This monthly selection of articles has been carried out by Philippe Gugler and Damiano Lepori, the Center for Competitiveness, University of Fribourg. The entire selection, carried out since 2013, can be consulted on the academic articles page of our web.

Competitive industry clusters and transportation in Minnesota

By: L. W. Munnich, Jr. M. Iacono. Competitiveness Review: An International Business Journal, Vol. 26 Iss. 1, 2016.

Abstract: “This study seeks to advance the state of knowledge of the relationship between transportation and economic development by investigating how firms in competitive industry clusters use transportation networks and what role those networks play in the competitiveness of these clusters. The approach combines quantitative and qualitative techniques to geographically identify competitive industry clusters and to investigate the role of transportation. The U.S. Cluster Mapping tool is used to identify competitive clusters by employment location quotients in 25 Minnesota metropolitan and micropolitan regions. Twelve competitive clusters were selected for further study, and in-depth interviews and site visits were conducted with businesses in each cluster to explore the competitive importance of different modes of transportation. Minnesota’s economic competitiveness is dependent on a well-functioning transportation system in all modes—truck, air, rail, and water. Access to global markets requires rail and truck to reach coastal ports. Air transportation is critical for high-value, low-weight, time-sensitive products such as medical devices or Mayo lab testing samples. Air service is important for customers at MSP, St. Cloud, and Rochester, Duluth, as well as other Minnesota cities. Highway access and reliability is critical for key statewide clusters such as processed food and heavy machinery. Study limitations include the representativeness of company interviews in generalizing for a cluster and industry employment as a measure of competitiveness. These methods can yield valuable insights into how transportation functions as an input within competitive industry clusters and how it can inform economic development strategies tailored to certain locations and industries. This is a first-of-its kind study using industry clusters as a framework for examining the role that transportation plays in economic competitiveness.” [ABSTRACT FROM AUTHORS]

A proximity-based measure of industrial clustering

By: J. Ruan, X. Zhang. IFPRI Discussion Paper 01468, 2015.

Abstract: “An industrial cluster is a locality with a high concentration of firms in related businesses. Although relatedness and concentration are the two defining features of an industrial cluster, the commonly used measures of clustering often fail to simultaneously capture both dimensions. Based on the product space literature, we first compute the degree of relatedness based on the concept of industrial proximity. Next, we develop a clustering index that takes into account both proximity and concentration. Finally, we calculate this new proximity-based index using the 1995 China Industrial Census and the 2004 and 2008 China Economic Census. The new index predicts China’s top 100 industrial clusters much more accurately than existing cluster measures.” [ABSTRACT FROM AUTHORS]

Early stage cluster development: A manufacturers-led approach in the aircraft industry

By: H.-J. Steenhuis, D. Kiefer. Competitiveness Review: An International Business Journal, Vol. 26 Iss. 1, 2016.

Abstract: “The purpose of this study was to explore the early stage of development of a cluster. The literature on early stage of cluster development shows that there are often random effects such as an entrepreneur and spin-off companies and in this study a coordinated approach for cluster development is described. A single exploratory case study approach is followed. The aerospace cluster in the Spokane region, State of Washington, is described. Data from a variety of sources are triangulated to enhance the credibility of the case study findings. It was found that although there are many types of collaborations occurring in the region which involve policy and government organizations, a main driver of the early stage cluster development is manufacturers-led coordinating mechanism. Individual manufacturers are too small to be successful in the aerospace industry and they are collaborating to present a united ‘front’ to out-of-the-region customers. Once customers place an order, then within this coordinating mechanism the work is divided among different manufacturers. The research has two main limitations. First, it is a single case study and therefore the results may not be generalizable. Second, the cluster is in an early stage of development so it is not (yet) clear whether this manufacturers-led coordinated approach will have long-term success. The studies offer potential for cluster development that go beyond relying on a single entrepreneur or on mostly government or policy driven initiatives. Instead, this is an approach that can be used by industry to lift the overall competitiveness of their region. This study adds to the existing knowledge on clusters and cluster types. The companies involved are mainly small to medium sized companies but by coordinating their capabilities they acts as one unit to customers which are located outside the region. The identified cluster approach does not fit with the main types of clusters that have been identified in the literature. It is not driven by or achieved through advantages in innovation, not driven by vertical or horizontal supply chain competition and advantages, also not driven by a regional demand base but rather customers are located outside the region.” [ABSTRACT FROM AUTHORS]

Innovation and firm growth: Does firm age play a role?

By: A. Coad, A. Segarra, M. Teruel. Research Policy, Vol. 45, Iss. 2, 2016.

Abstract: “This paper explores the relationship between innovation and firm growth for firms of different ages. We hypothesize that young firms undertake riskier innovation activities which may have greater performance benefits (if successful), or greater losses (if unsuccessful). Using an extensive Spanish Community Innovation Survey sample for the period 2004–2012, we apply panel quantile regressions to study the effect of R&D activities on firm growth (i.e. sales growth, productivity growth and employment growth). Our results show that young firms face larger performance benefits from R&D at the upper quantiles of the growth rate distribution, but face larger decline at the lower quantiles. R&D investment by young firms therefore appears to significantly riskier than R&D investment by more mature firms, which suggests some policy implications.” [ABSTRACT FROM AUTHORS]

The Role of Clusters and Public Policy in New Regional Economic Path Development

By: B. T. Asheim, A. Isaksen, R. Martin, M. Trippl. Center for Innovation, Research and Competences in the Learning Economy, Lund University, No 2015/44, 2015.

