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.

Connecting local and global technological knowledge sourcing

By: J. Cantwell, S. Zaman. Competitiveness Review, Vol. 28, Iss. 3, pp. 236-251, 2018.

Abstract: “Through increasing globalization, cities are becoming increasingly interconnected with each other. To remain competitive, it is necessary for cities to combine complementary non-local sources of knowledge with local knowledge sources. The authors contend that an increase in non-local knowledge sourcing tends to enhance local knowledge sourcing too. The purpose of this study is to examine the influence of international knowledge sources on the capacity to build upon local knowledge sources in a city region. In addition, the authors investigate whether information and communication technologies (ICT) knowledge sources have a bigger impact than do other fields of knowledge on local knowledge connectivity. Using the US Patent and Trademark Office data, the authors study knowledge sourcing trends for the years 1980-2016 across 33 global cities. Backward patent citations from these granted patents are used to identify the location of inventors of prior knowledge sources, and the geography of knowledge building connections over time is assessed by using the inventor locations of cited (source) and citing (recipient) patents. The authors show that international knowledge sourcing is highly connected with local knowledge sourcing. The authors also find that ICT have a significant effect on this relationship. However, there are significant differences across cities in the extent and nature of this relationship. This study contributes to the literature on the changing geography of knowledge connections. It provides a detailed picture of changing knowledge sourcing trends at a city region level, and it improves our understanding of the role played by a variety of knowledge connections in helping a city remain competitive.” [ABSTRACT FROM AUTHORS]

Global connectedness and local innovation in industrial clusters

By: E. Turkina, A. Van Assche. Journal of International Business Studies, Vol. 49, No. 6, pp. 706-728, 2018.

Abstract: “In today’s knowledge economy, clusters are a key driver of a country’s competitiveness. Yet a cluster’s technological base is now more than ever influenced by constituent firms’ actions to tap into distant knowledge sources. Drawing on a social network perspective, and distinguishing between horizontal versus vertical organization-based linkages, we explore the effects of a cluster’s connectedness to foreign locations on its innovation performance. We show that improvements in horizontal and vertical connectedness both stimulate a cluster’s innovation performance, but that their relative effects vary across cluster types. Innovation in knowledge-intensive clusters disproportionately benefits from enhancements in their constituent firms’ horizontal connectedness to foreign knowledge hotspots. Innovation in labor-intensive clusters mostly gains from stronger vertical connections by their firms to central value chain players abroad. We discuss the implications of our findings for research on global knowledge sourcing and cluster upgrading.” [ABSTRACT FROM AUTHORS]

International business, cities and competitiveness: recent trends and future challenges

By: S. Iammarino, P. McCann, R. Ortega-Argilés. Competitiveness Review, Vol. 28, Iss. 3, pp. 236-251, 2018.

Abstract: “This paper aims to explain how thinking regarding multinationals, competitiveness and location in cities has evolved over the past five decades and how our current understanding and thinking about future challenges is contingent on these previous shifts. The design of the paper is a conceptual piece linking different theoretical strands. Global cities are not always necessarily the key locations for future multinational investments. It depends on the activities taking place. Knowledge and technology and how they interact with the firm’s capabilities and objectives are crucial. The implications are that future multinational location choices will be driven by diversity, demography, protectionism, automation and industrial policy. This paper provides a roadmap for scholars in the international business and competitiveness fields to understand the current and future challenges facing multinationals and their location behavior.” [ABSTRACT FROM AUTHORS]

Global cities, ownership structures, and location choice: Foreign subsidiaries as bridgeheads

By: C. Geisler Asmussen, B. Nielsen, A. Goerzen, S. Tegtmeier. Competitiveness Review, Vol. 28, Iss. 3, pp. 252-276, 2018.

