On the Marshall - Jacobs Controversy It takes two to tango

Gerben van der Panne and Cees van Beers

No 06-23, DRUID Working Papers from DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies

Abstract: The literature is inconclusive as to whether Marshallian specialization or Jacobian diversification externalities favour regional innovativeness. The specialization argument poses that regional specialization towards a particular industry improves innovativeness in that industry. Regional specialization allows for knowledge to spill over among similar firms. By contrast, the diversification thesis asserts that knowledge spills over between firms in different industries, causing diversified production structures to be more innovative. Building on an original database, we address this controversy for the Netherlands. We thereby advance on the literature by providing a two-level approach, at the region’s and the firm’s level. At the regional level, we compare specialized with diversified regions on numbers of accommodated innovators. At the firm level, we establish causalities between externalities and degree of innovativeness. The results suggest Marshallian externalities: specialized regions accommodate increased numbers of innovating firms and, consistently, incumbent firms’ innovativeness increase with regional specialization. Once the product has been launched, innovators in diversified Jacobian regions prove more successful in commercial terms than innovators in specialized Marshallian regions.

Keywords: Industrial clusters; innovation; knowledge externalities (search for similar items in EconPapers)
JEL-codes: O18 O31 R10 (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-hpe, nep-ino, nep-knm and nep-ure
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Citations: View citations in EconPapers (39)

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