Abstract
This study investigates the impact of both university spillovers and firms’ absorptive capacities on firms’ financial performance, using a multilevel approach. Considering internal firm characteristics as well as external regional characteristics, our results clearly show that university spillovers do not have a per se stimulating effect. It is the interaction between firms’ absorptive capacities and local university spillovers, which proves to have a positive and significant effect on firms’ economic performance. We further find that there is an optimal level of absorptive capacities, implying that ‘a more the better’ logic does not apply. Our findings give impetus to a call for more comprehensive public policy strategies. Policy makers have to balance the support provided to knowledge producing regional actors such as universities as well as knowledge exploiting actors such as knowledge-based firms to leverage local resources and ultimately create economic value within regional innovation systems by enabling efficient technology transfer processes.
Highlights
Already Porter (1990) suggested that local competitiveness translates to the competitive advantage of a firm and German-Soto and Flores (2013, p. 2) stress that “the essence of any modern economy relies on its ability to increase the application of knowledge, which makes us think about innovation in terms of knowledge used to create new knowledge”
Our results suggest that firm performance is positively shaped by firms’ absorptive capacities, whereas knowledge spillovers do not have a per se stimulating effect
All further model specifications reinforce the insignificant effect of the existence of knowledge spillovers on firm performance, resulting in a rejection of hypothesis 1
Summary
Local factors and resources constitute essential determinants of a firm’s choice of location. 2) stress that “the essence of any modern economy relies on its ability to increase the application of knowledge, which makes us think about innovation in terms of knowledge used to create new knowledge”. In this respect, crucial questions arise like how more applied knowledge is generated, how this knowledge spills over and how this knowledge could be absorbed and exploited by firms to generate new knowledge, innovations, and marketable products (Leyden & Menter, 2018). The underlying innovation mechanisms here refer to the exploitation of opportunities originating from knowledge spillovers by universities, research institutes, or overlooked and neglected by incumbent firms (Audretsch & Keilbach, 2007; Brown, 2016; Lehmann, 2015). Firms invest in absorptive capacities to exploit the opportunities originating from knowledge spillovers, generated by external sources (Cohen & Levinthal, 1990)
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