Industrial clusters, firm location and productivity – Some empirical evidence for Danish firms

Erik Strøjer Madsen (), Valdemar Smith () and Dilling-Hansen, Mogens ()
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Erik Strøjer Madsen: Department of Economics, Aarhus School of Business, Postal: Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark
Dilling-Hansen, Mogens: University of Aarhus, Postal: Economic Institute, Aarhus Universitet, Bartholins Alle, bygning 322, Universitetsparken, 8000 Århus C,

No 03-26, Working Papers from University of Aarhus, Aarhus School of Business, Department of Economics

Abstract: According to the economic literature, industrial clusters are groups of firms on the same

location composing a production system with spillovers that can be vertical and/or

horizontal. This paper focuses on horizontal clusters by exploring the spatial

distribution of industrial clusters in Denmark. The key issue in the theoretical part of the

paper is whether firms located in industrial clusters are more productive than their

counterparts located separately outside industrial agglomerations. Firms located in

clusters are potentially more productive than other firms because of the agglomeration

advantages of e.g. networks, knowledge spillovers, human capital mobility etc. In the

empirical part of the paper, industrial clusters are identified using municipalities as the

spatial dimension. In the first part of the analysis, clusters are identified at the NACE-2

digit industrial level. Next, using firm-level data for the 1990s the relative ‘cluster-firm’

productivity is estimated. The study finds evidence of a significantly higher productivity

in clusters. However, the magnitude of the cluster advantages varies a lot across

industries and is highest in textile.

Keywords: Industrial clusters; productivity (search for similar items in EconPapers)
JEL-codes: D24 L60 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec, nep-mic and nep-ure
Date: 2003-05-26
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