Agglomeration Advantages Research Articles

Are entrepreneurial cultures stable over time? Historical evidence from China

Are entrepreneurial cultures stable over time? In this paper, we use historical measures of the outgrowth of entrepreneurial culture in China and test whether these correlate with entrepreneurial activities today. We employ provincial panel data from China documenting the regional distribution of entrepreneurial activities during the Ming Dynasty (1368–1644) and the Qing Dynasty (1644–1912) and private firm activities in post-reform China (1992–2012). Our study finds a significant association between the regional distribution of historical and current measures of entrepreneurship, supporting (1) the long-term stability of underlying regional cultural differences; and (2) the adaptability of entrepreneurial activities to changing institutional arrangements and relative payoff structures. These results are robust to numerous alternative explanations, including geography, agglomeration advantages, education, and technology. Our findings suggest that government efforts to encourage new business ventures—if they are to have more than short-term effects—will need to take into account local cultural norms.

The determinants for sustainability in a low-technology SME textile cluster in an emerging economy

The purpose of this paper is to ascertain whether cluster-based strategies for SMEs could result in the enhancement of competitiveness in an environment of a developing nation, with a primary objective of examining the use of a cluster approach as a tool for sustainability – particularly for a low-technology textile cluster. Building on extensive literature dealing with SME clusters and cluster-based strategies, the paper identifies the determinants and variables for SME cluster sustainability in philosophy and policies. The paper builds upon and links together research about collective efficiency in small-industry clusters and literature about entrepreneurial environments, the significance of cluster policy and intermediaries, trust, and the acquisition of technological capabilities in context to low-technology textile clusters of an emerging economy. The paper identifies the different advantages that commonly occur in a typical cluster and then examines the ways in which these advantages may boost competitiveness, resulting in sustainability. Theoretical insight from the literature about clustering, agglomeration advantages, skill, trust, and competitiveness in developing and advanced economies is examined in order to make the assessment. Subsequently, solutions for the future have been proposed by means of a conceptual framework. Generation of hypotheses for further empirical validation are proposed.

Institutional quality and agglomeration of fast food multinationals in Latin American cities

PurposeThe purpose of this paper is to explore the location decision of multinationals across major cities in Latin America. Based on agglomeration economics and institutional theory, the paper explores whether institutional quality of a city can temper the attraction of agglomeration factors.Design/method/approachThe paper analyzes the geographic dispersion of three global fast-food franchise networks in 45 Latin American cities. The explanatory variables are horizontal aggregation of other multinationals and the institutional quality of a city. The direct and indirect impacts of horizontal agglomeration are explored through negative binomial regression with controls for city population and economic power [gross domestic product (GDP)].FindingsThe key finding is that location choice of fast-food networks is driven principally by market conditions and to a lesser extent by horizontal agglomeration. The institutional quality of a city has a positive influence on the agglomeration of fast-food networks. A city with strong institutional quality makes this relation stronger.Research limitationsOther multinational and national fast-food franchises are not included in the paper. Future studies should include a greater number of global and local fast-food franchisers.Practical implicationsThe positive reinforcements of agglomeration and strong institution are important for the investment location decision of fast-food multinationals. The institutional quality of the city should be an important consideration in the location decision as it expands regionally and within a country. Smaller cities may not offer the agglomeration advantages of the large metropolitan areas, but their good institutional quality may reduce the business costs for multinationals.Social implicationsLarge cities in Latin America tend to reap the benefits of agglomeration. As a result, smaller secondary cities struggle to be relevant in generating economic activity and attracting private investments. One strategy to achieve relevance is to build strong and transparent institutions and a solid business environment.Originality/valueThe inclusion of institutional quality at the city level as moderation of the agglomeration factors influencing the location decision of a multinational is original. This paper contributes to our understanding of the importance of regional cities in attracting the investment of multinational firms.

