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The Impact of Functional Integration and Spatial Proximity on the Post-entry Performance of Knowledge Intensive Business Service Firms

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Abstract

Knowledge intensive business service firms (KIBS) are an important element of modern economies and thus attracting increasing interest in scientific research. In the existing literature it is argued that due to the important role of knowledge, innovation and userproducer interaction in the KIBS sector, functional integration and spatial proximity are particularly decisive for a firm’s development. Nevertheless, due to the absence of suitable micro data there is a lack of studies empirically analysing the impact of functional integration and regional proximity using micro firm data. Based upon newlyconducted firm micro data in three German metropolitan regions, this paper supplements the literature by giving a multivariate empirical analysis of the determinants of post-entry performance of KIBS. The results of the estimation of firm growth equations show that functional linkages to knowledge providers, customers and co-operation partners indeed matter for the performance of young KIBS. Regarding spatial proximity, however, especially a high diversification of geographical reach is proved to be crucial.

Suggested Citation

  • Harald Strotmann & Andreas Koch, 2005. "The Impact of Functional Integration and Spatial Proximity on the Post-entry Performance of Knowledge Intensive Business Service Firms," IAW Discussion Papers 18, Institut für Angewandte Wirtschaftsforschung (IAW).
  • Handle: RePEc:iaw:iawdip:18
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    References listed on IDEAS

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    1. Simone Strambach, 2002. "Change in the Innovation Process: New Knowledge Production and Competitive Cities--The Case of Stuttgart," European Planning Studies, Taylor & Francis Journals, vol. 10(2), pages 215-231, March.
    2. Gallouj, Faiz & Weinstein, Olivier, 1997. "Innovation in services," Research Policy, Elsevier, vol. 26(4-5), pages 537-556, December.
    3. Haas Hans-Dieter & Lindemann Susanne, 2003. "Wissensintensive unternehmensorientierte Dienstleistungen als regionale Innovationssysteme," Zeitschrift für Wirtschaftsgeographie, De Gruyter, vol. 47(1), pages 1-14, October.
    4. Almus, Matthias & Egeln, Jürgen & Engel, Dirk, 1999. "Determinanten regionaler Unterschiede in der Gründungshäufigkeit wissensintensiver Dienstleister," ZEW Discussion Papers 99-22, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    5. Garnsey, Elizabeth, 1998. "A Theory of the Early Growth of the Firm," Industrial and Corporate Change, Oxford University Press, vol. 7(3), pages 523-556, September.
    6. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    7. Andreas Koch & Thomas Stahlecker, 2004. "Regional innovation systems and the foundation of knowledge intensive business services. A comparative study in Bremen, Munich, and Stuttgart, Germany," European Planning Studies, Taylor & Francis Journals, vol. 14(2), pages 123-146, November.
    8. P. Geroski, 1998. "An Applied Econometrician's View of Large Company Performance," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 13(3), pages 271-294, June.
    9. Dirk Czarnitzki & Alfred Spielkamp, 2003. "Business services in Germany: bridges for innovation," The Service Industries Journal, Taylor & Francis Journals, vol. 23(2), pages 1-30, March.
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    Cited by:

    1. Harald Strotmann & Andreas Koch, 2005. "Determinants of Innovative Activity in Newly Founded Knowledge Intensive Business Service Firms," IAW Discussion Papers 21, Institut für Angewandte Wirtschaftsforschung (IAW).
    2. Andreas Koch & Jochen Späth & Harald Strotmann, 2013. "The role of employees for post-entry firm growth," Small Business Economics, Springer, vol. 41(3), pages 733-755, October.
    3. Cristina Fernandes & João Ferreira & Carla Marques, 2015. "Innovation management capabilities in rural and urban knowledge intensive business services: empirical evidence," Service Business, Springer;Pan-Pacific Business Association, vol. 9(2), pages 233-256, June.
    4. Fernandes, Cristina & Ferreira, João & Raposo, Mario, 2013. "Drivers to firm innovation and their effects on performance: An international comparison," MPRA Paper 46776, University Library of Munich, Germany.
    5. Andreas Koch & Jochen Spaeth, 2009. "New Firms---Different Jobs? An Inquiry into the Quality of Employment in Start-ups and Incumbents," IAW Discussion Papers 50, Institut für Angewandte Wirtschaftsforschung (IAW).
    6. Fernandes, Cristina & Ferreira, João & Marques, Carla, 2011. "KIBS Innovation Management Capability in Rural Portuguese Regions: Empirical Evidence," MPRA Paper 47005, University Library of Munich, Germany.
    7. Malgorzata Zieba, 2013. "Knowledge-Intensive Business Services (Kibs) And Their Role In The Knowledge-Based Economy," GUT FME Working Paper Series A 7, Faculty of Management and Economics, Gdansk University of Technology.

    More about this item

    Keywords

    Employment growth; Entrepreneurship; Entry; Firm growth; Innovation; Knowledge intensive business services; Post-entry performance;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • L80 - Industrial Organization - - Industry Studies: Services - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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