Industrial clusters, flagship enterprises and regional innovation

Abstract

For a sample of all 88 counties in the State of Ohio over a 5-year period, this study documents the effect of flagship enterprises and concentrated industrial clusters on regional innovation. Consistent with the agglomeration arguments and the knowledge spillover theory of entrepreneurship, both appear to affect regional innovation positively. Additionally, regional educational attainment positively moderates the effect of industrial clusters on innovation. At the same time, flagship enterprises primarily affect regional innovation in regions with low education levels. Results are obtained with the help of conservative econometric techniques and are robust to the choice of alternative dependent variables and estimators. The findings have major policy implications and provide insights into alternative routes to encouraging regional innovation.

Flagship enterprises, entrepreneurial clusters, and business entry rates: insights from the knowledge spillover theory of entrepreneurship

“…The results are fully consistent with our conceptual reasoning and serve to underscore the critical role of decision makers in determining the fate of new discoveries. Prior literature has established that, by themselves, both flagship enterprises and clusters encourage local innovation (Anokhin et al 2019). This study demonstrates that flagship enterprises tend to share innovative opportunities with de novo startups whereas clusters tend to appropriate most opportunities of value created by their members.…”

“…Such exogenous shocks distort economic incentives for starting new companies and cause major change in entrepreneurial behaviour (Morgan et al 2020). The local/county level of analysis was deemed appropriate (Anokhin et al 2019;Armington and Acs 2002;Bosma, Stam, and Schutjens 2011;Feldman 2001;Fritsch and Schmude 2006). Moreover, the State of Ohio closely resembles the entire country on several key dimensions and offers sufficient variability in terms of rural, suburban, and urban counties, hence serving the requirement of generalizability.…”

“…Following emerging empirical literature (Anokhin et al 2019), we operationalized flagship enterprises as the number of the largest Ohio employers in the county. The Ohio Department of Development consistently tracks the 200 largest employers.…”

“…This approach, which is consistent with the Schumpeterian view (1942), postulates that large firms 1 are the creators of new knowledge leading to novel resource combinations. Recent empirical evidence confirms that a higher concentration of flagship enterprises in the region is positively associated with regional innovation (Anokhin et al 2019). Decision makers at those firms, who exercise full control over the new ideas generated through research, may choose to commercially pursue or ignore new resource combinations (Acs et al 2009).…”

“…Apart from flagship enterprises, entrepreneurial clusters are seen as a prominent source of regional innovation (Anokhin et al 2019). Interestingly, however, and in contrast to the largest firms, clusters are unlikely to serve as a source of knowledge that spills over to potential new entrants.…”