This monthly selection of articles is been carried out by Philippe Gugler and Basile de Raemy, from 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.

Location, city connectivity and  innovation zones in China: a dynamic perspective of knowledge community

By: J. Du, C. Krusekopf. Competitiveness Review, DOI:  10.1108/CR-03-2022-0036, November 2022.

Abstract: “Purpose – This study aims to examine two innovation zones in China, including the Suzhou Industrial Park and Tianjin Eco-city, to gain a comprehensive understanding of city locations attributes and its relationship to inward foreign direct investment (FDI) from multinational enterprises (MNEs) in innovation zones embedded in nonhub cities in China. Design/methodology/approach – This research incorporates two site visits and in-depth interviews with 39 personnel working with innovation zones. Thematic analysis is used to analyze interview data and documents. Findings – The results highlight that cities can use innovation zones as a strategy to build high scale knowledge community precincts to connect MNEs and other global actors. As an important institutional feature of city locations, innovation zones increase within-city connectivity and connect cities in global networks resulting in cross-city connectivity to attract FDI from MNEs. From a dynamic knowledge community perspective, this research also compares active and passive approaches toward building knowledge communities and identifies several elements of knowledge communities within innovation zones in China. Research  limitations/implications – The research results could be further explored in other institutional and economic contexts, to understand the interplay of city locations, FDI and innovation zones, and the dynamics of building knowledge communities. Practical  implications – This research has several implications for policymakers and administrators who work with municipal economic development and the development and enhancement of innovation zones. It offers recommendations for MNEs to consider where to make foreign investments and the advantages innovation zones may offer to support FDI. Originality/value – This research contributes to the literature related to economic development and how nonhub cities can attract FDI and join global networks. It offers empirical insights drawn from two successful innovation zones located in nonhub cities in China.” [ABSTRACT FROM AUTHORS]

Geographic clusters. Regional productivity and resource  reallocation across firms: Evidence from China

By D. Guo, K. Jiang, C. Xu, X. Yang. Research Policy, DOI: 10.1016/j.respol.2022.104691, December 2022.

Abstract: “We link industrial clusters, regional productivity and resource reallocation efficiency with geographical and sectoral disaggregated data. Based on a county-industry level panel from 1998 to 2007 in China, we find that industrial clusters significantly increase local industries' productivity by lifting the average firm productivity and reallocating resources from less to more productive firms. Moreover, we find major mechanisms through which resource reallocation is improved within clusters: (i) clusters are associated with a higher firm turnover with increased entry and exit rates simultaneously; and (ii) within clusters' environment, the dispersion of individual firm's markup is significantly reduced, indicating intensified local competition within clusters. Such results suggest that industrial clusters in China help improve regional productivity and resource allocation efficiency with intensified competition and accelerated firm dynamics. The identification issues are carefully addressed by two-stage estimations with instrumental variables and other robustness checks.” [ABSTRACT FROM AUTHORS]

Start-ups’ use of knowledge  spillover for product innovation: the influence of entrepreneurial ecosystems  and virtual platforms

By: M. Cuvero, M. L. Granados, A. Pilkington, R. Evans. R&D Management, DOI: 10.1111/radm.12567, November 2022.

Abstract: “Entrepreneurial ecosystems have been explored widely in entrepreneurship, management and social sciences literature. The Knowledge Spillover Theory of Entrepreneurship (KSTE) aims to uncover the effects of information on start-ups co-located in diverse locations, such as urban areas, science and technology parks, incubators, and accelerator programs. Extant research has focused on how entrepreneurs launch start-ups and develop patents over a 5–10 years timespan from a regional perspective. However, studies into the development processes of start-ups and the creation of entrepreneurial ecosystems in physical and virtual environments in high-tech start-ups, are limited. As a result, this paper aims to identify the development processes undertaken by high-tech entrepreneurs at the individual level and evaluate the absorption and implementation of knowledge in physical and virtual clusters within entrepreneurial ecosystems. A multiple case study of 32 start-ups that have attended incubator and accelerator programs in London, United Kingdom, is presented. Semi-structured interviews were conducted with Chief Executive Officers (CEOs) and Founders of start-ups to propose the Model of Knowledge Spillovers and Entrepreneurial Ecosystems. The themes identified during interviews highlight the mechanisms employed by start-ups to capture tacit and explicit knowledge spillovers. Theoretically, the findings of this study contribute to the KSTE by questioning the flexibility of entrepreneurs to access knowledge without the limitation of geographical proximity to sources of knowledge. Practically, our findings provide entrepreneurs with proven mechanisms required to capture tacit knowledge spillovers within entrepreneurial ecosystems and use virtual platforms to obtain explicit knowledge spillovers towards product innovation.” [ABSTRACT FROM AUTHORS]

