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Does firm agglomeration drive product innovation and renewal?


  • Filip De Beule
  • Ilke Van Beveren


This paper uses data from the Community Innovation Survey for Belgium to evaluate to what extent firms located in sectors and regions characterized by high employment concentration (clusters) innovate more. We analyze the innovative performance of Belgian firms in the year 2004 and relate it to own-sector employment concentration, as well as to a number of control variables. Our findings show a positive impact of own-sector employment concentration on firm-level innovation output, lending support to the hypothesis that firms can benefit from their location within a cluster. This finding only holds for low-tech sectors and not for high-tech sectors, suggesting that congestion and competition effects have overcome localization economies, in particular for the mediumhigh-tech industries in Belgium.

Suggested Citation

  • Filip De Beule & Ilke Van Beveren, 2010. "Does firm agglomeration drive product innovation and renewal?," Working Papers of VIVES - Research Centre for Regional Economics 14, KU Leuven, Faculty of Economics and Business (FEB), VIVES - Research Centre for Regional Economics.
  • Handle: RePEc:ete:vivwps:14

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    Cited by:

    1. ZHANG, Hongyong, 2015. "How does agglomeration promote the product innovation of Chinese firms?," China Economic Review, Elsevier, vol. 35(C), pages 105-120.
    2. Iritié, B. G. Jean Jacques, 2016. "Economic issues of innovation clusters-based industrial policy : a critical overview," EconStor Preprints 142746, ZBW - Leibniz Information Centre for Economics.
    3. Filip De Beule & Dieter Somers & Haiyan Zhang, 2018. "Who Follows Whom? A Location Study of Chinese Private and State-Owned Companies in the European Union," Management International Review, Springer, vol. 58(1), pages 43-84, February.
    4. Annekatrin Niebuhr & Jan Cornelius Peters & Alex Schmidke, 2020. "Spatial sorting of innovative firms and heterogeneous effects of agglomeration on innovation in Germany," The Journal of Technology Transfer, Springer, vol. 45(5), pages 1343-1375, October.
    5. Amber Naz & Annekatrin Niebuhr & Jan Peters, 2015. "What’s behind the disparities in firm innovation rates across regions? Evidence on composition and context effects," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 55(1), pages 131-156, October.

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