Do firms in clusters innovate more?

Does Cluster Policy Trigger R&D Activity? – Evidence from German Biotech Contests

“…Jaffe et al (1993) find that the probability of an inventor to be cited in a patent application is larger if the actors are located in geographical proximity. Likewise, Baptista and Swann (1998), based on UK micro data, show that firms in sectors that show a geographical concentration indeed exhibit, on average, more intensive research activities. In a further study, Baptista (2000) shows that firms adopt technical innovations particularly in those regions which are characterized by a high share of firms having implemented the same innovations already.…”

Product Innovation and Renewal: Foreign Firms and Clusters in Belgium

“…Clusters provide a fertile ground for 8 learning, experimentation, and innovation due to short distances, short information time lags, and relatively inexpensive communication (VON ZEDTWITZ and HEIMANN, 2006). As such, firms have been found to be considerably more likely to innovate if sectors are clustered (BAPTISTA and SWANN, 1998). And, although firms in clusters densely populated by other innovative firms positively affect the likelihood of innovating, quite strong disadvantages seem to arise from the presence of non-innovative firms in a firm"s own industrial sector (BEAUDRY and BRESCHI, 2003).…”

“…Additionally, we include region dummies in (1) to control for the demand structure in the different regions and hence to ensure that the effect captured by the cluster membership dummy is not attributable to differences in regional demand patterns (BAPTISTA and SWANN, 1998).…”

“…First, while both BAPTISTA andSWANN (1998) andBEAUDRY andBRESCHI (2003) use patent data to measure innovative output, the present analysis uses two alternative measures of innovative output, specifically a binary variable indicating whether firms have introduced product innovations or not, and a censored variable measuring the percentage of newly innovated products in turnover. Using innovative output rather than patent data avoids potential misallocation issues 1 .…”

“…Second, BAPTISTA andSWANN (1998) andBEAUDRY andBRESCHI (2003) apply their analysis only to manufacturing firms. The richness of the database employed here allows us to present results for both manufacturing and service sectors.…”