A hazai műkereskedelem tipológiája és térbeli jellegzetességei Budapest példáján

A műkereskedelem hazánkban mindmáig a kiskereskedelem kevésbé feltárt szegmensei közé tartozik. Ugyanakkor a téma aktualitását igazolja, hogy bizonyos társadalmi rétegek jelentős összegeket fordítanak műtárgyak vásárlására és fektetik be felhalmozott jövedelmük egy részét antik és kortárs vagyontárgyakba. A műtárgypiacon számos galéria, aukciósház és régiségbolt jelenik meg, és az antikváriumok is fontos résztvevőknek tekinthetők.Jelen tanulmány célja a budapesti műkereskedelem klasszifikációja és térbeli sajátosságainak bemutatása. A primer adatgyűjtésre épülő kutatás a fővárosi műkereskedéseket vizsgálja, saját terepi megfigyelésekkel és félig strukturált interjúk elkészítésével. Az üzletek és kereskedőházak elhelyezkedésének megjelenítése és elemzése térinformatikai szoftver alkalmazásával történt.A műtárgypiac szereplői különböző típusokba sorolhatóak a profil, az értékesítés helye, az árpolitika és a kínálat alapján. Megfigyelhető, hogy a galériák és aukciósházak Budapest legelegánsabb hagyományos bevásárlónegyedében helyezkednek el, a másodlagos bevásárlózóna jellemzően az antikváriumoknak és a régiségboltoknak ad otthont. Az egyes típusok térbeli elkülönülése számos tényezővel magyarázható: a bérleti díjak nagyságával, történeti előzményekkel, agglomerációs előnyökkel.

State investments in high-technology job growth

Since the early 1970's state and local governments have launched an array of economic development programs designed to promote high-technology development. The question our analysis addresses is whether these programs promote long-term high-technology employment growth net of state location and agglomeration advantages. Proponents talk about an infrastructure strategy that promotes investment in public research and specialized infrastructure to attract and grow new high technology industries in specific locations, and a more decentralized entrepreneurial strategy that reinforces local agglomeration capacities by investing in new enterprises and products, promoting the development of local networks and partnerships. Our results support the entrepreneurial strategy, suggesting that state governments can accelerate high technology development by adopting market-supportive programs that complement private sector initiatives. In addition to positive direct benefits of technology deployment/transfer programs and SBIR programs, entrepreneurial programs affect change in high-technology employment in concert with existing locational and agglomeration advantages. Rural (i.e. low population density) states tend to benefit by technology development programs. Infrastructure strategy programs also facilitate high technology job growth in places where local advantages already exist. Our results suggest that critics of industrial policy are correct that high technology growth is organic and endogenous, yet state governments are able to “pick winners and losers” in ways that grow their local economy.

The strategic location of regional headquarters for multinationals in Africa: south Africa as a host country

Multinational enterprises are aiming to strike a balance between local responsiveness and global integration. The establishment of regional offices allows multinational companies to have a local insight of the market, competition landscape and customer preferences. With such detailed insight, multinational companies are then able to formulate effective and responsive regional strategies. The importance and value of regional headquarters in the academic literature has generally focused on them in industrialized countries. The result is that we do not yet fully possess an overall framework for understanding how value and decisions are devolved, how location decisions are made and how their structures and strategies are evolving to accommodate the growth in emerging markets. The study examines the dominant criteria used by multinational enterprises to choose their locations for regional headquarters in Africa by examining South Africa as a host country for the continent. We find that the main criteria are linked to the advantages of agglomeration and the accompanying economies of scale, and a sound institutional framework which provides a predictable economic climate. In emerging markets which often suffer from institutional voids and thus higher country risk profiles, multinationals choose to locate in the environment which is most familiar to its home rules and use it as a springboard to do business in more ‘hostile’ milieus. The implications for managers looking to do business in Africa is to recognize that this is a continent still consolidating its transition to a sounder institutional environment. Given the unique business environment it will be a difficult region to manage successfully from centralized headquarters and thus using regional headquarters with local knowledge has real advantages.

