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.

Innovation  catalysts: How multinationals reshape the global geography of innovation

By: R. Crescenzi, A. Dyèvre, F. Neffke. Utrecht University, Papers in Evolutionary Economic Geography, No. 20.16, 2020.

Abstract: “We study whether and when Research and Development (R&D) activities by foreign multinationals help in the formation and development of new innovation clusters. Combining information on nearly four decades worth of patents with socio-economic data for regions that cover virtually the entire globe, we use matched difference-in-differences estimation to show that R&D activities by foreign multinationals have a positive causal effect on local innovation rates. This effect is sizeable: foreign research activities help a region climb 14 percentiles in the global innovation ranks within five years. This effect materializes through a combination of knowledge spillovers to domestic firms and the attraction of new foreign firms to the region. However, not all multinationals generate equal benefits. In spite of their advanced technological capabilities, technology leaders generate fewer spillovers than technologically less advanced multinationals. A closer inspection reveals that technology leaders also engage in fewer technological alliances and exchange fewer workers in local labor markets abroad than less advanced firms. Moreover, technology leaders tend to set up their foreign R&D activities in regions with relatively low absorptive capacity. We attribute these differences to that fact that the trade-off between costs and benefits of local spillovers a multinational faces depends on the multinational’s technological sophistication. This illustrates the importance of understanding corporate strategy when analyzing innovation clusters.” [ABSTRACT FROM AUTHORS]

Does  Goliath help David? Anchor firms and startup clusters

By: R. R. Gupta. U.S. Census Bureau, The research program of the Center for Economic Studies (CES), CES 20-17, 2020.

Abstract: “This paper investigates the effects of a large firm’s geographical expansion (anchor firm) on local worker transitions into young firms through wage effects in industries economically proximate to the anchor firm. Using hand-collected data matched to administrative Census microdata, I exploit anchor firms’ site selection processes to employ a difference-in-differences approach to compare workers in winning counties to those in counterfactual counties. The arrival of an anchor firm induces worker reallocation towards young firms in industries linked through input-output channels by a magnitude of 120 new businesses that account for approximately 2,300 jobs. Consistent with the literature in personnel and organizational economics, incumbent firms experiencing the fastest wage growth due to these shocks shed mid-layer employees who select

into young firms within the county and in their own industry of experience. These effects are strongest in the most specialized and knowledge-intensive industries. Attracting an anchor firm to

a county appears to have limited spillover effects in overall employment that are mainly driven by

reorganization of incumbent firms in the anchor’s input-output industries that face rising labor

costs.” [ABSTRACT FROM AUTHOR]

Spatial  analysis of financial health of companies

By: I. Berková. University of South Bohemia, ECONOMICS WORKING PAPERS, Vol. 4, No. 2, ISSN: 1804-9516, 2020.

Abstract: “The aim of the paper was to describe the literature overview of companies’ location in the

context of the economy and the assessment of companies’ performance. Then there is the introduction of a new statistical methodology for the description of the location of companies because the location of companies is one of the most important factors which ensures the future successful development of a company. The methodology can be applied for the evaluation of companies’ location and could answer the question of where it is better to place a new company. To tackle the location of companies, the local population and the health of companies was taken into account. The methodology is based on a point process. Since the population is unevenly distributed and companies choose their locations according to the size of the local population, it was not possible to use homogeneous models and thus the local scaling principals were used for modeling the inhomogeneity. For the evaluation of the health of companies, Neumeiers’ indices were taken into account.” [ABSTRACT FROM AUTHOR]

The  geography of COVID-19 and the structure of local economies: the case of Italy

By: A. Ascani, A. Faggian, S. Montresor. Gran Sasso Science Institute. Discussion paper No. 2020-01, 2020.

Abstract: “The aim of this article is to analyse the sub-national spread of COVID-19 in Italy using an economic geography perspective. The striking spatial unevenness of COVID-19 suggests that the infection hits economic core locations harder, and this raises questions about whether, and how, the sub-national geography of the disease is connected to the local economic base. We provide preliminary evidence consistent with the possibility that the local specialisation in geographically concentrated economic activities acts as a vehicle of disease transmission, thus generating a core-periphery pattern in the spatiality of COVID-19, which might follow the lines of the local economic landscape and the tradability of its outputs.” [ABSTRACT FROM AUTHORS]

Innovating  in Krugman’s footsteps – Where and how innovation differs in Europe: Static  innovation indicators for identifying policy leverages

By: I. Rhoden. Leibniz Information Centre for Economics, 2020.

