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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.

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Paper provided by Katholieke Universiteit Leuven, Faculteit Economie en Bedrijfswetenschappen, Vives in its series Vives discussion paper series with number 14.

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Date of creation: 2010
Date of revision:
Handle: RePEc:ete:vivwps:14
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