Location choices of Chinese greenfield investment across EU  regions: the role of industry and country-of-origin agglomerations

By: Y. Wang, A. Ascani, C. Castaldi. Regional Studies, DOI: 10.1080/00343404.2022.2142542, December 2022.

Abstract: “The presence of Chinese multinational enterprises (MNEs) in Europe is on the rise, yet they concentrate in specific regions. Traditional spatial explanations of this clustering refer to the co-location of foreign and local firms in the same or related sectors (‘industry agglomeration’). Nonetheless, Chinese investors may also favour locations with a presence of Chinese firms and ethnic communities (‘country-of-origin agglomeration’). We investigate the combined role of both agglomeration typologies by using data on 1307 Chinese investments in 176 NUTS-2 regions during the period 2009–19. While both agglomerations matter in general, we find a substitution effect of country-of-origin agglomeration offsetting the benefits of industry agglomeration.” [ABSTRACT FROM AUTHORS]

Agglomeration, knowledge spillovers, and corporate investment

By: W. Grieser, G. Maturana, I. Spyridopoulos, S. Truffa. Journal of Corporate Finance, DOI: 10.1016/j.jcorpfin.2022.102289, December 2022.

Abstract: “Agglomeration is positively correlated with productivity and exhibits substantial heterogeneity across industries. Yet, the connection between agglomeration and corporate investment, an important driver of production, remains relatively underexplored. We study this relation using counterfactuals that account for the empirical distribution of industry size and firm locations, and by employing network methods that exploit firm geographic location and patent citation connections. We find a strong positive relation between industry peers’ proximity, investment externalities, uncertainty, and knowledge capital. Collectively, our evidence supports the notion that knowledge spillovers generate positive investment externalities that drive firm location decisions and explain industry-level agglomeration patterns.” [ABSTRACT FROM AUTHORS]

Knowledge sourcing by multi-plant firms in Europe

By: A. Frigon, D. L. Rigby. European Planning Studies, DOI: 10.1080/09654313.2022.2156273, December 2022.

Abstract: “Research on geographies of knowledge sourcing examines the organizational structure of innovation activities within the firm, the mechanisms by which knowledge is extracted from various external sources and the geography of these different activities. We augment this literature by exploring knowledge sourcing within multi-plant firms operating in Europe. Analysis makes use of linked patent-firm data recording the location of knowledge production and its ownership. The results add value to existing research in three ways. First, the establishments of multi-plant firms are shown to produce different kinds of knowledge in different locations. Second, the patents generated within a firm’s establishments are linked to the knowledge stocks of the regions where they operate, supporting a vision of geographical knowledge sourcing. Third, the complexity of knowledge produced within firms is positively related to the number of plants in which they innovate.” [ABSTRACT FROM AUTHORS]

Regional expansion of the beef  industry in Brazil from the coast to the Amazon, 1966-2017

By: R. Vale, P. Vale, H. Gibbs, D. Pedron, J. Engelmann, R. Pereira, P. Barreto. Regional Studies, Regional Science, DOI: 10.1080/21681376.2022.2130088, November 2022.

Abstract: “A regional approach to the study of Brazil’s beef industry is increasingly relevant as deforestation takes centre stage in policy debates worldwide. To what extent has beef production expanded toward regions hosting sensitive ecosystems such as the Amazon? Important data limitations remain to answer this question, especially regarding slaughterhouses, fundamental to the beef supply chain. This paper addresses the data gap on slaughterhouse location and history and provides novel regional analysis. We map the beef industry’s evolution into Brazil’s interior over the last six decades and quantify changes in market concentration between 2006 and 2016. To accomplish this, we triangulated across fiscal and animal sanitation data sources to produce the first longitudinal dataset with information on the opening and closing dates, locations, and production volumes of 2602 slaughterhouses. We show the linear movement of slaughterhouses and cattle herds to the Amazon by tracking their geographical centres of gravity. We also show the clustering pattern of slaughterhouses. Until the 1960s, all the geographical clusters were located south of the capital, Brasília. By the early 2000s, clusters north of Brasília were almost as extensive. Finally, we assessed the degree of market power that the largest beef-processing companies possess. The results indicate that market concentration increased in regions of more recent settlement further away from the coast, and that it remained relatively stable in states near the coast (Minas Gerais, São Paulo). The results shed light on the relationship between displacement toward the Amazon and Cerrado regions and economic concentration.” [ABSTRACT FROM AUTHORS]

