Agglomeration Of Firms Research Articles

The Global Agglomeration of Multinational Firms

The explosion of multinational activities in recent decades is rapidly transforming the global landscape of industrial production. But are the emerging clusters of multinational production the rule or the exception? What drives the offshore agglomeration of multinational firms in comparison to the agglomeration of domestic firms? Using a unique worldwide plant-level dataset that reports detailed location, ownership, and operation information for plants in over 100 countries, we construct a spatially continuous index of pairwise-industry agglomeration and investigate the patterns and determinants underlying the global economic geography of multinational firms. Our analysis presents new stylized facts that suggest the emerging offshore clusters of multinationals are not a simple reflection of domestic industrial clusters. Agglomeration economies including capital-good market externality and technology diffusion play a more important role in the offshore agglomeration of multinationals than the agglomeration of domestic firms. These findings remain robust when we address potential reverse causality by exploring the regional pattern and process of agglomeration.

The potential for the clustering of the maritime transport sector in the Greater Dublin Region

A cluster of industry is an economic occurrence that provides a particular industry with a distinct and sometimes global competitive advantage. Successful clusters are seen as avenues for regional and national growth. Maritime clusters are a selection of industries that are usually located at, or originally centred on, the trading activities of a port. Some of the world's major maritime clusters include the clusters of Rotterdam, Singapore and London. Island nations like Ireland require, out of necessity, transport services to facilitate the trade of commodities. However, due to Ireland's peripheral location and its lack of transhipment port status, the maritime transport sector in the Greater Dublin Region (GDR) is not a world-renowned maritime transport cluster. However, not all industries and nations can have a successful cluster affording global market dominance. Therefore ‘what is a cluster’ can mean different things to different nations and their industries. By examining the potential clustering of the GDR maritime transport sector, the main aims and objectives of the research are: to establish by consensus if the GDR maritime transport sector is a maritime transport cluster as opposed to basic firm agglomeration and to develop a level of understanding on the capability of the GDR maritime transport sector to improve its clustering potential.

O impacto das políticas públicas no desenvolvimento de arranjos produtivos locais: o caso do APL de ovinocaprinocultura em Quixadá, Ceará

Este artigo enfoca o papel das políticas públicas para o desenvolvimento de arranjos produtivos locais (APLs) na região Nordeste. Uma das formas de o governo alavancar os APLs é com a criação de políticas que apoiem o desenvolvimento dessas aglomerações de empresas. No Brasil, tais políticas de incentivo aos APLs têm se tornado consistentes e já se pode visualizar os resultados satisfatórios de sua implementação. Por meio de um estudo de caso, este artigo analisa o exemplo de um conjunto de políticas implementadas em um APL de ovinocaprinocultura na região Nordeste. A seguinte questão norteou o estudo: qual o impacto das políticas públicas implementadas no APL selecionado, em termos de desenvolvimento local e melhoria nas condições de vida dos sujeitos? Adotou-se uma abordagem qualitativa, sendo levantadas evidências a partir de análise documental e entrevistas a 13 atores sociais locais. Constatou-se que as políticas públicas implementadas no APL de ovinocaprinocultura localizado no sertão de Quixadá, Ceará, tiveram um significativo impacto para os criadores da região, que têm experimentado melhoria nos processos de manejo do rebanho, ensejando melhor produção, o que representa ganho significativo para os participantes do APL.

COMPETITIVIDADE INTERNACIONAL EM SOFTWARE: UM ESTUDO SOBRE A EXPERIÊNCIA DE FLORIANÓPOLIS

Exportar software em países menos industrializados é geralmente difícil. Este artigo aborda tal questão, focalizando a experiência do aglomerado de alta tecnologia da região de Florianópolis, que registra a projeção internacional de alguns de seus integrantes. Baseado em pesquisa de campo, o texto desdobra-se em cinco partes, além da introdução e da conclusão. Na primeira explora-se o tema da internacionalização do segmento de software, destacando as dificuldades dos países menos desenvolvidos e a importância da "forma aglomerado" para os setores de alta tecnologia. Na segunda e terceira partes, respectivamente, descrevem-se o aglomerado de alta tecnologia de Florianópolis e os procedimentos da pesquisa de campo. Em seguida, apresentam-se os casos de internacionalização encontrados, caracterizando-os e procurando discernir o papel da "forma aglomerado" em cada um, e depois analisam-se e discutem-se os resultados da pesquisa empírica. Conclui-se assinalando, entre outras coisas, a importância de medidas de promoção que impliquem principalmente suporte financeiro e técnico à internacionalização, essenciais para as firmas estudadas e também, certamente, para o aglomerado como um todo.

International tax competition: do public good spillovers matter?

