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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, vol. 14(1), pages 27-60, February.
    • Handle: RePEc:oup:indcch:v:14:y:2005:i:1:p:27-60
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    1. repec:taf:entreg:v:28:y:2016:i:9-10:p:746-767 is not listed on IDEAS
    2. 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.
    3. Enrico Santarelli & Marco Vivarelli, 2007. "Entrepreneurship and the process of firms’ entry, survival and growth," Industrial and Corporate Change, Oxford University Press, vol. 16(3), pages 455-488, June.
    4. 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).
    5. 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.
    6. repec:kap:sbusec:v:50:y:2018:i:3:d:10.1007_s11187-017-9912-4 is not listed on IDEAS
    7. 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.
    8. 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.
    9. Méndez Ortega, Carles, & Arauzo Carod, Josep Maria, 2018. "Do Software and Videogames firms share location patterns across cities? Evidence from Barcelona, Lyon and Hamburg," Working Papers 2072/306552, Universitat Rovira i Virgili, Department of Economics.
    10. 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.
    11. 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.
    12. 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.

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