Do firms in clusters invest in R&D more intensively? Theory and evidence from multi-country data

Chang-Yang Lee ()

Research Policy, 2009, vol. 38, issue 7, 1159-1171

Abstract: This study aims to evaluate whether firms located in clusters invest more intensively in research and development (R&D) than their non-clustered counterparts. Specifically, it proposes a model of firm R&D and tests empirically its implications for the effect of being located in a cluster on firm R&D intensity. The key ideas underlying the theory are as follows: (1) due either to natural excludability or to a high degree of stickiness of R&D-opportunity-bearing technological knowledge, geographical proximity per se is limited in the (automatic) spillover of knowledge with promising R&D opportunities to nearby firms; (2) geographical proximity may, however, help enhance the effectiveness or efficiency of knowledge exchange through market mechanisms (e.g., through contract R&D, R&D collaboration); (3) potential advantages (or disadvantages) in firm R&D of being located in a cluster also depend on the degree of asymmetry in technological competence among firms located in the cluster. The key ideas are supported by an empirical analysis of a multi-industry, multi-country data set compiled by the World Bank. In particular, the results show that being located in a cluster per se actually has a negative effect on firm R&D intensity, which is in contrast to the conventional wisdom of pure or automatic localized knowledge spillovers, as far as firm R&D intensity is concerned.

Keywords: R&D; intensity; Cluster; Geographical; proximity; Localized; knowledge; spillovers; Natural; excludability (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (18)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:respol:v:38:y:2009:i:7:p:1159-1171

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