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Are Small Firms More Dependent on the Local Environment than Larger Firms? Evidence from Portuguese Manufacturing Firms

In: Entrepreneurship, Human Capital, and Regional Development

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  • Carlos Carreira

    (Universidade de Coimbra)

  • Luís Lopes

    (Universidade de Coimbra)

Abstract

This paper analyzes the impact on firm-level total factor productivity of both agglomeration economies and regional knowledge base, using an unbalanced panel of Portuguese manufacturing firms covering the period 1996–2004. Controlling for the endogeneity using the difference generalized method of moments estimator, we found that both localization and urbanization economies have a significant and positive effect on firm productivity, with the latter playing the most important role. Sectoral specialization economies are important for small and medium firms, but not for large firms. However, larger firms, therefore those with higher absorptive capacity, profit more from regional knowledge than smaller ones.

Suggested Citation

  • Carlos Carreira & Luís Lopes, 2015. "Are Small Firms More Dependent on the Local Environment than Larger Firms? Evidence from Portuguese Manufacturing Firms," International Studies in Entrepreneurship, in: Rui Baptista & João Leitão (ed.), Entrepreneurship, Human Capital, and Regional Development, edition 127, chapter 0, pages 263-280, Springer.
    • Handle: RePEc:spr:inschp:978-3-319-12871-9_13
    DOI: 10.1007/978-3-319-12871-9_13
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    Cited by:

    1. Carlos Carreira & Luís Lopes, 2016. "Collecting new pieces to the regional knowledge spillovers puzzle: high-tech versus low-tech industries," GEMF Working Papers 2016-06, GEMF, Faculty of Economics, University of Coimbra.
    2. Lara Abdel Fattah & Giuseppe Arcuri & Aziza Garsaa & Nadine Levratto, 2020. "Firm financial soundness and knowledge externalities: A comparative regional analysis," Papers in Regional Science, Wiley Blackwell, vol. 99(5), pages 1459-1486, October.
    3. Carlos Carreira & Luís Lopes, 2018. "Regional knowledge spillovers: a firm-based analysis of non-linear effects," Regional Studies, Taylor & Francis Journals, vol. 52(7), pages 948-958, July.
    4. Carlos Carreira & Luís Lopes, 2020. "How are the potential gains from economic activity transmitted to the labour factor: more employment or more wages? Evidence from the Portuguese context," Regional Science Policy & Practice, Wiley Blackwell, vol. 12(2), pages 319-348, April.
    5. Carlos Carreira & Luís Lopes, 2016. "Collecting new pieces to the regional knowledge spillovers puzzle: high-tech versus low-tech industries," GEMF Working Papers 2016-06, GEMF, Faculty of Economics, University of Coimbra.

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    More about this item

    Keywords

    Agglomeration economies; Regional knowledge; Total factor productivity (TFP); Small firms; Firm-level studies;
    All these keywords.

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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