We study the impact of public good spillovers on tax competition between two imperfectly integrated countries with different levels of productivity. We show that international public good spillovers, by reducing the tax gap between countries, strengthen the agglomeration of firms in the most productive country. Then we carry on a welfare analysis. We first assume that governments are engaged in a redistributive tax policy. At the non-cooperative equilibrium, the tax level in the high-productivity country is inefficiently high while it is inefficiently low in the other country. A different conclusion emerges when tax revenues are recycled in a public good provision: taxes are inefficiently low in both countries and public good spillovers increase the global welfare. Finally, for a given amount of total tax revenues, public good provision in the high-productivity country is inefficiently high compared to its level in the low-productivity country.

Too much love in the neighborhood can hurt: how an excess of intensity and trust in relationships may produce negative effects on firms

AbstractThis study aims to provide a better understanding of the effect of social networks on innovation through the analysis of territorial agglomerations of firms. Critical voices argue that the same mechanisms that form the basis of efficient, continuous improvements of clustered firms can also be considered as limitations. We suggest that the impact of social capital decreases beyond a certain point of development. In fact, the effect of social interactions and trust on firm value creation can be described as an inverted U‐shaped curve. The study is based on a sample of 154 firms in the Valencia region of Spain. Implications of the study have relevant prescriptions for regional planners and individual entrepreneurs. Copyright © 2009 John Wiley & Sons, Ltd.

Demand‐ and Supply‐Side Agglomerations: Distinguishing between Fundamentally Different Manifestations of Geographic Concentration

abstract Agglomeration research investigates the benefits that firms receive from locating in close geographic proximity. Despite a substantial surge in interest in this topic over the past 20 years, a lack of distinction among unique manifestations of spatial concentrations of similar firms threatens continuing progress in this stream of research. We argue that agglomerations of related firms that draw benefits from the supply‐related externalities of increased access to specialized labour, specialized inputs, and knowledge spillovers are fundamentally different from those that draw benefits from heightened demand realized through reduction in consumer search costs. Extending agglomeration theory, we explicate the differences between these distinct phenomena, discuss how the nature of key theoretical relationships varies across these agglomeration types, and demonstrate significant implications for research. We discuss how the differences affect a host of theoretical relationships and empirical research decisions.

Industrial clusters, entrepreneurial culture and the social environment: The effects on FDI distribution

Abstract Using balance sheet data from a sample of 3498 foreign firms in the manufacturing industry we analyse the distribution of foreign direct investments (FDI) in Italy at a very detailed geographical level, i.e. the provincial level, a region which comprises an urban area and the limited geographical area surrounding it. In this paper, we test the impact that agglomeration economies, entrepreneurial culture and social capital have on the distribution of foreign investments. While the findings regarding the social variables are mixed, the important role played by agglomeration economies is confirmed. Our analysis shows that investments by multinationals are attracted by those areas that combine industrial cluster characteristics with an agglomeration of foreign firms and that have a high level of entrepreneurial culture. The role that this last variable plays is fundamental and suggests the idea that multinational corporations (MNCs) invest in regions with entrepreneurial resources.

The role of cluster types and firm size in designing the level of network relations: The experience of the Antalya tourism region

The importance of developing global as well as local networks between tourism firms and clusters seeking to attain global competitiveness has been increasingly emphasized in previous studies. The aim of this paper is to examine the role of local and global networking in firms of different sizes and of differentiated cluster types (based on specialization and agglomeration) in tourism. This paper differs from previous researches in that it addresses the tourism dimension of the networking literature and employs a quantitative method of analysis based on a firm-level survey. The findings of this paper reveal that there is a positive relation between large firms and the global level of networking. The specialization and agglomeration of firms in a cluster does not determine the level of connectedness, but rather it is the size of the firm in a cluster that determines the level of networking of that cluster. Based on the research findings, the paper explores the necessity of developing networks not only at a local level but also at a global level by emphasizing the defining factors.

Self-organized agglomerations and transport costs

This paper investigates the impact of the shape of transport costs on the structure of spatial equilibria. We consider a racetrack economic model in which firms and workers freely locate on the continuous space of a circumference. We present reasonably weak conditions on the shape of transport costs under which continuous distributions of firms and workers are never stable equilibria. We also characterize conditions on the shape of transport costs under which discrete distributions are stable equilibria. The results confirm the idea that agglomeration of firms and workers in few cities is a natural outcome of economic interactions.

How different? Comparing the use of design in service innovation in Nordic and American new technology-based firms

This paper explores differences in the use of design in service innovation in Nordic and American new technology-based firms and is based on a systematic qualitative comparison of case data collected on eight service innovation projects in each of the locations. Differences were expected due to these two locations' disparity in terms of agglomeration of technology-based firms and access to design resources. The results of the comparison indicate that there are more similarities than there are differences in how design is used in service innovation in these two locations. Possible explanations are explored and implications suggested.

