Local Knowledge Spillovers Research Articles

The rise (and fall) of tech clusters

Tech clusters play a growing role in knowledge-based economies by accommodating high-tech firms and providing an environment that fosters location-dependent knowledge spillovers and promote R&D investments by firms. Yet, not much is known about the economic conditions under which such entities may form in equilibrium without government interventions. This paper develops a spatial equilibrium model with a competitive final sector and a monopolistically competitive intermediate sector, which allows us to determine necessary and sufficient conditions for a tech cluster to emerge as an equilibrium outcome. We show that strongly localized knowledge spillovers, skilled labor abundance, and low commuting costs are key drivers for a tech cluster to form. With continual improvements in infrastructure and communication technology that lowers distance decay in knowledge spillover or coordination costs, tech clusters will eventually be fragmented.

Localized Knowledge Spillovers and Organizational Capabilities: Evidence from the Canadian Manufacturing Sector

Purpose - This study empirically investigates how the effects of localized knowledge spillovers on technology adoption are conditional on the organizational capabilities of potential adopters.
 Design/methodology - The empirical model utilized in this study examines how the presence of prior adopters of advanced manufacturing technologies affects a plant’s technology adoption decision differently based on its organizational capabilities, measured by plant size and plant status (single- plant firm vs. multi-plant firm). Moreover, this study investigates how the scope of knowledge spillovers from prior adopters, both in terms of geographical and functional proximities, differ for plants with different organizational capabilities.
 Findings - The main findings of this study are as follows: 1. Although plants with lower organizational capabilities are less likely to adopt advanced technologies, such plants receive greater marginal benefits from knowledge spillovers from prior adopters in their region. 2. Plants with greater organizational capabilities can benefit from knowledge spillovers from a wider set of prior adopters. In other words, while plants with lower organizational capabilities tend to benefit from knowledge spillovers from “similar” and “local” adopters, plants with greater organizational capabilities can also benefit from knowledge spillovers from “not-too-similar” or are geographically distant prior adopters.
 Originality/value - While existing studies mainly focus on the effects of the various kinds of regional agglomeration, few studies investigate localized knowledge spillovers in technology adoption. Moreover, no prior studies have explored how the effects of knowledge spillovers on technology adoption depend on a plant’s organizational capabilities and how the scope of knowledge spillovers differs for plants with different organizational capabilities. This study is the first to empirically investigate this topic.

Knowledge Spillover and Spatial Innovation Growth: Evidence from China’s Yangtze River Delta

This article explores the relationship between knowledge sources at different levels and corporate innovation from the perspective of urban cluster, with a focus on enterprises. This paper conducted an empirical analysis of 375 listed companies in 27 cities within the Yangtze River Delta urban cluster in China from 2009 to 2019. The findings showed that: (1) Local scientific knowledge spillovers, mediated by industry relevance, positively influence firms’ innovation performance. This study verifies how spatial knowledge is dimensionally reduced from scientific spillovers to industrial technological innovation. (2) Emerging industries acquire relevant scientific knowledge for transformation from a broader regional scope. Regional knowledge creation in the Yangtze River Delta urban cluster has stimulated industrial innovation across various sectors, thereby enhancing the overall innovation capacity and level of the urban cluster. (3) Regional diversity significantly affects the process of transforming knowledge into innovation. This paper supports the existence of a unified spatial innovation network among heterogeneous spatial economic entities and emphasizes the innovation synergy from lower to higher levels within heterogeneous hierarchical innovation networks. Developing urban agglomeration strategies that leverage the resource advantages of industrial clusters and adjust industrial layouts is an important approach to promote innovation and economic growth.

Lockdowns and Innovation: Evidence from the 1918 Flu Pandemic

Abstract Does social distancing harm innovation? We estimate the effect of non-pharmaceutical interventions (NPIs)—policies that restrict interactions in an attempt to slow the spread of disease—on local invention. We construct a panel of issued patents and NPIs adopted by 50 large US cities during the 1918 flu pandemic. Difference-in-differences estimates show that cities adopting longer NPIs did not experience a decline in patenting during the pandemic relative to short-NPI cities, and recorded higher patenting afterward. Rather than reduce local invention by restricting localized knowledge spillovers, NPIs adopted during the pandemic may have preserved other inventive factors.

Immigrant inventors and local income taxes: Evidence from Swiss municipalities

This paper studies the relationship between local personal income tax rates and the attractiveness of municipalities as residential locations for immigrant inventors in Switzerland. Exploiting sharp differences in top income tax rates across state borders, I find an elasticity of the probability that an inventor takes residence in a border municipality with respect to the top net-of-tax rate of around 3.2. Additional evidence suggests that inventors’ residential location choices are consequential for the localization of entrepreneurial activity and local knowledge spillovers.

