INDUSTRIAL AGGLOMERATION AND FIRMS’PERFORMANCE: AN EXAMPLE OF TAIWANESE BIOTECHNOLOGY COMPANIES

Kuang-Chung Hsu (), Yungho Weng and Yii-Wen Lin
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Kuang-Chung Hsu: Department of Economics and International Business, University of Central Oklahoma
Yungho Weng: Department of Economics and International Business, University of Central Oklahoma
Yii-Wen Lin: Department of Economics and International Business, University of Central Oklahoma

Review of Economic and Business Studies, 2023, issue 31, 113-126

Abstract: This paper investigates how industrial agglomeration affects clustered firms’ strategies to receive better performance. We employed data from Taiwanese biotechnology firms for the years 2013–2020. Our data show that Taiwanese biotechnology firms located inside industrial parks had lower total costs, higher ratios of R&D cost shares to total costs, higher ratios of labor cost shares to total costs, and higher capital intensity than firms located outside of industrial parks. Our regression results confirmed the existence of the three benefits of agglomeration mentioned by Marshall (1920). Clustered firms should take advantage of such agglomeration by reducing the cost shares of R&D and labor and capital intensity to enable better performance.

Keywords: Geographic clusters; Knowledge spillover; Biotechnology; Firm performance; Agglomeration (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:aic:revebs:y:2023:j:31:hsuk

DOI: 10.47743/rebs-2023-1-0006

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