Agglomeration, Knowledge Spillovers, and Corporate Investment

33 Pages Posted: 13 Oct 2016 Last revised: 8 Aug 2022

See all articles by William Grieser

William Grieser

Texas Christian University

Gonzalo Maturana

Emory University - Goizueta Business School

Ioannis Spyridopoulos

American University, Kogod School of Business

Santiago Truffa

ESE Business School

Date Written: June 24, 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.

Keywords: Agglomeration, Industrial Clustering, Knowledge Spillovers, Innovation, R&D, Investment

JEL Classification: R1, R3, L1, O3

Suggested Citation

Grieser, William and Maturana, Gonzalo and Spyridopoulos, Ioannis and Truffa, Santiago, Agglomeration, Knowledge Spillovers, and Corporate Investment (June 24, 2022). Available at SSRN: https://ssrn.com/abstract=2851588 or http://dx.doi.org/10.2139/ssrn.2851588

William Grieser

Texas Christian University ( email )

Fort Worth, TX 76129
United States

Gonzalo Maturana (Contact Author)

Emory University - Goizueta Business School ( email )

1300 Clifton Road
Atlanta, GA 30322-2722
United States

HOME PAGE: http://www.gonzalomaturana.com/

Ioannis Spyridopoulos

American University, Kogod School of Business ( email )

4400 Massachusetts Ave, NW
Washington, DC 20016
United States

Santiago Truffa

ESE Business School ( email )

Av. La Plaza 1905
San Carlos de Apoquindo, Las Condes
Santiago
Chile

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