IDEAS home Printed from https://ideas.repec.org/p/ing/wpaper/201411.html
   My bibliography  Save this paper

Agglomerations and firm performance: how does it work, who benefits and how much?

Author

Listed:
  • Hervas-Oliver,Jose-Luis

    ()

  • Sempere-Ripoll,Francisca

    ()

Abstract

Agglomeration can generate gains. If it does, how does it work and how are those gains distributed across agglomerated firms? Despite the existence of an important body of research on this topic, the evidence is inconclusive. We examine the effect of localization externalities on a firm’s innovativeness. By analyzing a large dataset of 6,697 firms integrated with another regional agglomeration-related dataset, we obtain results which show that (i) location in an agglomeration has a positive influence on a firm’s absorptive capacity and innovativeness, and, (ii) firms benefit heterogeneously from being located in agglomerations, with benefits being distributed asymmetrically. Agglomeration gains exist but not all firms benefit equally: the least innovative firms gain the most.

Suggested Citation

  • Hervas-Oliver,Jose-Luis & Sempere-Ripoll,Francisca, 2014. "Agglomerations and firm performance: how does it work, who benefits and how much?," INGENIO (CSIC-UPV) Working Paper Series 201411, INGENIO (CSIC-UPV), revised 01 Dec 2014.
  • Handle: RePEc:ing:wpaper:201411
    as

    Download full text from publisher

    File URL: http://www.ingenio.upv.es/sites/default/files/working-paper/2014-11.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Michael Storper & Anthony J. Venables, 2004. "Buzz: face-to-face contact and the urban economy," Journal of Economic Geography, Oxford University Press, vol. 4(4), pages 351-370, August.
    3. Vega-Jurado, Jaider & Gutiérrez-Gracia, Antonio & Fernández-de-Lucio, Ignacio & Manjarrés-Henri­quez, Liney, 2008. "The effect of external and internal factors on firms' product innovation," Research Policy, Elsevier, vol. 37(4), pages 616-632, May.
    4. José Albors-Garrigos & José L. Hervas-Oliver, 2011. "Making sense of innovation by R&D and non-R&D innovators in low technology contexts: a forgotten lesson for policymakers," Working Papers. Serie EC 2011-06, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    5. Audia, Pino G. & Rider, Christopher I., 2010. "Close, but not the same: Locally headquartered organizations and agglomeration economies in a declining industry," Research Policy, Elsevier, vol. 39(3), pages 360-374, April.
    6. Adam B. Jaffe & Manuel Trajtenberg & Rebecca Henderson, 1993. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 577-598.
    7. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
    8. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
    9. Stephen Tallman & Aya S. Chacar, 2011. "Knowledge Accumulation and Dissemination in MNEs: A Practice‐Based Framework," Journal of Management Studies, Wiley Blackwell, vol. 48(2), pages 278-304, March.
    10. Folta, Timothy B. & Cooper, Arnold C. & Baik, Yoon-suk, 2006. "Geographic cluster size and firm performance," Journal of Business Venturing, Elsevier, vol. 21(2), pages 217-242, March.
    11. Jan W. Rivkin, 2000. "Imitation of Complex Strategies," Management Science, INFORMS, vol. 46(6), pages 824-844, June.
    12. Pe'er, Aviad & Keil, Thomas, 2013. "Are all startups affected similarly by clusters? Agglomeration, competition, firm heterogeneity, and survival," Journal of Business Venturing, Elsevier, vol. 28(3), pages 354-372.
    13. McCann, Brian T. & Folta, Timothy B., 2011. "Performance differentials within geographic clusters," Journal of Business Venturing, Elsevier, vol. 26(1), pages 104-123, January.
    14. Bruno Cassiman & Reinhilde Veugelers, 2006. "In Search of Complementarity in Innovation Strategy: Internal R& D and External Knowledge Acquisition," Management Science, INFORMS, vol. 52(1), pages 68-82, January.
    15. Glaeser, Edward L & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1992. "Growth in Cities," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1126-1152, December.
      • Edward L. Glaeser & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1991. "Growth in Cities," NBER Working Papers 3787, National Bureau of Economic Research, Inc.
      • Glaeser, Edward Ludwig & Kallal, Hedi D. & Scheinkman, Jose A. & Shleifer, Andrei, 1992. "Growth in Cities," Scholarly Articles 3451309, Harvard University Department of Economics.
    16. Baptista, Rui & Swann, Peter, 1998. "Do firms in clusters innovate more?," Research Policy, Elsevier, vol. 27(5), pages 525-540, September.
    17. Gilbert, Brett Anitra & McDougall, Patricia P. & Audretsch, David B., 2008. "Clusters, knowledge spillovers and new venture performance: An empirical examination," Journal of Business Venturing, Elsevier, vol. 23(4), pages 405-422, July.
    18. Arora, Ashish & Gambardella, Alfonso, 1990. "Complementarity and External Linkages: The Strategies of the Large Firms in Biotechnology," Journal of Industrial Economics, Wiley Blackwell, vol. 38(4), pages 361-379, June.
    19. Ennen, Edgar & Richter, Ansgar, 2009. "The Whole Is More Than the Sum of Its Parts - Or Is It? A Review of the Empirical Literature on Complementarities in Organizations," MPRA Paper 15666, University Library of Munich, Germany.
    20. Stuart, Toby & Sorenson, Olav, 2003. "The geography of opportunity: spatial heterogeneity in founding rates and the performance of biotechnology firms," Research Policy, Elsevier, vol. 32(2), pages 229-253, February.
    21. Escribano, Alvaro & Fosfuri, Andrea & Tribó, Josep A., 2009. "Managing external knowledge flows: The moderating role of absorptive capacity," Research Policy, Elsevier, vol. 38(1), pages 96-105, February.
    22. Marco Bellandi & Lisa De Propris, 2012. "Small Firms and Industrial Districts," Chapters,in: Handbook on the Economics and Theory of the Firm, chapter 27 Edward Elgar Publishing.
    23. Camagni, Roberto, 2002. "On the concept of territorial competitiveness: sound or misleading?," ERSA conference papers ersa02p518, European Regional Science Association.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    agglomeration; localization externalities; innovation; performance;

    JEL classification:

    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ing:wpaper:201411. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (François Perruchas). General contact details of provider: http://edirc.repec.org/data/ingenes.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.