Abstract: “This paper aims to develop a more nuanced view of subnational location choice with a particular focus on global cities. It is argued that multinational firms may use global cities to establish bridgeheads- subsidiaries at intermediate levels of the ownership chain that enable further international as well as subnational expansion. Beyond those host country subsidiaries that are directly owned by a foreign multinational, the authors go deeper and focus specifically on the multi-tiered – “subsidiaries of subsidiaries” to examine how the geographic origins and destinations of these investments are associated with micro-location choices in a host country. The authors find that there are substantial differences between the types, roles, activities and geographic origins of the firms locating in different areas, and in the ownership structures spanning them. The authors propose that this has managerial and theoretical implications which may be understood based on an organizing framework describing a tradeoff between the pursuit of global connectivity and local density on the one hand and cost control on the other.” [ABSTRACT FROM AUTHORS]

Eco-innovation and competitiveness in the Barossa Valley wine region

By: V. Ratten. Competitiveness Review, Vol. 28, Iss. 3, pp. 318-331, 2018.

Abstract: “This paper aims to explore the role of eco-innovation in the competitiveness of the Barossa Valley wine region, which is one of the premier wine areas in Australia. A case study approach using qualitative in-depth semi-structured interviews was utilised to gather data from respondents in the wine regional cluster. The findings suggest that eco-innovation and regional wine clusters contribute to better international performance of wine firms. In addition, environmental issues are important for the wine industry because of the role they play in the global economy. This study highlights the growing importance of climate change and sustainability on the willingness of wine firms to be involved in eco-innovation. This is crucial for wine firms in the Barossa Valley being globally competitive leaders based on environmental innovations. Due to the large amount of natural resources that wine firms use, clusters can be used to encourage eco-innovation, which can facilitate further expansion into new international markets. This is important because of consumers increasing emphasis on environmentally friendly food products and the government priority given to eco-innovations. This paper provides insights into the eco-innovation process that can help wine firms, industry practitioners and regional planners develop better environmental strategies that lead to increased global competitiveness.” [ABSTRACT FROM AUTHOR]

The Nexus of Entrepreneurship and Regional Development

By: M. F. Fischer, P. Nijkamp. WU Vienna University of Economics and Business, Working Papers in Regional Science No. 2018/05, 2018.

Abstract: “This chapter offers a review on modern entrepreneurship analysis, against the background of regional development. Regions with an entrepreneurial culture tend to be forerunners in a competitive economic process. After a conceptual discussion on the importance and the measurement of entrepreneurship, the contribution discusses critical success factors and key determinants of entrepreneurship. Next, much focus is laid on the geography of entrepreneurship as well as on industrial agglomeration, while also due attention is paid to the relevance of networks for modern entrepreneurship. The chapter concludes with some retrospective and prospective remarks.” [ABSTRACT FROM AUTHORS]

Move a Little Closer? Information Sharing and the Spatial Clustering of Bank Branches

By: S. Qi, R. De Haas, S. Ongena, S. Straetman. Swiss Finance Institute, Research Paper Series N. 17-74, 2018.

Abstract: “We study how information sharing between banks influences the geographical clustering of branches. We construct a spatial oligopoly model with price competition that explains why bank branches cluster and how the introduction of information sharing impacts clustering. Dynamic data on 59,333 branches operated by 676 banks in 22 countries between 1995 and 2012 allow us to test the hypotheses derived from this model. Consistent with our model, we find that information sharing spurs banks to open branches in localities that are new to them but that are already relatively well served by other banks. Information sharing also allows firms to borrow from more distant banks.” [ABSTRACT FROM AUTHORS]

Determinants of FDI Attraction in the Manufacturing Sector in Mexico, 1999-2015

By: F. J. Fonseca, I. Llamosas-Rosas. Banco de México, Working Papers No. 2018-07, 2018.

Abstract: “Using an up-to-date database that improves the identification of the destination of the Foreign Direct Investment (FDI) among Mexican states and spatial panel econometric models that quantify the potential interactions and spillover effects, we analyze the main characteristics that help understand the regional distribution of manufacturing FDI in Mexico. Our main findings indicate the presence of a positive spatial relationship among states' FDI; for example, a higher investment creates a positive spillover effect on neighboring states' FDI and positive direct and indirect effects of human capital, agglomeration and states' fiscal margin. Based on the results of this research, key implications for public policy oriented to strengthen the FDI reside in increasing the average education level and improving tax revenue of Mexican states.” [ABSTRACT FROM AUTHORS]