Abstract: “This paper introduces two indicators for innovation, showing the allocation of innovation and its inherent diversity. Both indicators can give insights for regional innovation policy conception. The first indicator measures the share of patents in research and development expenditure, proposing a locational innovation output indicator. It can show that innovation in Europe differs strongly among NUTS2-level regions, which points to regionally specific, place-based policies as a result of a strong dispersion in European innovation activity. The second measure, the innovation diversity indicator, shows the diversification of innovation in a region and is built upon Krugman’s locational Gini coefficients. Here, the share of patents belonging to a particular IPC class is related to the dispersion of all patents in a region. Possible implications for policy are the construction of place-based, technology-specific programs, on either national or subnational (NUTS2-) level, where each country or region has to be considered carefully. Analyses underline that innovation in Europe is a highly regionally and technically diversified concept.” [ABSTRACT FROM AUTHOR]

Concentration  and Agglomeration of IT Innovation and Entrepreneurship: Evidence from  Patenting

By: C. Forman, A. Goldfarb. NBER Working Paper Series, Working Paper No. 27338, 2020.

Abstract: “Information technology (IT) matters to prosperity. The top patenters are increasingly IT companies. We use data on US patents to document four trends in IT patenting. First, firm-level concentration in IT patenting is increasing over time. Second, geographic concentration in IT patenting is increasing over time. Third, most technology classes experienced a decline in new patenters from 1980 to 2000. This was not true of new IT patents. Since 2000, the trend in new IT patenters looks like other classes and is declining over time. Fourth, there is increased geographic concentration of new IT patenters. We do not identify the reasons behind these trends nor whether they are related to overall changes in industry concentration, agglomeration, or prosperity.” [ABSTRACT FROM AUTHORS]

Agglomeration  externalities of fast-growth firms

By: J. Du, E. Vanino. Regional Studies, DOI: 10.1080/00343404.2020.1760234, 2020.

Abstract: “Small groups of fast-growth firms contribute disproportionately to job creation, yet little is known about their broader impact on the economy. This paper provides the first evidence of the agglomeration externalities of fast-growth firms, examining their economic impact on non-fast-growth firms operating within the same region (NUTS-2) and industry (SIC2), and through backward and forward linkages. Using comprehensive firm-level data on UK firms between 1997 and 2013, the analysis shows robust evidence of positive spillovers of fast-growth firms on the labour productivity of non-fast-growth firms in the same industry and region. However, the externalities in relation to the employment growth of non-fast-growth firms are negative, suggesting labour poaching and local competition effects.” [ABSTRACT FROM AUTHORS]

Local  entrepreneurial ecosystems as configural narratives: A new way of seeing and  evaluating antecedents and outcomes

By: P. Muñoz, E. Kibler, V. Mandakovic, J. E. Amorós. Research Policy, DOI: https://doi.org/10.1016/j.respol.2020.104065, 2020.

Abstract: “This paper develops and applies a new evaluative approach to local entrepreneurial ecosystems, as configural narratives. We examine how configurations of local entrepreneurial ecosystem attributes, as evaluated by local experts, support or hinder the emergence of new and innovative firms. Drawing on sociology of place, we present a novel configurational comparative analysis of local experts' evaluation of their ecosystems in Chile. Our proposed approach to entrepreneurial ecosystems helps us uncover two counterintuitive findings and so elaborateon interferences that have not yet been addressed through conventional concepts, methods and data. First, we reveal three distinct ecosystem types explaining different local levels of new firm activity: Active self-propelled, Indulged and Passive self-absorbed. The internal composition of these types change when only innovative and high growth firms are taken into consideration. Second, we show why, when seen as configural narratives, ecosystem attributes that have been assumed necessary play only a peripheral role. Our study demonstrates a split picture against seemingly similar outcomes and homogenous local contexts, contributing to the advancement of entrepreneurial ecosystem theory, observation and assessment.” [ABSTRACT FROM AUTHORS]