Tourism competitiveness evaluation and spatio-temporal characteristics of Chinese border counties

Under the current government strategy of building a Silk Road economic belt, tourism in Chinese border counties has becoming increasingly popular. Studying tourism competitiveness in Chinese border counties is of sizable theoretical and practical importance, as there are several notable factors involved. In this study, we constructed a tourism competitiveness evaluation model based on eight factors: natural environment, tourism resource, location and transportation, social environment, tourism service facility, border port, tourism industrial cluster and tourism market. We then analyzed the spatial characteristics of tourism competitiveness in border counties and identified five types of border counties: resource advantage type (RA), border-port advantage type (PA), location advantage type (LA), agglomeration advantage type (AA), and relative balance type (RB), and examined the correlation between tourism market competitiveness and interior competitiveness factors in the counties from 2006 to 2011. Results showed that tourism resource, location and transportation, and tourism service facility are the most important competition factors for RA border counties during the study period. Competition factors in PA counties transferred from tourism resource, social environment and tourism service facility to border port and tourism industrial cluster; competition factors in LA counties transferred from natural environment and tourism resource to tourism service facility and tourism industrial cluster and border port. Competition factors in AA counties transferred from tourism service facility to tourism resource. Tourism industrial cluster, tourism service facility and tourism resource proved to be important competition factors in RB counties. The findings of this study can be used to target tourism strategies according to different county types.

Foreign Direct Investment in China, the Factors Determining a Preference for Investing in Eastern or Western Provinces

Why do foreign enterprises invest in certain provinces of China? This study started with five possible factors that could influence the decision of multinational corporations: 1) Economic growth; 2) Labor costs; 3) Domestic investments; 4) Agglomeration advantages; and 5) Innovation. The Eastern and Western provinces are slowly converging in terms of foreign direct investments (FDI) and growth rates. Especially after the 11th and 12th five year plans, which were primarily aimed at opening up the Western part of China. Based on a data for the time period 1992-2012 for each of the 30 provinces we analyzed the hypotheses derived from Dunning [1]. After checking for normality and multi-collinearity we estimated the coefficients of the independent variables and their statistical significance. To find different determinants across China, this study opted to do the analysis for the Eastern and Western provinces of China separately. GDP Growth is found to be positively related to FDI in both cases. The wage level is only found to be significant in the Eastern provinces. A reason for this can be that the Eastern China is a step ahead of the Western China, higher educated people are needed and hence higher labor costs are accepted. Domestic investments are found to have a positive effect on FDI in both models. Finally the indicator for agglomeration has a positive significant coefficient: already existing businesses pull MNEs. This effect is found to be stronger in the Eastern provinces; this can be due to the fact that more MNEs have already established their businesses over there. Lastly, the variable patent has the wrong coefficient in both models. These results have policy implications and confirm the importance of certain location factors as suggested in the Dunning model. The government can stimulate FDI in the western provinces by promoting domestic investments in these provinces. Also agglomeration attracts FDI and can be promoted.

The role of path-dependence in the local economic transformation

The examination focuses on the issue of path-dependence, which is considered to be the core concept of evolutionary economic geography emphasizing the importance of historical development. Although the notion of path-dependence is used both in negative and positive contexts, we place the latter in focus leaving room for changes, as we are interested in the question how the local economic base can be reinforced by the development of perspective activities. Our key question involves aspects of regional development, namely how medium-sized settlements can be positioned as hubs in the economic space dominated by large cities in the age of globalization. With regard to the opportunities for establishing localization-type agglomeration advantages, which are important for the generation of positive feedback mechanisms in the broadest sense, the healthcare industry appears to be a perspective research field in the case of our examined city, Debrecen. Not only significant traditions and remarkable weight does the sector represent in the economy of the city, but the development ideas. In our presentation we attempt to delineate the corporate and institutional actors of the local healthcare industry. On the other hand, the companies are examined in three temporal sections after the change of regime, in order to unfold the dynamic segments of the healthcare industry. Business registers and corporate databases of the Hungarian Central Statistical Office are analysed in addition to the evaluation of corporate reports, press releases and documents of economic development reinforcement of healthcare industry constitutes a columnar component of the local.

From tourism to multilocal residence?