Spatial Concentration: focus on Garment Firms in Minas Gerais

This article aims to identify and analyze the aspects that drove the spatial concentration of garment firms in Prado, a block located in Belo Horizonte, Brazil. It also aims to evaluate the competition relationships that firms developed between each other in order to benefit from agglomeration advantages. In this sense, the selection of this research topic is based on two reasons. Firstly, it looks at the potential benefits from the spatial concentration of firms. Secondly, in terms of the local economy, the selected industry is highly representative. Based on 15 interviews with entrepreneurs and individuals from the firms’ local association, it is suggested that the factors that are considered traditional by the literature influenced the localization decision of the firms. In addition, it is found that the cooperative relationships are still incipient. Therefore, the potential competitive advantages based on spatial concentration have not yet accrued to the firms. Finally, the results show that the deterioration of a neighboring cluster benefited the agglomeration of firms in Prado. Key-words: Cluster. Garment firms. Competition relationships interfirms.

Who enters, where and why? The influence of capabilities and initial resource endowments on the location choices of de novo enterprises

Some geographical locations have characteristics that create opportunities for de novo enterprises, but not all new firms can access the benefits presented by a potential location. The ability of new firms to appropriate benefit and avoid risk depends on the resources that entrepreneurs can marshal for their enterprise. This article develops a model of the interplay between the attributes of de novo entrants and their founding locations. The model assumes that de novo entrants tend to appear in the region where their founders live, but that founders choose among locations within their regions.The test of the model, using data on all de novo entrants in the Canadian manufacturing sector during 1984—98, reveals that entrants with greater resource and capability endowments are more likely to locate in areas with an agglomeration of similar firms, but this effect reverses at high endowment levels. Additionally, larger entrants are less likely to locate in areas characterized by intense local competition and potential entry deterrence, while smaller and well-endowed entrants tend to locate in areas where entry barriers are lower and asset turnover higher. These findings suggest that entrants choose locations strategically within their founding regions.They also indicate that the strategic imperatives of de novo entrants differ significantly from those of geographically diversifying firms, and thus suggest amendments to theories of location choice when modeling the decisions of new ventures.

Central agglomeration of monopolistically competitive firms

This article analyzes the location equilibrium for firms under monopolistic competition in a linear market a la Hotelling. The central agglomeration of firms is uniquely achieved with sufficiently low transport costs under three pricing schemes: discriminatory, mill and uniform-delivered pricing.

Agglomeration of Firms into Technological Districts: the Case of 22@ Project in Barcelona

This paper presents a theoretical analysis of the complex process of agglomeration of firms into technological districts when cities are also competing for them. Positive spillovers tend to make firms locate in the same area, while congestion effects limit this process. Thus, for any given city there exists an optimal number of firms. If there are fewer firms, face competition under increasing returns to scale, with path dependence effects. Hence, if firms are relatively scarce, not all cities will be occupied by firms at the optimal level. The problem of a firm is to choose an optimal city, expecting rational behaviour from other firms. A factor such as office rent depends on city size, while wage costs and spillover effects also depend on the number of firms there. Technological firms choose to agglomerate in those cities where their profits will be maximized after optimal entry. Under certain conditions there exists an equilibrium allocation, where all firms are located in the cities with the best parameters. Since cities are different, their attractiveness also differs. This paper also presents an empirical analysis of the advantages and disadvantages of the emerging technological district 22@ in Barcelona. At present, Barcelona needs state intervention to create a critical mass of technological firms in this area. On the empirical side, we analyse the potential effect of investment in infrastructure in Barcelona in order to improve its attractiveness. In particular, we are interested in the factors that may be responsible for the growing density of technological firms located in 22@ district.

AGGLOMERATION EFFECTS IN THE LABOUR MARKET: AN EMPIRICAL ANALYSIS FOR ITALY

Extensive and persistent geographic variability of the unemployment rate within the same region has been attributed to various causes. Some theories identify the “thickness” of markets as the source of positive externalities affecting labour market by improving the ability to match the skills requested by firms with those offered by workers. A recent paper by Gan and Zhang (2006) empirically confirms this hypothesis for the US labour markets. Agglomeration can be defined as aggregation of people, basically measured by city size, or as aggregation of firms, measured by cluster size (employment or number of plants). However, the population location and the industrial location are by far more similar in United States than in Europe and in Italy. Our paper aims to evaluate the effects of agglomeration on the local unemployment rate. The new methodological contribution of the study is the identification of both urban and industrial cluster agglomeration effects, using a wide set of control variables. Adjusting the system for the effects of sectorial and size shocks, as well as those relating to geographic structure and policy interventions, the results of our analysis differ from that for the United States. The study stresses the presence of negative and significant urbanisation externalities. We obtain, instead, positive effects concerning the geographic agglomeration of firms, and their thickness, in a specific area. Furthermore, positive and significant effects can be found in local systems with features of a district. Finally, the model distinguishes the negative effects of urban agglomerations (in terms of population density) from positive firm’s agglomerations (in terms of density of local units).