Abstract:  “This chapter deals with the role of clusters and public policy in new regional economic path development. New path development is analysed from an institutional perspective by focussing on changes in the wider regional innovation system (RIS), including firms, universities and governmental agencies, and by placing emphasis on the role that public policy can play. We argue that new regional economic path development requires a broad-based policy approach that stimulates cross-fertilizing effects between different industrial activities within and beyond the region. While cluster policies are well suited to support the growth and sustainment of existing industries, policies for new path development should aim at regional diversification and variety creation, preferably based on existing strengths and expertise in the region. These ideas are central to the Constructing Regional Advantage (CRA) approach. Empirically, the chapter draws on case study research on two new regional economic growth paths in Sweden and Norway, namely the new media cluster in Southern Sweden and the Oslo Cancer cluster. While the first is an example of path renewal through combining knowledge bases, the latter is an example for new path creation based on scientific knowledge. The empirical analysis underlines the role that public policy can play in facilitating new regional economic path development.” [ABSTRACT FROM AUTHORS]

Do clusters follow the industry life cycle? Diversity of cluster evolution in old industrial regions

By: J. Valdaliso, A. Elola, S. Franco. Competitiveness Review: An International Business Journal, Vol. 26 Iss.1, 2016. 

Abstract: “This paper aims at examining whether in old industrial regions the trajectory of clusters follows that of their corresponding industry or deviates from it and which are the factors that account for cluster evolution. We deal with the issue of how established clusters renew or transform themselves in such regions and how they adapt to changes in their corresponding international industries. This research paper draws from in-depth case studies on six industrial clusters, takes a longitudinal perspective and employs a multi-level and qualitative analysis. Based on existing literature, the paper suggests and exploratory analytical framework with four alternative scenarios for cluster evolution and three broad factors: cluster knowledge base, social capital at cluster and region-level and public policies. Clusters do not always follow the life cycle of its dominant industry. The paper clearly shows a diversity of cluster evolution across clusters and even within clusters (at sub-cluster level). Our study suggests that cluster knowledge diversity and heterogeneity allow to broad en the scope of evolutionary trajectories available; and the same goes for social capital at cluster- and region-level. The main limitation of this paper lies in its qualitative approach that makes its conclusions more suggestive than conclusive. In any case, further research on other Basque clusters may corroborate or question its findings. The paper offers an empirical and longitudinal study on cluster evolution, very much needed to the ongoing theoretical discussion on this issue. So far, there are very few empirical studies on cluster evolution with this perspective. At the same time, it presents a theoretical framework to analyze diversity of cluster evolution in old industrial regions that builds on Menzel and Fornah (2010) model.” [ABSTRACT FROM AUTHORS]

Knowledge, Proximity and R&D Exodus

By: G. Livanis, A. Lamin. Research Policy, Vol. 45, Iss. 1, 2016.

Abstract: “We explore not only how technological leaders and laggards react to agglomeration, but within an agglomeration we look at how the relative presence of other leaders, laggards and foreign firms affects these firms. Existing literature argues that technological leaders experience net knowledge outflows and are therefore losers in agglomerations. However, we do not know if they avoid locations with laggards more so than locations with leaders or vice versa, thus we examine how the relative presence of each affects leaders’ location decisions. For technologically lagging firms, we argue they will prefer locations with leaders over locations with laggards. We further posit that an increasing presence of foreign firms will have a particularly detrimental effect on technologically leading domestic firms, as these lose out in the contest for talent. Contextualized in an emerging market with weak intellectual property rights protection, we examine whether these concerns about knowledge spillovers and competition for talent prompt firms to close their R&D facilities or remain open. Using 5798 observations of R&D laboratories in India during 2003–2011, we find that while technologically leading firms are more likely to close their R&D facilities as the presence of other domestic labs increases, laggards are less likely to do so. These findings suggest concerns over knowledge spillovers are present, especially on the part of technologically leading firms. Moreover, leaders are more concerned by the presence of other leaders. Technologically lagging firms, by contrast, are less likely to close R&D facilities in the face of these concerns and will prefer staying near leaders over laggards. Finally, we find evidence of foreign firms crowding out domestic technological leaders but not laggards in the competition for talent.” [ABSTRACT FROM AUTHORS]

The participation of new technology-based firms in EU-funded R&D partnerships: The role of venture capital

By: M. G. Colombo, D. D’Adda, L. H. Pirelli. Research Policy, Vol. 45, Iss. 2, 2016.

Abstract: “This paper investigates the participation of new technology-based firms (NTBFs) in EU-funded R&D partnerships. We examine whether venture capital (VC)-backed firms are more likely to enter these partnerships than their non VC-backed peers and the role of the ownership and governance of the VC investor. We resort to a mixed method approach. We use qualitative information collected through interviews with managers of NTBFs and VC firms to better illustrate our deductively derived theoretical hypotheses that are then tested through a large scale econometric analysis. The econometric analysis takes advantage of the VICO dataset, which includes longitudinal data on 8346 NTBFs from seven European countries observed from 1995 to 2008, out of which 758 were VC-backed. The econometric results show that VC backing has a strong positive impact on NTBFs’ participation in EU-funded R&D partnerships, but the magnitude of this effect rapidly decreases with NTBFs’ prior experience of this type of partnership. Moreover, the magnitude of the impact of VC backing considerably differs depending on the type of investor with bank and government VC exhibiting the strongest positive effects.” [ABSTRACT FROM AUTHORS]