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Desperately seeking spillovers? Increasing returns, industrial organization and the location of new entrants in geographic and technological space

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  • Barak S. Aharonson
  • Joel A. C. Baum
  • Maryann P. Feldman

Abstract

Using detailed data on Canadian biotechnology firms during the 1990s, we explore the geographic scope of knowledge spillovers and the balance spillover-seeking and expropriation-avoidance in entrants’ locations. Our findings indicate that knowledge spillovers are highly localized, with entrants attracted to incumbents’ R&D employees and spending within 500 m, but not further. We also find that two local contextual factors enhance the tendency toward spillover seeking. One is increasing returns to positive information externalities that accompany concentrations of technologically similar firms. The other is the entrepreneurial and open industrial organization that arises when incumbents with direct ties to universities concentrate geographically. Our findings provide empirical evidence of forces promoting geographically concentrated and technologically specialized industrial micro-clusters, as well as factors reinforcing the significance of co-location for the creation of new knowledge. Copyright 2007 , Oxford University Press.

Suggested Citation

  • Barak S. Aharonson & Joel A. C. Baum & Maryann P. Feldman, 2007. "Desperately seeking spillovers? Increasing returns, industrial organization and the location of new entrants in geographic and technological space ," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 16(1), pages 89-130, February.
    • Handle: RePEc:oup:indcch:v:16:y:2007:i:1:p:89-130
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    File URL: http://hdl.handle.net/10.1093/icc/dtl034
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    Cited by:

    1. Zhang, Gupeng & Wang, Xiao & Duan, Hongbo & Zheng, Leven J., 2021. "How do new entrants’ pre-entry technological backgrounds impact their cross-industry innovation performances? A retrospective study of the mobile phone vendors," Technovation, Elsevier, vol. 100(C).
    2. Mark J. Kutzbach, 2010. "Access to Workers or Employers? An Intra-Urban Analysis of Plant Location Decisions," Working Papers 10-21, Center for Economic Studies, U.S. Census Bureau, revised Sep 2012.
    3. Siddharth Vedula & Markus Fitza, 2019. "Regional Recipes: A Configurational Analysis of the Regional Entrepreneurial Ecosystem for U.S. Venture Capital-Backed Startups," Strategy Science, INFORMS, vol. 4(1), pages 4-24, March.
    4. Lawrence A. Plummer & Zoltán J. Ács, 2015. "Localized competition in the knowledge spillover theory of entrepreneurship," Chapters, in: Global Entrepreneurship, Institutions and Incentives, chapter 8, pages 145-160, Edward Elgar Publishing.
    5. Vestal, Alex & Danneels, Erwin, 2018. "Knowledge exchange in clusters: The contingent role of regional inventive concentration," Research Policy, Elsevier, vol. 47(10), pages 1887-1903.
    6. Getu Hailu & B. James Deaton, 2016. "Agglomeration Effects in Ontario’s Dairy Farming," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(4), pages 1055-1073.
    7. Kim, Jungho & Kollmann, Trevor & Palangkaraya, Alfons & Webster, Elizabeth, 2022. "Does local technological specialisation, diversity and dynamic competition enhance firm creation?," Research Policy, Elsevier, vol. 51(7).
    8. Barrenho, E & Smith, PC & Miraldo, M, 2013. "The determinants of attrition in drug development: a duration analysis," Working Papers 12204, Imperial College, London, Imperial College Business School.
    9. Nguyen, Huong, 2016. "Does Proximity to Foreign Invested Firms Stimulate Productivity Growth of Domestic Firms? Firm-level Evidence from Vietnam," Papers 1001, World Trade Institute.
    10. Thomas Hutzschenreuter & Philippa-Luisa Harhoff, 2020. "National capital city location and subsidiary portfolio expansion: The negative effect of geographic distance to the capital city at inception on the speed of subsequent investments," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(7), pages 1107-1132, September.
    11. Pinkse, Jonatan & Vernay, Anne-Lorène & D’Ippolito, Beatrice, 2018. "An organisational perspective on the cluster paradox: Exploring how members of a cluster manage the tension between continuity and renewal," Research Policy, Elsevier, vol. 47(3), pages 674-685.
    12. Silveli Cristo-Andrade & João J. Ferreira, 2020. "Knowledge spillovers and strategic entrepreneurship: what researches and approaches?," International Entrepreneurship and Management Journal, Springer, vol. 16(1), pages 263-286, March.
    13. Mercedes Delgado & Kimberly Zeuli, 2016. "Clusters and Regional Performance," Economic Development Quarterly, , vol. 30(2), pages 117-136, May.
    14. Koutroumpis, Pantelis & Leiponen, Aija & Thomas, Llewellyn D W, 2017. "Invention Machines: How Control Instruments and Information Technologies Drove Global Technologigal Progress over a Century of Invention," ETLA Working Papers 52, The Research Institute of the Finnish Economy.
    15. Aviad Pe'er & Ilan Vertinsky & Thomas Keil, 2016. "Growth and survival: The moderating effects of local agglomeration and local market structure," Strategic Management Journal, Wiley Blackwell, vol. 37(3), pages 541-564, March.
    16. Soares, Thiago J. & Torkomian, Ana L.V. & Nagano, Marcelo Seido, 2020. "University regulations, regional development and technology transfer: The case of Brazil," Technological Forecasting and Social Change, Elsevier, vol. 158(C).
    17. Naveen Kumar Jain & Tanvi Kothari & Vikas Kumar, 2016. "Location Choice Research: Proposing New Agenda," Management International Review, Springer, vol. 56(3), pages 303-324, June.
    18. Audia, Pino G. & Rider, Christopher I., 2010. "Close, but not the same: Locally headquartered organizations and agglomeration economies in a declining industry," Research Policy, Elsevier, vol. 39(3), pages 360-374, April.
    19. de Faria, Pedro & Sofka, Wolfgang, 2010. "Knowledge protection strategies of multinational firms--A cross-country comparison," Research Policy, Elsevier, vol. 39(7), pages 956-968, September.
    20. Mark J. Kutzbach, 2010. "Access to Workers or Employers? An Intra-Urban Analysis of Plant Location Decisions," Working Papers 10-21r, Center for Economic Studies, U.S. Census Bureau, revised Sep 2012.
    21. Daniel Tzabbar & Jeongsik (Jay) Lee & Donghwi (Josh) Seo, 2022. "Collaborative structure and post‐mobility knowledge spillovers: A dyadic approach," Strategic Management Journal, Wiley Blackwell, vol. 43(9), pages 1728-1762, September.

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