Stronger together: Country-of-origin  agglomeration and multinational enterprise location choice in an adverse  institutional environment

By: Y. Li, J. Li, P. Zhang, S. Gwon. Strategic Management Journal, DOI: 10.1002/smj.3471, November 2022.

Abstract: “Research Summary: Research suggests that multinational enterprises (MNEs) are attracted to locations with concentrated firms from the same home country to benefit from interactions with market forces, but it remains an open question whether such agglomeration facilitates MNEs' interactions with nonmarket actors such as the host government. We submit that since country-of-origin agglomeration can enable collective actions and create collective gains, colocation with compatriot firms will help MNEs navigate an adverse institutional environment. In line with this reasoning, we hypothesize that MNEs are more attracted to locations with country-of-origin agglomeration when MNEs face an exogenous shock that increases their regulatory burden in the host country. Our analysis offers corroborative evidence. The study adds to research on agglomeration, institutional environment, and location strategy. Managerial Summary: Why do multinational enterprises (MNEs) locate near compatriot firms in a foreign location? The commonly recognized benefits include resource access and knowledge spillover from interactions with market forces such as suppliers and customers. We submit that colocation with compatriot firms can also help MNEs navigate an adverse institutional environment by generating “stronger-together” benefits.” [ABSTRACT FROM AUTHORS]

Location of Hungarian microbreweries: an exploratory  analysis

By: Z. Bakucs, I. Fertö. Regional Studies, DOI: 10.1080/00343404.2022.2137295, November 2022.

Abstract: “Growth in the craft beer sector has been unevenly distributed over time and in terms of geographical area. While the spatial drivers of craft breweries in the United States are well documented, research on the situation in European countries is still limited. This paper investigates the locational determinants of the Hungarian craft brewing industry between 2005 and 2018 at the level of small regions. We employ negative binominal models to determine the relationship between the number of microbreweries and locational factors. We find that demand-side factors, including income, level of education, proportion of youth in a region and population density, positively affect the number of craft breweries. We emphasize that general local economic characteristics may be less important, whilst industry-specific local conditions (e.g., craft brewing traditions and market saturation) significantly impact the location choice of craft breweries. Our estimations highlight the role of transport costs in location decisions. Finally, we demonstrate the relevance of the availability of water, one of most important inputs in beer production.” [ABSTRACT FROM AUTHORS]

The role of community-private sector partnerships in the  diffusion of environmental innovation: renewable energy in Southern Israel

By: A. Eitan, I. Fischhendler, L. Herman, G. Rosen. Journal of Economic Geography, DOI: 10.1093/jeg/lbac030, November 2022.

Abstract: “Local communities have been identified as crucial actors in the diffusion of renewable energy, considered one of the most important eco-innovations of our time. Anecdotal evidence has indicated that local communities tend to play different roles in promoting eco-innovation, particularly renewable energy. However, what this heterogeneity looks like has not yet been quantitatively examined. Our study addresses this gap by systematically exploring the involvement of communities in the promotion of eco-innovation at the local level. We focus on their participation in renewable energy partnerships with the private sector in rural areas in Israel's southern periphery. Our study indicates that local communities play diverse roles in promoting renewable energy through varying involvement in finance, ownership, knowledge contribution, employment, energy consumption, and, most common according to our findings, the leasing of natural resources. The study further tracks the factors that shape this diverse involvement, including the community’s land size, population size, socio-economic ranking, and experience. Finally, the study unpacks the levels of risks and gains that local communities face when promoting renewable energy through their partnerships with the private sector. By confronting theory with quantitative research, this study sheds light on the diverse roles local communities play in the diffusion of eco-innovation, a prerequisite for renewable energy.” [ABSTRACT FROM AUTHORS]