This monthly selection of articles has been carried out by Philippe Gugler and Michael Keller, the Center for Competitiveness, University of Fribourg.

How Do Pre-existing R&D Activities in a Region Influence the Performance of Cluster Initiatives? The Case of French Competitiveness Clusters.

By : Emilie-Pauline Galliéa, Anna Glaser, Valérie Mérindol and Thierry Weil. European Planning Studies, Volume 21, Issue 10, Pages 1653-1675, October 2013.

Abstract: « This article explores the diversity of 66 French competitiveness clusters, which were all accredited in 2005 according to the same specifications, by characterizing the initial context in which they emerged and taking a close look at the link between this initial context and their current performance. Since French competitiveness cluster policy is based on state co-funding of R&D projects, we establish a typology based on a multiple component analysis and a hierarchical ascending classification of the R&D potential of the cluster's territory, the respective R&D efforts of companies and academic laboratories, the kinds of actors setting up the cluster and their pre-existing relationships. We then measure the differences among the five classes relating to their clusters' capacity to obtain state funding for their projects. Our results show that initial context can partially explain competitiveness clusters' performance. Competitiveness clusters in territories possessing significant R&D resources, and involving large companies capable of organizing projects, are the most efficient in obtaining state funding. In contrast, competitiveness clusters without prior cooperation experience perform poorly.» [ABSTRACT FROM AUTHORS]

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

By : Dirk Engel, Timo Mitze, Roberto Patuelli & Janina Reinkowski. European Planning Studies, Volume 21, Issue 11, Pages 1735-1759, November 2013.

Abstract: « This article evaluates the research and development (R&D) enhancing effects of two large public grant schemes for the German biotechnology industry (BioRegio and BioProfile). Both grant schemes are organized in the form of contents for cooperation and aimed at fostering the performance of innovative firms by their organization in research clusters. We apply a difference-in-differences estimation technique in a generalized linear model framework, which allows us to control for different initial regional conditions in R&D activity of the biotech sector. Our econometric findings support the view that winners generally outperform non-winning participants during the treatment period, thus indicating that exclusive funding as well as the stimulating effect of being a “winner” have positive effects on R&D activity in the short-term. Apart from this direct winner effect, for the non-winning participants no beneficial indirect effect due to a mobilization of local actors during the application phase could be detected. Finally, first attempts in estimating the long-term effects of the contests for cooperation approach on the winner regions' R&D activity in the post-treatment period show ambiguous results.» [ABSTRACT FROM AUTHORS]

Transnational Entrepreneurs and the Emergence of Clusters in Peripheral Regions. The Case of the Diamond Cutting Cluster in Gujarat (India).

By : Sebastian Henn. European Planning Studies, Volume 21, Issue 11, Pages 1779-1795, November 2013.

Abstract: « This paper argues that through their close-knit community networks transnational entrepreneurs can transfer focused knowledge about external markets and technologies over great geographical distances at low costs. When integrating this external knowledge with the knowledge flows between their peers at a given location, they can shape the preconditions for the emergence of clusters even at places that do not appear to have any industry-specific amenities at all. In general, such patterns of cluster evolution are of particular importance in labour-intensive manufacturing sectors in developing countries or emerging markets which are characterized by low labour costs and a lack of knowledge in production techniques. The empirical part of this paper focuses on the evolution of the diamond cutting cluster in the Indian state of Gujarat which only developed after World War II but today is the world's most important location for diamond manufacturing. The study is based on semi-structured interviews with 120 diamond firm representatives and workers in Mumbai, Surat, New York and Antwerp, as well as on an analysis of immigration files from the Antwerp city archives.» [ABSTRACT FROM AUTHOR]

Regional Competitiveness and Territorial Capital: A Conceptual Approach and Empirical Evidence from the European Union.

By : Roberto Camagni and Roberta Capello. Regional Studies, Volume 47, Issue 9, Pages 1383-1402, 2013.

Abstract : « Regional competitiveness and territorial capital: a conceptual approach and empirical evidence from the European Union, Regional Studies. Today, a selective pattern of regional growth is emerging to differentiate single regions' growth and determine a varied mosaic of development stories. This fact calls for more stringent and selective interpretations of the different regional assets defining growth strategies for each region, city or territory: in short, what is increasingly called ‘territorial capital’, and its efficient exploitation. The paper inspects in depth the concept of territorial capital and it conceptually highlights all elements that are embedded in this concept. The novelty of the empirical exercise lies in the treatment of the entire European territory at the same time.» [ABSTRACT FROM AUTHORS]

Evolution of Innovation Networks across Geographical and Organizational Boundaries: A Study of R&D Subsidiaries in the Bangalore IT Cluster.

By : Amit Karma, Florian Täube and Petra Sonderegger. European Management Review, Volume 10, Issue 3, November 2013.

Abstract: « In this paper, we investigate the evolution of multinational corporation (MNC) research and development (R&D) subsidiaries through evolution of innovation networks. Their evolution within and outside MNC R&D subsidiaries has not been investigated in the context of MNCs that source innovation from emerging economies. We do so, using two dimensions: geographical and organizational boundaries. In order to identify a pattern, we chose the information technology (IT) cluster in Bangalore, India, as the context for a qualitative study; for there are MNC subsidiaries that operate and innovate within and outside organizational boundaries, and have strong links with firms within and outside of Bangalore cluster. The globalized nature of the cluster helps us infer the evolution of innovation networks by taking a knowledge flow perspective. We identify four distinct phases based on where and how knowledge flows. We find that the innovation networks of these MNC subsidiaries in emerging economies first develop as hierarchical networks and then extend to the local markets. Within the first part, the networks start with a non-local nature (phase A) and get embedded into local networks (phase B and phase C), finally developing into non-local (phase D) market ties that enable MNC headquarters to source innovation from the host country. In an emerging economy context, clusters can serve as a springboard by providing a local environment that can help overcome institutional voids.» [ABSTRACT FROM AUTHOR]

Innovation in clusters: effects of absorptive capacity and environmental moderators.

