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Heterogeneity and geographical location in Italian Business Networks

Author

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  • Ceccarelli Valentina

    (Tuscia University)

  • Correani Luca

    (Tuscia University)

  • Morganti Patrizio

    (Tuscia University)

Abstract

Business network agreements (BNA) are an innovative policy tool that allow firms to cooperate on common projects by sharing skills and knowledge. BNA can be set up either by firms working in the same geographical area or by firms geographically distant among each other. Focusing on Italian networks, we conduct a cross-section empirical analysis to investigate the relationship between geographical distance and heterogeneity in firms’ business when forming an interfirm network. It emerges that the geographical agglomeration of network firms is significantly related to a lower value of the entropy index, though in this case the network tends to be composed by a small number of firms. In other words, firms can enjoy the positive externalities arising from cooperation when they are located near each other and carry out similar activities; at the same time, the drawbacks of competition are reduced by limiting the number of partners with whom they share their efforts. On the contrary, we observe more dispersed and big networks among heterogeneous firms.

Suggested Citation

  • Ceccarelli Valentina & Correani Luca & Morganti Patrizio, 2024. "Heterogeneity and geographical location in Italian Business Networks," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 51(4), pages 793-814, December.
    • Handle: RePEc:spr:epolin:v:51:y:2024:i:4:d:10.1007_s40812-024-00303-6
    DOI: 10.1007/s40812-024-00303-6
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    More about this item

    Keywords

    Firm networks; Entropy; Strategic location;
    All these keywords.

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy

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