Local knowledge spillovers and the effects of related and unrelated variety on the novelty of innovation

ABSTRACT Knowledge spillovers have been identified as a factor affecting the unequal distribution of innovation in space. In this paper we aim to understand how territorial factors shape the novelty degree of innovations. Thus, we perform an empirical analysis that relates territorial factors to innovative performance at the firm level. Our results show that local knowledge spillovers from research and development expenditures are positively associated with upper-level innovation, while local knowledge spillovers from total innovation expenditures are not related to the degree of novelty of innovation. Furthermore, the impacts on innovation are also moderated by related and unrelated varieties since firms in regions with higher regional-related variety are less likely to generate upper-level innovation.

Exploring Local Labor Markets and Knowledge Spillover from a Spatial Perspective

Relevance. Cities serve as vital hubs for socioeconomic activities, fostering convergence in local labor markets characterized by high productivity, premium wages, and knowledge spillover. Jakarta Metropolitan, as Indonesia's economic center, embodies these advantages, prompting the need for a spatial investigation of their regional association. Research Objective. This study examines the unique attributes of the labor market in the Jakarta Metropolitan Area. The analysis encompasses anomalies such as the impact of premium wages on local labor productivity and the influence of education levels, as a proxy for knowledge spillover, on urban labor productivity. Data and Methods. Utilizing microdata from Sakernas and macrodata from BPS for 2017-2019, this study offers a comprehensive analysis of the Jakarta Metropolitan Area. By synthesizing cross-level data, the intricate interplay between productivity, wages, and area size becomes evident, particularly the tendency for skilled individuals to gravitate toward larger urban centers. Employing spatial regression, the analysis takes into account local characteristics in regions. Results. Density and education have a positive correlation, while the number of holders of bachelor's degrees has a surprisingly negative impact on productivity. Notably, higher aggregate education levels enhance regional productivity throughout the Jakarta Metropolitan Area, except for highly educated individuals. The level of education influences the minimum wage in a region, driven by spatial disparities in the educational infrastructure and quality. The number of educated people also influences wages in and across regions, prompting migration to regions with higher salaries. Conclusions. By integrating microdata and macrodata and employing spatial regression techniques, this study shows the connection between education, productivity, and regional dynamics, particularly in the Jakarta Metropolitan Area. These findings challenge the assumption that possessing a high level of education guarantees higher productivity and remuneration, demonstrating the need for education reforms that align with labor market demands and bolster the economy.

Global–Local Knowledge Spillover Strategic Coupling Network: Biopharmaceutical Industry Study of GBA, China

Strategic coupling is a hot field in the research of global production networks. The existing literature mostly consists of studies from the perspective of countries, regions, and enterprises, and relatively lacks the content for describing global–local strategic coupling networks and their evolution path with industries as carriers. The GBA is a bridgehead for China to participate in the global production network. Based on the systematic construction of the strategic coupling network analysis framework of global–local knowledge spillovers, this paper, taking the biopharmaceutical industry of GBA as an example, depicts the evolution process of its coupling network nodes, structures, and networks from 1990 to 2019 by using system analysis, social network analysis, and other methods, and analyzes node centrality, network structure, coupling paths, and their influencing factors. We found that the strategic coupling of global–local knowledge spillover is typically a networked structure, with the network organization presenting a multi-element sub-system hierarchical state. The overall network structure, with knowledge spillover as the carrier, shows obvious phased differences, having gone through three path stages from exploratory to expanding to stable. The path selection shows a spatial progression and a temporal sequence. The main factors affecting the path selection of the coupling network are the bargaining power of regional knowledge, behavioral subjects’ will, and multi-dimensional proximity.

Green Entrepreneurship: Should Legislators Invest in the Formation of Sustainable Hubs?

This study explores which local factors affect the creation of sustainable or green startups in a geographical area. The analysis aims to help regional legislators get a more nuanced view of regional economic and sustainable policymaking and to promote a transition toward a greener economy. Building on knowledge spillover theory, results from 4301 companies across Europe show that the driving factors for the emergence of green startups go beyond funding opportunities. Knowledge exchange and industry networks are equally if not more important in attracting green entrepreneurs. Results also reveal that green startups are more likely than non-green startups to change their location. Of those who change their location, green founders prefer large cities and have a negative inclination to establish their companies in small cities. Companies in the sustainable information technology (IT) industry are less likely to change their location, whereas green manufacturing companies are more likely to change. In summation, results indicate that the location choices and resulting evolution of clusters for green startups are based on a number of variables, including local knowledge stock and spillovers, company density, availability of educated talent, and industry affiliations.