Bank Consolidation and Lending Policies to Small Business: Differences Across Geographical Areas

Using Bank of Italy data on Italian banks in the period 1990-2004, the paper analyses the short and long-run effects of the concentration of the banking industry on the availability of credit to small and medium-sized firms. Our study employs a bank-based approach and investigates the differential effects of banking consolidation in the various geographical areas, in order to capture the influence of the different economic contexts. Our research also considers the different groups of intermediaries involved, as well as the role of new entry banks and of those not involved in consolidations (e.g. rivals). We find that banks' specialization in terms of credit policy seems to be affected by MA this effect is stronger in the South and in the North East of Italy. On the other hand, in the case of acquisitions, banking groups improve their expertise in small business lending. These results hold in all the main geographical areas, except for the southern regions, where - everything being equal - small firms are riskier and banks' takeovers are motivated mainly by the need to allow financial restructuring. However, in this market, the entry of new banks and close relationships between local banks and agglomerations of small firms partly offset the lower specialization on small business financing induced by acquisitions.

A Matter of Distrust: Explaining the Persistence of Dysfunctional Beliefs in Regional Clusters

ABSTRACT Much theoretical writing on regional clusters is based on a functionalist and normative view of trust‐based social exchange underlying innovativeness and competitiveness. Empirical research, however, reports many cases of clusters that are best characterized as loosely connected agglomerations of firms, driven by intense distrust and rivalry, rather than trust and cooperation, and with outcomes that may or may not be advantageous. The aim of this paper is to offer a microlevel Darwinian explanation for the persistence of distrust in clusters. From the “meme's eye view,” a cluster may be understood as a cultural phenomenon that is created and reproduced by human agents as they selectively perceive and enact the ideas that draw their attention. The outcome is not necessarily a distribution of ideas that benefits the individual members of the cluster or enhances the performance of the cluster as a whole. This paper outlines the general evolutionary principles involved in this process and applies them in a discussion of some of the conditions under which ideas related to distrust may be selected and reproduced.

Geography and the Immigrant Division of Labor

Immigrants concentrate in particular lines of work. Most investigations of such employment niching have accented either the demand for labor in a limited set of mostly low-wage industries or the efficiency of immigrant networks in supplying that labor; space has taken a backseat or has been ignored. In contrast, this article’s account of immigrant employment niching modulates insights built on social network theories with understandings derived from relative location. We do so by altering the thinking about employment niches as being metropolitan wide to considering them as local phenomena. Specifically, the analysis examines the intraurban variation in niching by Mexican, Salvadoran, Chinese, and Vietnamese men and women in four industries in Los Angeles. Niching is uneven; in some parts of the metropolitan area, these groups niche at high rates in these industries, whereas in others, there is no unusual concentration. We show how a group’s propensity to niche in an industry is generally higher when the industry is located close to the group’s residential neighborhoods and demonstrate the ways in which the proximity of competing groups dampens this geographic advantage. The study speaks to debates on immigrant niching and connects with research on minority access to employment and accounts of the agglomeration of firms. More generally, it links the geographies of home and work in a new way, relating patterns of immigrant residential segregation to those of immigrant employment niches.

Connecting Gender and Economic Competitiveness: Lessons from Cambridge's High-Tech Regional Economy

Although recognition of the significance of gender divisions continues to transform economic geography, the discipline nevertheless remains highly uneven in its degree of engagement with gender as a legitimate focus of analysis. In particular, although social institutions are now widely regarded as key determinants of economic success, the regional learning and innovation literature remains largely gender blind, simultaneously subordinating the female worker voice and making invisible distinctively gendered patterns of work in the face of an increasingly feminised labour force. Focusing on the industrial agglomeration of information and communication technology firms in Cambridge, England, we first outline the nature of the inequalities in patterns of work and social interaction among female versus male employees within Cambridge's high-tech regional economy. Second, we demonstrate how these inequalities in turn constrain female employees' abilities to contribute to key processes widely theorised to underpin firms' innovative capacities and economic competitiveness. Specifically, these self-identified constraints centre on female workers' abilities to: (a) act as agents of information and knowledge diffusion between firms; and (b) use new information and knowledge once they enter the firm. Overall, our results suggest that gender issues of social equity at the level of the individual worker need to be explicitly integrated with issues of economic competitiveness at the levels of the firm and the region. This is a case not simply of female employees being socially excluded at work, but of their simultaneous exclusion from key elements of firms' productive processes.