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Desperately Seeking Spillovers?: Increasing Returns, Industrial Organization and the Location of New Entrants in Geographic and Technological Space

49 Pages Posted: 8 May 2006  

Aharonson Barak S.

Tel-Aviv University

Joel A. C. Baum

University of Toronto - Joseph L. Rotman School of Management

Maryann P. Feldman

University of North Carolina at Chapel Hill; University of North Carolina (UNC) at Chapel Hill - Department of Public Policy; Kenan Flagler Business School

Multiple version iconThere are 2 versions of this paper

Date Written: February 27, 2006

Abstract

Using detailed data on Canadian biotechnology firms during the 1990s, we explore the geographic scope of knowledge spillovers and the balance spillover-seeking and expropriation-avoidance in entrants' locations. Our findings indicate that knowledge spillovers are highly localized, with entrants attracted to incumbents' R&D employees and spending within 500 meters, but not further. We also find that two local contextual factors enhance the tendency toward spillover seeking. One is increasing returns to positive information externalities that accompany concentrations of technologically similar firms. The other is the entrepreneurial and open industrial organization that arises when incumbents with direct ties to universities concentrate geographically. Our findings provide empirical evidence of forces promoting geographically concentrated and technologically specialized industrial micro-clusters, as well as factors reinforcing the significance of co-location for the creation of new knowledge.

Keywords: Entrepreneurship, knowledge spillovers, location choice, industrial clustering, biotechnology

JEL Classification: M13, R12, L16

Suggested Citation

S., Aharonson Barak and Baum, Joel A. C. and Feldman, Maryann P., Desperately Seeking Spillovers?: Increasing Returns, Industrial Organization and the Location of New Entrants in Geographic and Technological Space (February 27, 2006). Available at SSRN: https://ssrn.com/abstract=899598 or http://dx.doi.org/10.2139/ssrn.899598

Aharonson Barak S.

Tel-Aviv University ( email )

Tel Aviv
Israel

Joel A.C. Baum (Contact Author)

University of Toronto - Joseph L. Rotman School of Management ( email )

University of Toronto
105 St. George Street
Toronto, ON, M5S 3E6
Canada
416-978-4914 (Phone)
416-978-4629 (Fax)

HOME PAGE: http://www.rotman.utoronto.ca/~baum

Maryann P. Feldman

University of North Carolina at Chapel Hill ( email )

CB 3435
University of North Carolina
Chapel Hill, NC 27599-3140
United States

HOME PAGE: http://maryannfeldman.web.unc.edu/

University of North Carolina (UNC) at Chapel Hill - Department of Public Policy ( email )

Abernathy Hall
Chapel Hill, NC 27599-3435
United States

Kenan Flagler Business School ( email )

Chapel Hill, NC
United States

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