The article analyses the recent status and development of permanent inhabitants and second homes in the UNESCO World Heritage (WH) Dolomites area in the Italian Alps. First, the results show that a growth of permanent population is ongoing selectively in the urban and periurban areas, confirming earlier research in the Alpine arc and showing that agglomeration advantages are taking place. Second, the results show that these processes are parallel to a shifting use of second homes, announcing a transformation from an export-based to a residential economy in which second homes seem not to be homogeneously complementary to the tourist sector. Third, the Dolomites are not a homogenous region: despite the joint application process for WH site involving five provinces, demographic and economic differences can be highlighted along the provincial borders. This proves that demographic development is strongly path- dependent and conditioned by institutional settings and legislation. Therefore, ongoing strong agglomeration advantages and institutional differences are more decisive for the economic and demographic transformation in the Alps than single strategies carried out by local tourism consortia or enterprises. This brings to a relativization of the emerging debate about new migrants: regions with stable economic structures profit by gaining permanent residents, while regions with declining structures up to now attract mainly multilocal residents.

Trend and policy implications of regional industrial agglomeration: an empirical analysis of the manufacturing industries in Guangdong Province

AbstractAdvantages stemming from industrial agglomeration and economy of scale have become important drivers of sustained competitiveness for a national or regional economy in the context of globalization and regional integration. Since the reform and opening up in China, the economic advantages of agglomeration in Guangdong Province, especially in Pearl River Delta region, have attracted foreign investment and resultant emerging domestic supporting industries. Using entropy index, spatial Gini coefficient and the concentration ratio, this paper summarizes the features of regional economic development and structure changes of the manufacturing industry in Guangdong Province, and then analyses the comparative advantage and agglomeration scale, geographical agglomeration degree and dynamic changes, spatial distribution and transfer trend of the manufacturing industry in the Province. The paper also makes a comparison of the agglomeration degree and development trends across different industries. It further provides policy implications of the regional industrial restructuring and the co‐ordinated development of interregional economy concerning agglomeration and diffusion of regional manufacturing industry.

Az állam megváltozott szerepe és a városfejlesztés viszonya

A tanulmány „Az állami szerepek átalakulása és azok hatása a területi szerkezetre” című alapkutatás előzetes eredményeit vázolja. A téma aktualitását a városok szerepének európai és globális dimenziójú átértékelése adja, amit elengedhetetlen figyelembe venni Győr város helyzetének megítélése, gazdasági pozíciójának erősítése szempontjából is. Így a vizsgálat a nagyvárosi térségek, régiók intézményesülésében az utóbbi mintegy másfél évtizedben lezajlott gyökeres változásokat ragadja meg néhány állam és városrégió példáján. A tanulmány e változások hátterét és összefüggéseit kísérli meg megvilágítani, történetesen azt, hogy megváltozott a nemzetállamok viszonyulása városaikhoz és városi térségeikhez, azok ma már a gazdaságpolitika eszközeiként aktiválódnak. Az európai városhálózat az EU kohéziós politikájának célpontja, abban súlypontozódik a versenyképességi elem. Ennek következtében modernizálódott a területi tervezés rendszere, a városi térségek széles körben olyan, tervezési jogosultsággal bíró téregységekké váltak, amelyek alkalmasak az új típusú, a közszférát a magán- és a civil szférával összekapcsoló kormányzás megvalósítására. E változási folyamat nem értékelhető azon hatalmi decentralizációs folyamat nélkül, amely a szubnacionális szintek javára zajlott le a legtöbb fejlett országban. A decentralizáció a kompetenciák szétterítéséhez vezetett, míg a többszintű kormányzás ösztönzésével az EU a területi szintek és a különböző szektorok közötti kooperáció létrehozásával azok ismételt integrációját kívánja megvalósítani. A folyamat kulcselemei a kooperáció és a koordináció, kiegészülve a téregységek közötti versennyel. A létrejövő kooperatív és partneri állam azonban új szerepfelfogásában is megőrizte szabályozó és ellenőrző hatalmi jogosítványait. Tehát a keretfeltételeket ő szabja meg, így támogathatja vagy blokkolhatja a városi térségek fejlődését, versenyképességét.