Europe’s 2020 - innovation and creative capability of the Baltic Sea Region

J. Wedemeier, M. Kruse. Hamburg Institute of International Economics, HWWI Policy Paper No. 108, 2018.

Abstract: “The ongoing structural change towards the service and knowledge societies, innovations, and the increasing integration of markets will have considerable influence on the European Union, particularly on the Eastern members of EU. In March 2010, the European Commission released the Europe-2020 strategy, which shall push the EU to be the smartest and most competitive region in the world. Among the European Union members, the Baltic Sea countries are effective in bringing up innovative cluster solutions, cooperation between science and business. Innovations are crucial for further economic development and prosperity. However, the innovation headline indicators are ambitiously defined targets of the Europe-2020 strategy. The paper at hand analyses and highlights the innovation and creative capability within the Europe 2020 strategy framework. ” [ABSTRACT FROM AUTHORS]

The Regional Innovation System in China: Regional comparison of technology, venture financing, and human capital focusing on Shenzhen

By: K. Motohashi. The University of Tokyo, The Research Institute of Economy, Trade and Industry, RIETI Policy Discussion Paper Series No. 18-P-012, 2018.

Abstract: “Shenzhen has become a hot spot of innovation in China. In this paper, we characterize Shenzhen’s innovation by comparing it with that of Beijing and Shanghai using patent and venture investment data. First, the role of universities and public research institutions is small in Shenzhen’s innovation system as compared to Beijing and Shanghai. In contrast, private high-tech firms, such as Huawei, ZTE, and Tencent, are leading the innovation scene in Shenzhen. Second, we find that high-tech start-ups are geographically concentrated in the Nanshan district, particularly Yuehai Jiedao, where national-level high-tech zones are located. Recently, the number of start-ups has been increasing, and local, big firms, such as ZTE, are providing the human resources for such start-up firms. Third, inventor-disambiguated information based on patent data allows us to look at interorganizational talent movements. We find that such movements tend to occur within short distances, such as within the same district (e.g., Nanshan district). To sum up, Shenzhen has truly become a hot spot of high-tech entrepreneurship and innovation, but the dynamics are very much regionally bound. Therefore, it is important to become a local player in order to take advantage of innovation movements in Shenzhen by means of minority investment by corporate venture capital into local start-up firms. ” [ABSTRACT FROM AUTHOR]

Regional alignment and productivity growth

By: L. Dibiaggio, B. Montmartin, L. Nesta. GREDEG Working Paper No. 2018-18, 2018.

Abstract: “We propose the concept of regional alignment to suggest that synergistic relations among the scientific expertise, technological specialization and industry composition of regions affect regional productivity growth. In this paper, we test an extended conditional β-convergence model using data on 94 French departments (NUTS3) for the period 2001-2011. Our results indicate that a conditional β-convergence is associated with a σ-divergence process in the total factor productivity (TFP) growth of French regions. This process is strongly affected by the level of regional alignment. Indeed, we find evidence that regional alignment both directly and indirectly influences regional productivity growth. The indirect effect of regional alignment materializes through its leverage on R&D investment, which is one of the most important drivers of productivity growth. Moreover, using a heterogeneous coefficients model, we show that the positive effect of regional alignment on TFP growth increases with the industrial and technological diversity of regions, which suggests that regional alignment increases the value of Jacobs externalities more than Marshall-Arrow-Romer (MAR) externalities. ” [ABSTRACT FROM AUTHORS]

Hiring by start-ups and regional labor supply

By: L. Bellmann, U. Brixy. German Federal Employment Agency, Institute for Employment Research, AB Discussion Paper No. 18/2018.

Abstract: “Young firms find it difficult to attract (skilled) workers. Using linked employer-employee data for Germany we investigate how local labor market conditions affect the hiring success of young firms. In a first step, we estimate the probability of the founder be- coming an employer. In a second step we analyze how local conditions influence the probability of hiring skilled human capital. The results indicate a positive relationship between the local unemployment level and the hiring probability of young firms.” [ABSTRACT FROM AUTHORS]