Regional innovation clusters and firm innovation performance: an interactionist approach

Abstract

ABSTRACT How is firm innovation affected by location in an innovation cluster? How does the interplay of firm and cluster characteristics matter? We examine these questions by conducting an empirical analysis of firm innovation performance in regional innovation clusters. Our theoretical framework is based on a synthesis of the literature on industrial clustering, regional agglomeration economies and social networks. We test the framework empirically through the analysis of data on patent citations from 578 firms located in 26 European regional clusters in the information technology industry over 10 years. We find that location in these clusters offers benefits and at the same time poses certain constraints. One of the central findings is that connectedness to highly performing firms (in horizontal relationships), research institutions and universities located in a cluster moderates the onset of diminishing returns between firm innovation performance and research and development effort, and helps firms cope with the negative effects of locating in clusters.