From hub-airport to hub-office: new focal points of multiscalar knowledge generation. The case of Amsterdam-Schiphol and Frankfurt Rhine-Main

Accessibility is the prerequisite of today’s globalised, knowledge-driven, and networked economies. Moreover, accessibility and good transportation linkages are the key to and a focus for sustained real estate developments. Where accessibility is the highest and agglomeration advantages can unfold their positive cumulative causation, the likelihood increases that people meet other people: interacting, exchanging information, learning from each others successes and failures, and eventually generating new knowledge through personal interactions. Not long ago, Amsterdam and Frankfurt airports were considered purely infrastructural facilities. This situation is changing, and increasingly both airports resemble urban entities. Within this transformation of the airports, the knowledge economy has proved to be a major driver. Findings show that knowledge-intensive companies make strategic use of the location and the hub competence of the airport by installing a highly accessible ‘hub office’ within their internal office hierarchy.

Inter-industrial Relations and Sectoral Employment Development in German Regions

Summary This paper analyses the impact of cluster structures on employment development in Germany according to the hypothesis of Porter (1998). It develops a new way of measuring the co-location of suppliers and buyers of intermediate goods in a region based on an input-output approach. The resulting indicator is implemented in a shift-share regression in order to analyse the importance of input-output linkages for the employment development in individual industries. One advantage of this approach is that the results can be compared to earlier studies on localization advantages according to Marshall (1890). The results show that the availability of suppliers and customers in the same region was a major engine for job creation in specific industries in the past. In the period 1998 to 2007 this was particularly observed for service sectors, such as Air Transport or Health and Social Work but also for some manufacturing industries as well as for Agriculture and Construction. It becomes apparent from the comparison with earlier findings that agglomeration advantages are not realizable within a single industry. Positive effects rather result from the right composition of different industries that have the possibility to establish common production chains. However, for a lot of industries the intensity of inter-industrial interdependence did not play a significant role for their employment development.

A methodology for the construction of dynamic capabilities in industrial networks: The role of border agents

The article presents a methodology for the formation and functioning of industrial networks that favors the development of dynamic capabilities with regard to the creation, integration, transfer and absorption of knowledge. This methodology has been put into practice in a case study: Lignum Facile. The presence of some misalignments between our initial proposal and its implementation helped us reshape and emphasize particular processes and flows associated to the methodology. Beyond the typical localization and agglomeration advantages, the analysis suggests that the success in the formation and functioning of industrial networks is mainly related to their potential to formulate immaterial relationships capable of stimulating learning processes, the dissemination of technological knowledge and innovative activities. Particularly, we found that the inclusion of border agents – intermediaries between the market and industry such as architects, engineers or designers – is fundamental to develop innovations at the intersection of different scientific and technological disciplines.

A Constructive Critique of the Endogenous Development Approach in the European Support of Rural Areas

AbstractIn recent years, the endogenous development (ED) approach has gained influence within the rhetoric of European rural development policies (RP). This paper provides a fundamental critique of the approach and shows that neither the economic elements of RP in general nor ED in particular are targeted towards the specific economic needs and capabilities of rural areas. The second part of this paper consists of the search for possible alternative concepts for a more targeted and effective RP. Based on a synopsis of existing theories, an integrated approach is proposed that builds upon the different coordination mechanisms for economic activity suggested by different theories. The new, integrated perspective enables an economic characterisation of rural areas and indicates that the successful support of local coordination of economic activity is determined by specific local conditions. It also makes evident that localised approaches usually cannot compensate rural areas for the lack of agglomeration advantages. Therefore, programmes for the economic development of rural areas which support the local coordination of economic activity remain a second‐best policy. As such, they do not free the state from policies of spatial redistribution if the political aim is the creation of comparable living conditions.

