Company-College Co-Location: Do Universities Create Local Innovation Clusters?

69 Pages Posted: 26 Dec 2019

See all articles by Constantin Charles

Constantin Charles

University of Southern California - Marshall School of Business

Date Written: November 18, 2019

Abstract

I show that firms headquartered geographically close to a top-university engage in more research and development and produce more valuable patents. To address the endogeneity of university and firm location, I use 19th century as-good-as-random allocation of land-grant colleges. I find that firms located close to these colleges are more innovative. Moving from the first to the fifth quintile of the distance distribution is associated with a 0.75 percentage point reduction in research and development expenditure and a 1.72 percentage point reduction in the value of patents, representing 15% and 21% of the mean, respectively. My findings suggest that universities help firms innovate by supplying local labor markets with high human capital and by generating ideas for local knowledge spillovers.

Keywords: Innovation, R&D, Education, Local labor markets, Knowledge spillovers

JEL Classification: R3, I2, G3

Suggested Citation

Charles, Constantin, Company-College Co-Location: Do Universities Create Local Innovation Clusters? (November 18, 2019). Available at SSRN: https://ssrn.com/abstract=3499277 or http://dx.doi.org/10.2139/ssrn.3499277

Constantin Charles (Contact Author)

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA 90089
United States

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