Dirk Dohse

Location: A Neglected Determinant of Firm Growth

This paper links the performance of new technology firms, measured in terms of employment growth, to geographic location. We introduce a model of firm growth that is specific to characteristics of the location as well as the firm and industry. The model is estimated using a unique data set identifying the growth performance of small technology-based firms in Germany. We find that firm performance, as measured by employment growth, does appear to be influenced by locational characteristics as well as characteristics specific to the firm and the industry. In particular, the empirical evidence suggests that being located in an agglomeration rich in knowledge resources is more conducive to firm growth than being located in a region that is less endowed with knowledge resources. These results suggest the economic value of location as a conduit for accessing external knowledge resources, which in turn, manifests itself in higher rates of growth.

Why mode and regional context matter for entrepreneurship education

This study examines how modes of entrepreneurship education (active, such as business simulations, versus reflective, such as theory lectures) – alone and in interaction with the universities’ regional context – affect students’ self-employment intentions. Results from a cross-level analysis show that active modes are, irrespective of the regional context, positively related with intentions and attitudes towards entrepreneurship, whereas the effect of reflective modes is contingent on the regional context. The findings have important implications for the ongoing discussion on the teachability of entrepreneurship, the design of educational programmes and for future research.

Recent Developments in the Research on Innovative Clusters

A large literature has developed on the geography of innovation. The most important finding from this literature is that the innovation process in general, as well as in particular industries, tends to be highly localized in what has been called “innovative clusters”. Moreover, the generation and development of innovative clusters ranks high on the political agenda of national, regional and even local governments around the world. Clusters of innovative activity are conceived of having an important impact not only on regional but also on national competitiveness. Therefore, governments continually search for the magical policy formula that will allow them to identify and nurture highgrowth regions and increase regional and national competitiveness. However, “. . . the real magic lies hidden outside of government, within the regional economies” (Rosenfeld, 1995, p. 11) The growing interest in innovative clusters reflects the increasing pressure on firms and locations to compete on innovation rather than on productivity alone. Clusters are important in this respect, since they allow firms to be more innovative (and productive) than they could be in isolation and because they reduce entry barriers for technologybased start-ups relative to other locations (Ketels, 2004). Of particular importance is that functioning clusters provide a high density of information flows, not simply vertically between consumers and suppliers but also horizontally between firms in the same industry and across industries. Young and small firms, especially in knowledge-intensive sectors, depend heavily on shared knowledge and social capital, i.e. “. . . they benefit from intellectual, technological and social ‘spillovers’ based on network interactions with other entrepreneurs, other scientists, financiers and people in the same business and with comparable mindsets to themselves” (Cooke, 2001, p. 280). Much has been learnt in recent years about the emergence and the structural characteristics of innovative clusters: we know relatively well why clusters exist, how they emerge and why they are successful in comparison to other locations; we know that clusters allow certain flexibility in firm structure and in the coordination of transactions and that they

Clusters and Competition as Engines of Innovation—An Introduction

Never since Marshall’s seminal work on locational choice and industrial districts has the cluster idea been given more prominence than in the last decade, prominence that was in particular triggered by Porter (1990) and Enright (1990). This is not too surprising since “... both, firms keen to improve their competitiveness, and governments keen to exploit new sources of economic growth, need to understand how innovation works in order to better stimulate it”(OECD 1999). And there are many indications that, increasingly, regional growth and innovation seem to emerge from innovative complexes of firms and organizations. It is argued that it is primarily within these geographically concentrated networks or “clusters”, that regional value-added and employment growth are realized. “Policymakers care about industrial clusters and their geographical location, since clusters are associated with rents. Membership of clusters and inter-firm networks is strongly believed to enhance the productivity, and competitive performance of firms” (Forslid and Midelfart Knarvik 2002:2). It is widely recognized now that prominent clusters like California’s Silicon Valley or Boston’s Route 128 are just two examples of many clusters around the world. Regional governments have tried to imitate successful formations of innovative clusters, thereby entering into heavy competition for mobile capital and highly skilled labor. At the center of scientific and political interest are new growth sectors such as information technology, biotechnology, environmental technology and multimedia. It is discussed whether the externalities inherent in these cluster-intensive industries are strong enough to bring (regional) economies onto a higher growth path and what institutions are needed to capture the growth opportunities that these industries provide.

Unemployment and new business formation ? new insights into a complex relationship

ABSTRACT The article analyses the interrelation between unemployment and new business formation using panel data for a large cross-section of countries. We find robust evidence for a positive influence of unemployment, domestic credit to the private sector and business-friendly regulation on new business formation. Our examination does, however, indicate no support for the view that new business formation significantly reduces national unemployment rates.

Die EWU - Beschäftigungsmotor oder Beschäftigungsrisiko?

Abstract The current paper deals with the labour market effects of European Monetary Union (EMU). We compare the EU-memberstates’ susceptibility to asymmetric shocks and their labour market flexibility under status quo conditions. The findings are related to the question which countries are - from a labour market point of view - fit for EMU and which countries should not join EMU from the start. We then consider different policy scenarios and develop an institutional framework suitable to make EMU a labour market success. Special emphasis is given to the optimal interplay between the relevant agents, i.e. the EU-Commission, national governments, employers and trade unions.

Fostering place-based innovation and internationalization – the new turn in German technology policy

ABSTRACT Since the mid-1990s German technology policy has experienced a paradigmatic shift from standard grant schemes towards a region-oriented and competition-based R&D policy. Currently, a new policy experiment, the InterClust contest, is under way, trying to simultaneously foster place-based innovation, R&D internationalization and the internationalization of innovative places. The current paper analyses the new policy, relating it to the recent literatures on heterogeneous firms and on cluster-life cycles, and presents results from a firm survey performed in 21 winner regions of InterClust. Findings show that the new funding scheme takes insights from recent theoretical developments into account and addresses important impediments to firm and cluster internationalization. Although it is too early for an overall assessment, it is argued that the long-term impact will critically depend on the inflow of heterogeneous knowledge and the strength of intra-regional mobilization effects.