Reaching Out and Reaching Within: A Study of the Relationship between Innovation Collaboration and Innovation Performance

A large body of research has thoroughly discussed and examined agglomeration advantages for innovation of geographically concentrated firms. However, there is an increasing awareness that this intellectual tradition tends to overemphasize the role of geographic proximity in the transfer of knowledge between firms and to under-theorize the contribution of nonlocal knowledge flows. With a sample of 143 manufacturing firms from Singapore, this research attempts to answer three interrelated questions: (1) Does local networking effort provide firms with added value above and beyond what is available to them by just “being there?” (2) Does local collaboration contribute more to innovation performance than nonlocal collaboration? (3) What is the joint impact of local and nonlocal collaborations on innovation performance? We find that while local and nonlocal collaborations are statistically indistinguishable from each other in terms of their relative importance, they represent complementary spurs to innovation. Despite the unique research setting of Singapore as a city state, we argue that our findings may be generalizable to geographic systems in other parts of the world.

Regional determinants of MNE’s location choice in post-transition economies

This article focuses on the impact of agglomeration and labour market factors on the location choice of MNEs in post-transition economies. We compare data from 33 regions in East Germany, the Czech Republic and Poland using a mixed logit model on a sample of 4,343 subsidiaries for the time period between 2000 and 2010. The results show that agglomeration advantages, such as sectoral specialization as well as a region’s economic and technological performance prove to be some of the most important pull factors for FDI in post-transition regions. With respect to access to labour, the results suggest that FDI in post-transition regions is (no longer) only dominated by efficiency seeking behaviour, but also by access to well-qualified labour.

High‐tech industry clustering in less favoured areas

PurposeThe aim of this paper is to demonstrate that synergy between firms and local institutions may lead to success even in an economic environment which cannot offer competitive advantages to high tech industrial clustering. However, the condition for such a complex result is convergence between cluster‐based regional development policy, the related industry national strategy and the central government preferential policy for less developed areas.Design/methodology/approachThe experiences selected as case studies are the Xi'an National Civil Aerospace Base in Shaanxi Province (China) and CampaniAerospace in Campania region (Italy). As information was gathered both through policy documents (China and Italy) and direct interviews to cluster's stakeholders (Italy), the outcome is, according to the criteria suggested by Eisenhardt and Yin, a qualitative research. Comparing economic data provided by the respective countries' Statistical Offices, the authors assessed that Shaanxi Province and the Campania region share a “peripheral” position within their respective national context. Starting from this, the authors analyzed the formal documents which reported the experience of the two clusters.FindingsThe finding is that the outcome (the status of cluster which is assumed as “a value in itself”) of the convergence between firms' will to gain agglomeration advantages and the policymakers' plan to redress interregional economic disparities is definitely not an efficiency‐driven process. In the high tech sectors which are very sensitive to the increasing competition for technology on the international market, the pursuit of efficiency may, on the contrary, be dissipated.Originality/valueAs attested by the comparative literature, aims and performance of industrial clusters differ in accordance with the stage of economic development as well as the institutional and regulatory framework. The paper demonstrates, however, that in the take‐off stage, it is the position occupied by the host region within the national context which determines the behaviour of the actors concerned as well as the outcome of their commitment.

Spatial Welfare Economics Versus Ecological Footprint: A Sensitivity Analysis Introducing Strong Sustainability

The aim of this paper is a sensitivity analysis with the core-periphery model of ‘new economic geography’ put forward in Grazi et al. (Environ Resour Econ 38:135–153, 2007). This model comprises interregional trade, agglomeration advantages and resource (land) use or environmental externalities. Grazi et al. (2007, GBR) compare a social welfare (SW) indicator with the ecological footprint (EF) indicator for measuring spatial sustainability of a set of land use configurations. Their main result is that the SW and the EF indicator can yield completely different rankings and only for extreme parameterizations of environmental externalities the rankings coincide. We adapt the model by interpreting total natural land as a resource constraint and differentiate between weak and strong sustainability. In a sensitivity analysis we show that the main results of GBR (2007) correspond to the case of weak sustainability in our adapted model version. In the case of strong sustainability our adapted model version shows the same welfare rankings for both indicators without the extreme parameterization that is necessary to obtain the same results in the original GBR (2007) model.