Testing the role of intra-metropolitan local factors on knowledge-intensive industries’ location choices

Abstract

This paper contributes to the literature on entrepreneurship and economic geography by identifying factors that determine the attractiveness of a site in a metropolitan area, as the basis for the emergence of high-tech firms’ spatial concentration. The econometric model provides distinct advantages over the largely descriptive approaches that have been dominant in the point pattern analysis literature for clusters. We focus on the role of two types of knowledge spillovers on a firm’s location choices: (1) those that arise from collocating with other companies from the same industry, and (2) universities’ knowledge spillovers. A model is estimated using data on firm births in high and medium–high-technology manufacturing industries, during 2000–2016 in Madrid. Our results show that the main source through which firms benefit from knowledge spillovers is through proximity to firms in the same industry and not from universities.