Why are Some Regions More Innovative than Others? The Role of Firm Size Diversity
University of Toronto - Rotman School of Management; National Bureau of Economic Research (NBER)
Iain M. Cockburn
Boston University School of Management; National Bureau of Economic Research (NBER)
University of Toronto - Strategic Management
Georgia Institute of Technology - Strategic Management Area
NBER Working Paper No. w17793
Large labs may spawn spin-outs caused by innovations deemed unrelated to the firm's overall business. Small labs generate demand for specialized services that lower entry costs for others. We develop a theoretical framework to study the interplay of these two localized externalities and their impact on regional innovation. We examine MSA-level patent data during the period 1975-2000 and find that innovation output is higher where large and small labs coexist. The finding is robust to across-region as well as within-region analysis, IV analysis, and the effect is stronger in certain subsamples consistent with our explanation but not the plausible alternatives.
Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
Number of Pages in PDF File: 53working papers series
Date posted: January 27, 2012
© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo2 in 0.359 seconds