How Knowledge Services Clustered Firms Leverage Different Channels of Local Knowledge Spillovers for Service Innovation

ABSTRACTBuilt upon configuration theory, this study performs a Qualitative Comparative Analysis (QCA) to delineate alternative and sufficient configurations of local knowledge spillover (LKS) channels, that is, how informal interactions and spinoff, and absorptive capacity are combined to facilitate service innovation. Primary data was collected from the largest software outsourcing cluster in Vietnam in 2018, which provides a sample size of 42 firms. The findings imply that multiple configurations of different channels of LKS in conjunction with absorptive capacity can lead to service innovation. This study makes three important contributions. First, it contributes to the debate over the critical role of LKS and absorptive capacity in innovation by offering a more holistic, yet nuanced understanding of the causal mechanisms underlying service innovation. Second, this study sheds light on viable and equifinal pathways for enhancing innovation capabilities, therefore contributing to the literature on cluster upgrading and global service sourcing. Third, it provides some managerial implications for indigenous spinoff firms in developing countries seeking to innovate through the strategic use of LKS.

Migrant inventors as agents of technological change

How do regions enter new and distant technological fields? Who is triggering this process? This work addresses these compelling research questions by investigating the role of migrant inventors in the process of technological diversification. Immigrant inventors can indeed act as carriers of knowledge across borders and influence the direction of technological change. We test these latter propositions by using an original dataset of immigrant inventors in the context of European regions during the period 2003–201. Our findings show that: immigrant inventors generate positive local knowledge spillovers; they help their host regions to develop new technological specialisations; they trigger a process of unrelated diversification. Their contribution comes via two main mechanisms: immigrant inventors use their own personal knowledge (knowledge creation); they import knowledge from their home country to the host region (knowledge transfer). Their impact is maximised when their knowledge is not recombined with the local one (in mixed teams of inventors), but it is reused (in teams made by only migrant inventors). Our work contributes to the existing literature of regional diversification by providing fresh evidence of unrelated diversification for European regions and by identifying important agents of structural change. It also contributes to the literature of migration and innovation by adding fresh evidence on European regions and by unveiling some of the mechanisms of immigrants’ knowledge transmission.

Local knowledge spillovers and innovation persistence of firms

ABSTRACT Innovation activities of firms tend to be highly persistent. Yet, little is still known about potential spatial contingencies affecting the degree of persistence. This paper analyses the influence of local knowledge spillovers on firms’ persistence in innovation activities. Using a representative panel data set of firms in Germany from 2002 to 2016, complemented by detailed geographic information of patent activity over discrete distances to proxy local knowledge spillovers, we find that the local patenting activity positively moderates persistency in innovation activities. Estimations with different distance bands show that the strength of knowledge spillovers that contribute to innovation persistence attenuates with increasing distance and vanishes beyond 30 kilometres in manufacturing and beyond 20 kilometres in services.

A Rugged Land in a Flat World? The Localized Knowledge Spillovers in a Globalized Economy

A Rugged Land in a Flat World? The Localized Knowledge Spillovers in a Globalized Economy

Migrant Inventors as Agents of Technological Change

How do regions enter new and distant technological fields? Who is triggering this process? This work addresses these compelling research questions by investigating the role of migrant inventors in the process of technological diversification. Immigrant inventors can indeed act as carriers of knowledge across borders and influence the direction of technological change. We test these latter propositions by using an original dataset of immigrant inventors in the context of European regions during the period 2003-2011. Our findings show that: immigrant inventors generate positive local knowledge spillovers; they help their host regions to develop new technological specialisations; they trigger a process of unrelated diversification. Their contribution comes via two main mechanisms: immigrant inventors use their own personal knowledge (knowledge creation); they import knowledge from their home country to the host region (knowledge transfer). Their impact is maximised when their knowledge is not recombined with the local one (in mixed teams of inventors), but it is reused (in teams made by only migrant inventors). Our work contributes to the existing literature of regional diversification by providing fresh evidence of unrelated diversification for European regions and by identifying important agents of structural change. It also contributes to the literature of migration and innovation by adding fresh evidence on European regions and by unveiling some of the mechanisms of immigrants’ knowledge transmission.

Entrepreneurship in Cities

Impactful, growth-oriented entrepreneurship is a major research and policy focus. Building on arguments put forward by Jane Jacobs more than 50 years ago, we propose that local knowledge spillovers in a city are enhanced by human agency in that city (e.g. local psychological openness). This effect is critically amplified by the catalyst function of a favorable structural city environment that not only connects these agentic people (via urban density), but also facilitates the production and flow of new knowledge for these connected agentic people (via a diverse industry mix). This three-way interaction effect was confirmed in our empirical investigation of quality entrepreneurship across the MSAs (cities) in the US, using a large-scale dataset of the psychological profiles of millions of people. Local openness shows a robust positive effect on the level of quality entrepreneurship. This effect is further strengthened by a favorable structural city environment (i.e. high density and diversity) by up to 35%. Reviving Jacobs’ people focus, the results indicate that the best performing cities in terms of knowledge spillovers and economic performance are those that are not only home to, and attract, agentic people, but also empower these people by means of a physical and industrial city landscape that enables them to act in more innovative and entrepreneurial ways, as envisioned by Jacobs. We discuss the policy implications of our findings and an agenda for future research.

