Skip to main content
SpringerLink
Log in

External Effects of Metropolitan Innovation on Firm Survival: Non-Parametric Evidence from Computer and Electronic Product Manufacturing and Healthcare Services

  • Chapter
  • First Online:
Applied Regional Growth and Innovation Models

Part of the book series: Advances in Spatial Science ((ADVSPATIAL))

Abstract

In the last two decades, geography came into prominence as an important consideration in the study of knowledge accumulation, firm performance, and economic growth. The role of space as a determinant of economic outcomes comes primarily from the non-uniform distribution of human and social capital across territories. Accumulated knowledge, specific in each region, eventually should translate into productive applications and lead to dissimilar rates of economic growth (Ibrahim et al. 2009). The literature argues that knowledge, innovativeness, and entrepreneurship (factors that in the short-run are ‘attached’ to a region) play a definite role in economic outcomes.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 84.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 109.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    Abstracting from local knowledge spillovers, greater stock of knowledge in a region may contribute to a greater likelihood of exit via at least two other routes. The knowledge spillover theory of entrepreneurship postulates that more knowledge being produced (and unutilized) in a region should increase firm formation, thus increasing competition. At the same time, in the localities where more knowledge is generated, the incumbent firms are likely to be exposed to more business ideas. Firm owners might choose to sell off or to shut down their business in order to start something new that looks more promising.

  2. 2.

    A more detailed description of the data sources used is given in the next section.

  3. 3.

    The NETS Database includes records of all establishments (not firms or companies) reported by Dun & Bradstreet. It has relationship indicators, which identify a headquarter organization for each establishment. Only stand-alone establishments (DUNS Number, primary Database identifier, is the same in ID and HEADQUARTER fields of the NETS Database) are included in the estimation; therefore, the terms ‘establishment,’ ‘firm,’ and ‘company’ are used interchangeably.

  4. 4.

    The NETS Database indicates standalone establishments. The U.S. PTO database was used to determine if a firm in the sample had at least one successful application before year 2009. The Deal Pipeline, Alacra Store, and Wharton Research Data Services provided information on mergers and acquisitions.

  5. 5.

    We follow the November 2008 definition of MSAs by the U.S. Office of Management and Budget.

  6. 6.

    For the purposes of this study, each patent is attributed to a MSA on the basis of the inventor’s reported address. If inventors listed on a patent reside in different MSAs, corresponding share is assigned to each metropolitan area. The patent year is determined by the application date. Because of the processing and reporting delay, the data for the last several years is not quite complete. To mitigate this problem, we adjust the total patent counts for the years 2006, 2007, and 2008 by 5 %, 10 %, and 15 %, respectively, using the following formula:

    figure 0005

    where is the calculated total number of patents in MSA j applied for in year t. This number, standardized by population count in a given MSA, Patents, is used in estimation. is a patent count in MSA j reported by U.S. PTO for year t. is the average patent count in MSA j over years 1992–2005. t ∈ [2006, 2008]; y = 0.05 if t = 2006, y = 0.1 if t = 2007, y = 0.15 if t = 2008.

  7. 7.

    Calculating average patenting for each firm, as opposed to the patenting activity for each metropolitan area, ensures that the firm stays in the same group over time. If a firm does not move to a different MSA during the study period, the value of average patenting activity for a firm should be almost identical to the average patenting activity of the metropolitan area it is located in.

  8. 8.

    In the MSAs with low patenting activity, only one healthcare services firm exited during the observation period. This information is insufficient to estimate and to plot hazard over time.

References

  • Acs ZJ, Anselin L, Varga A (2002) Patents and innovation counts as measures of regional production of new knowledge. Res Policy 31:1069–1085

    Article  Google Scholar 

  • Acs ZJ, Armington C, Zhang T (2007) The determinants of new-firm survival across regional economies. Pap Reg Sci 86(3):367–391

    Article  Google Scholar 

  • Acs ZJ, Plummer L, Sutter R (2009) Penetrating the knowledge filter in “rust belt” economies. Ann Reg Sci 43(3):989–1012

    Article  Google Scholar 

  • Adams JD, Jaffe A (1996) Bounding the effects of R&D: an investigation using matched establishment-firm data. Rand J Econ 27(4):700–721

    Article  Google Scholar 

  • Agarwal R, Sarkar M, Echambadi R (2002) The conditioning effect of time on firm survival: an industry life cycle approach. Acad Manage J 45(5):971–994

    Article  Google Scholar 

  • Audretsch D (1995) