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Business groups are sets of firms tied together by a centralized control mechanism, and they represent the most common form of business organization worldwide. Business groups have internal labor and capital markets that help them overcome institutional voids. Despite the abundant literature on the location of business groups across countries, little is known about the factors that explain the choice of a location of firms affiliated with (or controlled by) business groups within a country. Building on business group literature and agglomeration economics, we propose in this study that more firms are affiliated with business groups in regions with limited access to strategic resources, finance, and labor. Empirical results based on a large sample of privately held French firms support the idea that business group affiliation is more common in regions with limited access to the workforce. However, we could not find any evidence in support of the argument that the degree of regional financial development influences the likelihood of a business group affiliation. Overall, the study provides evidence that the way businesses are organized, for instance, as business groups, depends on the degree of resource scarcity of the locations in which firms are created. [ABSTRACT FROM AUTHOR]

In this manuscript, we relate regional structural composition—related and unrelated variety—to firm-level productivity in European regions, applying a Cobb–Douglas production function framework and using firm-, industry- and regional-level mixed hierarchical (multilevel) models. Our analyses indicate that regional-related variety has a positive impact on firm productivity in European regions, especially for firms in high-tech and medium-tech regions. These outcomes have implications for European policies on competitiveness as firms embedded in regions without these technological and institutional circumstances are systematically worse off in terms of productivity, and catching-up is not obvious for such regional economies. [ABSTRACT FROM AUTHOR]

In this article, the effectiveness of policy creating science parks is evaluated with respect to small- and medium-sized enterprises (SMEs). Science parks created to support innovation and regional growth often target productivity gains through agglomeration economies. However, spatial proximity of firms may also stimulate selection, less competitive firms being forced to exit, a cluster of high-productivity, surviving firms being observed at the regional level. Empirical studies also show that high- or low-productivity firms or both may spatially sort into a region. Using estimates of firm-level total factor productivity, the science park sorting and selection behavior of Taiwanese and South Korean SMEs is analyzed. The results indicate heterogeneity in location choice of SMEs arising from the economic environment of science parks. Overall, the empirical evidence suggests that science parks can generate real productivity improvements if the incentives are reinforced through national-level policies; otherwise, such incentives may end up protecting inefficient firms. [ABSTRACT FROM AUTHOR]

This study attempts to fill the literature gap regarding sustainable entrepreneurship viewed through geographical clustering lenses by examining how institutional factors such as local entrepreneurship and innovation climates, knowledge networks, policies, resource availability, and awareness affect entrepreneurial firm formation in the USA. Drawing from various theoretical views within the interdisciplinary literature on the topic, we develop cross-cluster hypotheses regarding firm formation and geographic clustering of clean-technology companies. We test them using a negative binomial random effects model in a panel sample of US clean-technology startup firms and find general support. [ABSTRACT FROM AUTHOR]

The purpose of this research is to study the role of spatial agglomeration economies as drivers of firm exit in France over the period 2009-2013 by focusing on two regional variables (local financial development and local specialization). The spatial autocorrelation detected in the data leads us to apply spatial econometric techniques (Spatial Dynamic Panel models and spatial GMM) that permit us to control the estimation of spatial spillover effects. Our results show that firm exit is significantly influenced by positive spatial autocorrelation. Therefore, locations with high exit rates tend to be surrounded by similar ones. However, this phenomenon differs according to the period. In addition, we find that greater local financial development reduces the exit rate in a department, whereas local specialization seems not to exert any effect. [ABSTRACT FROM AUTHOR]

Regional multi-pole growth is an important spatial form of regional economic organization pattern. We construct a model of regional multi-pole growth evolution to study its mechanism based on the assumption of heterogeneous space and inseparability of the economic subject. The study concludes that the evolution of regional multi-pole growth is affected by factors such as transportation costs, economies of scale, the crowding-out effect, and the factor endowments of superior location and inferior location. Based on the condition that the factor endowment of a location remains the same, with an increased economy of scale effect and a decline in the marginal production cost advantage, location will strengthen the agglomeration layout, which does not help form regional multi-pole growth patterns. With an increase of the crowding-out effect and a decline in the marginal production cost disadvantage, location will strengthen the dispersed layout, which fosters the formation of the regional multi-pole growth pattern. When transportation costs are high, a decline in such costs strengthens the links among locations, fostering the evolution of the regional spatial organization form to shift from dispersion to agglomeration. However, when transportation costs are somewhat reduced, their further reduction leads the regional spatial organization pattern into dispersion. Therefore, under certain conditions and with a decline in transportation costs, regional multi-pole growth weakens first and then strengthens. [ABSTRACT FROM AUTHOR]

The consequences of the crisis have been mainly analyzed at national/international levels, neglecting its differential effects on local areas. Notwithstanding the international character of the Great Recession, the different local structural features might have influenced the economic and social impact of the crisis, determining effects on the resilience and recovery chance. In this paper, we focus on the role of different territorial indicators by looking at how their relevance has changed during the recent crisis at provincial level. Our aim is threefold. First, we identify the strategic territorial elements which might be particularly relevant in ensuring a greater local absorption capacity. Second, we test whether the crisis has increased the role of specific local factors. In doing that, we use different measures of performance (GDP, exports and employment). Third, we control for macro-regional characteristics (i.e., North versus South) and local specific effects through a panel analysis of the dynamics of the performance variables in three sub-periods over the years 2000–2014. For that purpose, we use a multidimensional dataset for Italian provinces aiming at estimating the empirical relations between the set of territorial elements (i.e., the components of the so-called territorial capital) and the change in local performance. The results stress the role of some localized variables (i.e., human and cultural/natural/capital, agglomeration economies) over the whole period and the changing role of other territorial dimensions (material and non-material) according to the performance variable considered and during the crisis. [ABSTRACT FROM AUTHOR]

This paper analyses region-level technical efficiency in nine European countries over the 1995-2007 period. We propose the application of a nonparametric conditional frontier approach to account for the presence of heterogeneous conditions in the form of geographical externalities. Such environmental factors are beyond the control of regional authorities, but may affect the production function. Therefore, they need to be considered in the frontier estimation. Specifically, a spatial autoregressive term is included as an external conditioning factor in a robust order- m model. Thus we can test the hypothesis of non-separability (the external factor impacts both the input-output space and the distribution of efficiencies), demonstrating the existence of significant global interregional spillovers into the production process. Our findings show that geographical externalities affect both the frontier level and the probability of being more or less efficient. Specifically, the results support the fact that the spatial lag variable has an inverted U-shaped non-linear impact on the performance of regions. This finding can be interpreted as a differential effect of interregional spillovers depending on the size of the neighboring economies: positive externalities for small values, possibly related to agglomeration economies, and negative externalities for high values, indicating the possibility of production congestion. Additionally, evidence of the existence of a strong geographic pattern of European regional efficiency is reported and the levels of technical efficiency are acknowledged to have converged during the period under analysis. [ABSTRACT FROM AUTHOR]

The role of agglomeration economies in firm performance has been extensively studied. Existing studies, however, almost invariably focus on firm, industry or city characteristics to examine the performance-enhancing effects of agglomeration while overlooking the attributes of the top executives involved in shaping corporate practices. In this study, we change that focus by empirically examining the moderating role of two particular top manager characteristics (age and educational level) on the agglomeration economies-firm performance relationship. Using a top manager-firm matched panel data set, we find that top manager age rather than educational level helps firms to realize the potential benefits of agglomeration. This paper contributes to the agglomeration literature by stating the importance of individual top managers. [ABSTRACT FROM AUTHOR]

In this paper, we put forth the view that the potential for urbanization economies increases with interaction opportunities. From that premise follow three fundamental properties that an agglomeration index should possess: (1) to increase with the concentration of population and conform to the Pigou-Dalton transfer principle; (2) to increase with the absolute size of constituent population interaction zones; and (3) to be consistent in aggregation. Limiting our attention to pairwise interactions, and invoking the space-analytic foundations of local labor market area (LLMA) delineation, we develop an index of agglomeration based on the number of interaction opportunities per capita in a geographical area. This leads to Arriaga's mean city-population size, which is the mathematical expectation of the size of the LLMA in which a randomly chosen individual lives. The index has other important properties. It does not require an arbitrary population threshold to separate urban from non-urban areas. It is easily adapted to situations where an LLMA lies partly outside the geographical area for which agglomeration is measured. Finally, it can be satisfactorily approximated when data is truncated or aggregated into size-classes. We apply the index to the Spanish NUTS III regions, and evaluate its performance by examining its correlation with the location quotients of several knowledge intensive business services known to be highly sensitive to urbanization economies. The Arriaga index's correlations are clearly stronger than those of either the classical degree of urbanization or the Hirshman-Herfindahl concentration index. [ABSTRACT FROM AUTHOR]

We analyze the determinants and regional implications of internal migration flows across Danish municipalities in 2006-2012. Besides assessing the role of labor market and housing market factors in driving a region's net migration rate, we particularly focus on agglomeration factors identified by 'new' migration theories related to regional growth models and the new economic geography. The work contributes to the field in the following way: we extend the scarce literature on the different channels through which agglomeration economies act as an attractor for mobile labor. Moreover, we account for the role of space-time dynamic adjustment processes and simultaneity among migration and labor market variables and finally test for heterogeneity in the migration response to regional labor market disparities among low- and high-skilled migrants. Our results support the view that agglomeration economies are indeed key drivers of internal migration flows in Denmark. That is, while we obtain mixed evidence with regard to the role of traditional labor and housing market variables, most of the included proxies for agglomeration economies such as the region's population density, patent intensity, endowment with human capital as well as the region's employment share of knowledge-intensive services are positively correlated with the region's net in-migration rate. Regarding the regional implications of internal migration flows, the results hint at a process of cumulative causation for the time period of analysis running from agglomeration economies to the inflow of mobile labor and subsequent regional income development. [ABSTRACT FROM AUTHOR]

Although the theoretical framework on agglomeration externalities and the channels through which they influence the regional economy appear well established, the empirical evidence on their magnitude and impact has been rather ambiguous and inconclusive. Applying the concepts of related and unrelated variety to an interregional European dataset and using spatial panel analysis, this paper provides critical information on the type and functioning of agglomeration externalities in relation to regional heterogeneity in knowledge intensity and innovation. We demonstrate that modeling this regional heterogeneity in a spatial panel setting is a crucial condition for identifying the positive agglomeration effects of (un)related variety on regional growth. The outcomes have substantial implications for European regional policy: We argue that policies should be both conceptually enriched and more empirically informed. [ABSTRACT FROM AUTHOR]

The paper investigates the effect of spatial agglomeration on firm exit in a dynamic framework. Using a large dataset at the industry-province level for Italy (1998-2007), we estimate a spatial dynamic panel model via a GMM estimator and analyze the short-run impact of specialization and variety on firm exit. Specialization negatively affects firm exit rates in the short-run. The effect is particularly significant for low-tech firms. The impact of variety on firm mortality rates at the industry level is instead less clear, although still negative and significant for low-tech firms. [ABSTRACT FROM AUTHOR]

The theoretical and empirical innovation literature stresses the importance of regional factors and location conditions for location choice of firms and their innovation success. Innovation activities are not equally distributed in space because agglomeration effects and specific regional infrastructures may promote innovation activities. Concerning environmentally oriented innovations, the so-called eco-innovations, there is a widespread empirical literature analyzing their determinants but-because of the lack of adequate data-the inclusion of regional and location factors has been neglected. This paper tries to close this gap by using the establishment panel of the German Institute for Employment Research in Nuremberg combined with data at the regional level. To explore specific regional determinants of eco-innovations compared to other innovations including variables at the firm and the regional level, a two-level mixed effects logistic regression has been applied. The econometric results show that external knowledge sources such as the regional proximity to research centers and universities are more important for eco-innovations compared to other innovations. Eco-innovations seem to be a chance for under-developed regions looking for new business activities because they are more likely in regions characterized by high poverty rates. Furthermore, they are less dependent on urbanization advantages. The econometric results also show that eco-innovations need a high qualification of the personnel connected with further education measures within the firms. [ABSTRACT FROM AUTHOR]

We test whether new firms locate close to incumbent firms of the same industry. Tendencies to coagglomerate may explain the general wisdom that industry location is highly persistent over time. We perform separate analysis for East and West Germany which enables us to study two integrated areas that have been characterized by different conditions in the period under study. A comparison of actual coagglomeration patterns with counterfactual patterns reveals that about 40 percent of the West German industries show coagglomeration patterns. In East Germany, coagglomeration between new and incumbent firms is prevalent in only 5 percent of the industries. The considerably lower degree of coagglomeration in East Germany may be due to a higher level of spatial reallocation within industries during the transformation from a socialist regime to a market economy. [ABSTRACT FROM AUTHOR]

This study examines a two-region OLG mode, in which parents educate their children and choose their location freely; that is, the population distribution and each worker's productivity are determined endogenously. Owing to the setting of both agglomeration economies in wage and agglomeration diseconomies in utility and thereby different consumption patterns between regions, the present model represents a generation of inequality in educational level between regions even when households with equivalent education are given. Incentive for interregional segregation by educational level is also assumed and inequality is persistent in the result. This model demonstrates a development process starting with a low-developed initial state that represents population concentration accompanied with human capital growth and expansion of interregional inequalities. In addition, the effects of policies on long-run equilibria are addressed along with lock-in effects against these policies. [ABSTRACT FROM AUTHOR]

This article focuses on the impact of agglomeration and labour market factors on the location choice of MNEs in post-transition economies. We compare data from 33 regions in East Germany, the Czech Republic and Poland using a mixed logit model on a sample of 4,343 subsidiaries for the time period between 2000 and 2010. The results show that agglomeration advantages, such as sectoral specialization as well as a region's economic and technological performance prove to be some of the most important pull factors for FDI in post-transition regions. With respect to access to labour, the results suggest that FDI in post-transition regions is (no longer) only dominated by efficiency seeking behaviour, but also by access to well-qualified labour. [ABSTRACT FROM AUTHOR]

The historical evolution of four prominent industry clusters is compared: automobiles in Detroit, Michigan, tires in Akron, Ohio, semiconductors in Silicon Valley, California, and cotton garments in Dhaka, Bangladesh. Detailed data are collected concerning the intellectual and geographic origins of entrants into the clusters and other regions to probe the mechanisms underlying geographic clustering. The main mechanism at work in the four clusters involves employees leaving established firms to found their own firms or shape new entrants in their industry. Questions and policy implications related to the spinoff mechanism and the mobility of employees are discussed. [ABSTRACT FROM AUTHOR]