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When interaction matters: the contingent effects of spatial knowledge spillovers and internal R&I on firm productivity

Timo Mitze () and Teemu Makkonen ()
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Teemu Makkonen: Karelian Institute, University of Eastern Finland

The Journal of Technology Transfer, 2020, vol. 45, issue 4, No 6, 1088-1120

Abstract: Abstract This work studies the linkages between spatially bound knowledge spillovers, internal research, and innovation (R&I) activities and firm productivity. Spillovers are modeled to emanate from intra- and extra-sectoral R&I activities in the firms’ regional business environments. We specifically test for non-linearities in the complex relationship between these internal and external knowledge sources and quantify their joint marginal effect on firm productivity. Our empirical results for a large panel of German manufacturing firms (1) underline the overall importance of knowledge spillovers in driving productivity and (2) point at distinct interactions between the included knowledge sources: First, we find that intra-sectoral knowledge spillovers only have a statistically significant effect on firm productivity when extra-sectoral spillovers are sufficiently large. Secondly, the link between knowledge spillovers and productivity varies with the level of the firms’ internal R&I activities.

Keywords: Firm productivity; Research; Innovation; Spatial knowledge spillovers; Interaction terms (search for similar items in EconPapers)
JEL-codes: C23 O10 O30 R11 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s10961-019-09729-w

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