Clusters and firm-level innovation: A configurational analysis of agglomeration, network and institutional advantages in European aerospace

Abstract

Clusters have the potential to strengthen firm innovation. However, our knowledge of how firms are affected by the external resources found in clusters, and how this relates to their level of internal resources, is limited. There are seemingly conflicting theoretical assumptions and empirical findings on both the individual and combined impact of these resources. Our paper seeks to reconcile these by adopting a configurational lens, allowing for multiple pathways to innovation. Applying fuzzy-set Qualitative Comparative Analysis (fsQCA) to a sample of firms in European aerospace clusters, we uncover that innovation outcomes can only be explained through combinations of internal assets, and external resources provided by geography, networks, and institutions. No single resource, in isolation, is sufficient. We distinguish between a total of seven pathways. These vary from weak firms benefitting from localized knowledge spillovers, to strong firms with extensive non-local networks. We find that the relationship between internal and external resources is causally complex, with even the potential for negative innovation impacts. Hence, we provide a first step towards harmonizing the literature's different approaches to understanding clusters’ impact on firms.