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Do local start-ups and knowledge spillovers matter for firm-level R&D investment?

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  • Frank Crowley

    (University College Cork, Ireland)

  • Declan Jordan

    (University College Cork, Ireland)

Abstract

What happens to firm-level research and development (R&D) when urban locations have more knowledge spillovers and are more entrepreneurial? This article explores the potential tension between knowledge spillovers, start-ups and innovation effort in existing firms. The relationship is empirically tested using Swedish firm-level data and municipality-level data on start-ups. The results indicate that having more start-ups in urban municipalities is associated with lower firm-level R&D expenditure. However, this relationship is not linear, where the negative association between the level of new firm formation and firm-level R&D expenditure decreases with scale. This suggests that the relationship between local entrepreneurship and a business’ R&D decisions is conditioned by the extent of that entrepreneurship.

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  • Frank Crowley & Declan Jordan, 2022. "Do local start-ups and knowledge spillovers matter for firm-level R&D investment?," Urban Studies, Urban Studies Journal Limited, vol. 59(5), pages 1085-1102, April.
    • Handle: RePEc:sae:urbstu:v:59:y:2022:i:5:p:1085-1102
    DOI: 10.1177/0042098021995105
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