By : Markus Kohlbacher, Doris Weitlaner, Arno Hollosi, Stefan Grünwald and Hans-Peter Grahsl. Competitiveness Review, Volume 23, Issue 3, Pages 199-217, 2013.

Abstract : « This paper aims to empirically explore the impact of absorptive capacity (AC) on explorative and exploitative innovation in business cluster settings, and the environment's moderating role on these relationships. Using a sample of Central European companies, the paper applies multivariate data analysis techniques to test the effect of AC on innovation performance and potential moderators, respectively. The empirical evidence indicates that AC impacts both explorative and exploitative innovation, and that the strength of the impact depends on the business clusters' level of dynamism and competitiveness. Environmental dynamism and competitiveness positively moderate the effect of AC on explorative innovation, and negatively moderate the effect of AC on exploitative innovation.» [ABSTRACT FROM AUTHORS]

Multinationals And Economic Geography : Location, Technology and Innovation.

By : Simona Iammarino and Philip McCann. Edward Elgar Publishing Limited, Cheltenham, UK, 2013.

Abstract: « After more than fifty years of systematic research on multinational enterprises (MNEs) what is apparent is that there is, as yet, no unified or dominant theory of the MNE. The objective of this book is to bring into focus one particular dimension of MNE behaviour and activity that has been relatively under-researched - namely the geography of the multinational enterprise - as understood through the lens of innovation and technological change. The authors clearly demonstrate that geography is becoming increasingly important for MNEs and, in turn, MNEs are becoming progressively more important for economic geography. The pivot on which this vital relationship turns is the creation, diffusion and management of new knowledge. This unique book will prove a fascinating read for academics, students and researchers across a broad range of areas including geography, economic geography, regional science, international business and management, innovation studies, economic development. Professionals such as corporate managers and policymakers in these fields would also find this book to be of great interest.» [ABSTRACT FROM AUTHORS]

Regional Competitiveness And Smart Specialization In Europe : Place-based Development in International Economic Networks.

By: Mark Thissen, Frank van Oort, Dario Diodato and Arjan Ruijs. Edward Elgar Publishing Limited, Cheltenham, UK, 2013.

Abstract: « Regions economically differ from each other - they compete in different products and geographical spaces, exhibit different strengths and weaknesses, and provide different possibilities for growth and development. What fosters growth in one region may hamper it in another. This highly original book presents an accessible methodology for identifying competitors and their particular circumstances in Europe, discusses regional competitiveness from a conceptual perspective, and explores both past and future regional development policies in Europe. The authors illustrate that for the concept of regional competition to be valued correctly, it should not solely be identified by the structural asset characteristics of cities and regions. They therefore present an unique applied analytic framework that takes into account economically valued network relations between places of (mobile) production factors and traded goods. Underpinned with thorough analysis and theory, the framework uses actual networks of competing and economically valued relations between regions to help developing smart specialization strategies that are central in the place-based policy initiatives of the new European cohesion policy. This path-breaking book presents a crucial contribution to the current academic discussion on regional competitiveness and the policy debate on smart specialization, place-based development and cohesion policy in the European Union. As such it will prove an invaluable read for academics, researchers, students and policymakers with an interest in economics - particularly applied regional economics, European studies, and regional studies.» [ABSTRACT FROM AUTHORS]

The New Geography of Innovation : Clusters, Competitiveness and Theory.

By : Xavier Tinguely. Palgrave Macmillan, November 2013.

Abstract : « It is now well established that innovation is the main engine of competitiveness and economic growth. However, in this modern fast-paced world, the inherent nature of the innovation process has changed. On the one hand, the rapid technological revolution or the emergence of new countries on the international economic stage has underlined a shift towards a globalization of the economy. On the other hand, another trend towards a spatial concentration of economic and innovative activity has been identified. Despite the widening of the geographical options offered by globalization, production and innovation still appear particularly concentrated in specific locations and clusters are the ultimate representation of this regionalization stream. The New Geography of Innovation assesses both the theoretically and empirically intertwined – but surprisingly still relatively unexplored – relationship between innovation, clusters and multinational enterprises in today's economy. Based on a unique database of patent applications at the European Patent Office, this book not only emphasizes the marked discrepancies in terms of inventive performance between Swiss regions but also identifies the country's main inventive clusters, offers new insights on the internationalization of the innovation process and provides exclusive evidence of the importance of foreign clusters as a source of new knowledge.» [ABSTRACT FROM AUTHOR]

People, Places and Public Policy: Some Simple Welfare Economics of Local Economic Development Programs.

By Patrick Kline and Enrico Moretti. NBER Working Paper Series. Working Paper 19659.

Abstract: Most countries exhibit large and persistent geographical differences in wages, income and unemployment rates. A growing class of "place based" policies attempt to address these differences through public investments and subsidies that target disadvantaged neighborhoods, cities or regions. Place based policies have the potential to profoundly affect the location of economic activity, along with the wages, employment, and industry mix of communities. These programs are widespread in the U.S. and throughout the world, but have only recently been studied closely by economists. We consider the following questions: Who benefits from place based interventions? Do the national benefits outweigh the costs? What sorts of interventions are most likely to be effective?To study these questions, we develop a simple spatial equilibrium model designed to characterize the welfare effects of place based policies on the local and the national economy. Using this model, we critically evaluate the economic rationales for place based policies and assess the latest evidence on their effects. We conclude with some lessons for policy and directions for future research.