "Geographic clusters, regional productivity and resource reallocation across firms: Evidence from China," Research Policy, Elsevier, vol. 52(2).

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