Do local start-ups and knowledge spillovers matter for firm-level R&D investment?

What happens to firm-level research and development (R&D) when urban locations have more knowledge spillovers and are more entrepreneurial? This article explores the potential tension between knowledge spillovers, start-ups and innovation effort in existing firms. The relationship is empirically tested using Swedish firm-level data and municipality-level data on start-ups. The results indicate that having more start-ups in urban municipalities is associated with lower firm-level R&D expenditure. However, this relationship is not linear, where the negative association between the level of new firm formation and firm-level R&D expenditure decreases with scale. This suggests that the relationship between local entrepreneurship and a business’ R&D decisions is conditioned by the extent of that entrepreneurship.

Do R&D investments in weak IPR countries destroy market value? The role of internal linkages

AbstractResearch SummaryThe growth of emerging economies has attracted R&D investments by multinational enterprises, but firms have struggled to protect their knowledge assets in these environments with weak intellectual property rights protection. Knowledge misappropriation may be reduced if firms use cross‐unit R&D teams to strengthen intra‐firm interdependencies and control. We examine the relationship between such internal linkage strategies, foreign R&D investments, and firm market valuation in a dynamic market valuation model for 117 leading multinational firms. While foreign R&D investments are positively associated with market value, IP risks in host countries reduce it. The latter effect disappears if firms have developed a pronounced internal linkage strategy in weak IP environments. Linkage strategy bears costs and, in the absence of IP risks, is negatively associated with market value.Managerial SummaryThe growing market potential of emerging economies has led to an increase in research & development (R&D) activities there by multinational firms. A known challenge to multinational R&D investors in these economies is the weak protection of intellectual property rights (IPR). Firms may seek to reduce the risks of local knowledge spillovers and IPR infringement by actively embedding internal linkages in the organization of R&D and relying on cross‐unit international R&D teams. We examine the consequences of such an internal linkage strategy for the performance effects of firms’ investments in weak IPR countries. Based on an analysis of 1763 cross‐border R&D investments by 117 leading multinational firms, we find that a firm's market value is negatively affected by new R&D investments in weak IPR countries, but that such a negative influence can indeed be mitigated if the firm's R&D organization embeds internal linkages. Consistent with this observation, we demonstrate that firms with an internal linkage strategy are able to limit local knowledge outflows in weak IPR environments. However, if an internal linkage strategy is applied in strong, rather than weak, IPR environments, it bears substantial costs and negatively affects performance.

한국특허 인용정보를 활용한 지식파급의 지역화 - 거리기반 접근

한국특허 인용정보를 활용한 지식파급의 지역화 - 거리기반 접근

Dinâmica territorial da inovação no Estado de São Paulo: uma análise a partir dos dados regionalizados da PINTEC

Resumo Este trabalho examina a geografia da inovação no estado de São Paulo. Seu objetivo é investigar se fatores territoriais, tais como gastos em P&D, transbordamentos de conhecimentos e aglomeração urbana, afetam a inovação no nível regional. Para isso, foram utilizados dados regionalizados da Pesquisa Industrial de Inovação Tecnológica (PINTEC/IBGE) sobre a inovação no nível das microrregiões do estado de São Paulo e adotado um modelo baseado na função de produção do conhecimento aplicado às regiões. Os resultados mostram que os esforços inovativos locais e os transbordamentos de conhecimentos são fatores territoriais que afetam a inovação nas regiões. Além disso, regiões de maior densidade urbana e com estrutura produtiva local mais diversificada apresentam maior crescimento da taxa de inovação. O trabalho apresenta novas evidências empíricas sobre o papel dos fatores locacionais no fomento à inovação no Brasil, por meio da utilização de medidas diretas de insumos inovativos, como gastos em P&D e de resultados da inovação medida pelas empresas inovativas.

Talent goes to global cities: The world network of scientists’ mobility

Global cities boast higher rates of innovation as measured through patent and scientific production. However, the source of the location advantage of innovation hubs is still debated in the literature, with arguments ranging from localized knowledge spillovers to network effects. Thanks to an extensive data set of individual scientist career paths, we shed new light on the role of scientist location choices in determining the superior innovative performance of global cities. We analyze the career paths of around two million researchers over a decade across more than two thousand cities around the globe. First, we show that scientists active in global cities are more productive in terms of citation weighted publications. We then show that this superior performance is in part driven by highly prolific scientists moving and remaining preferentially in global cities, i.e., central cities in the international scientist mobility network. The overall picture that emerges is that global cities are better positioned to attract and retain prolific scientists than more peripheral cities.