Geographical Clustering and the Effectiveness of Public Innovation Programs

42 Pages Posted: 14 Dec 2016

See all articles by Dirk Crass

Dirk Crass

ZEW – Leibniz Centre for European Economic Research

Christian Rammer

ZEW – Leibniz Centre for European Economic Research - Industrial Economics and International Management Research

Birgit Aschhoff

ZEW – Leibniz Centre for European Economic Research

Date Written: December 13, 2016

Abstract

The paper analyzes how geographical clustering of beneficiaries might affect the effectiveness of public innovation support programs. The geographical proximity of firms operating in the same industry or field of technology is expected to facilitate innovation through knowledge spillovers and other localization advantages. Public innovation support programs may leverage these advantages by focusing on firms that operate in a cluster.

We investigate this link using data from a large German program that co-funds R&D projects of SMEs in key technology areas called ‘Innovative SMEs’. We employ three alternative cluster measures which capture industry, technology and knowledge dimensions of clusters. Regardless of the measure, firms located in a geographical cluster are more likely to participate in the program. Firms being part of a knowledge-based cluster significantly increases their chance of receiving public financial support. We find no effects, however, of geographical clustering on the program’s effectiveness in terms of input or output additionality.

JEL Classification: C35, H50, O31, O32, O38, R59

Suggested Citation

Crass, Dirk and Rammer, Christian and Aschhoff, Birgit, Geographical Clustering and the Effectiveness of Public Innovation Programs (December 13, 2016). ZEW - Centre for European Economic Research Discussion Paper No. 16-083, Available at SSRN: https://ssrn.com/abstract=2884692 or http://dx.doi.org/10.2139/ssrn.2884692

Dirk Crass

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Christian Rammer (Contact Author)

ZEW – Leibniz Centre for European Economic Research - Industrial Economics and International Management Research ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany

Birgit Aschhoff

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany
+49 621 1235 182 (Phone)
+49 621 1235 170 (Fax)

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