Core vs. Periphery: New insights on the emergence and diffusion of radical innovations in clusters

Recently, radical innovations have received increasing attention due to their outstanding economic opportunities. Nevertheless, in the context of regional clusters they have been widely ignored – in particular with regard to heterogenous cluster characteristics. This paper aims to address this research gap by examining more generally the extent to which cluster location influences the emergence and diffusion of radical innovations, and by further distinguishing between the degree of specialization (i.e. strength) of clusters and the position of firms in the core or periphery of strong clusters. Based on various data sources (e.g. PATSTAT, ORBIS), we find a cluster premium for firms in terms of generating and diffusing radical innovations. For the emergence of radical innovations, we further show that it does not make a significant difference whether a firm is located in weakly specialized clusters or in the centre or periphery of strong clusters. For the diffusion of radical innovations, however, we find a significant difference. Firms located at the centre of strong clusters are better able to generate highly cited radical innovations not only compared to non-clustered firms, but even compared to other firms within clusters.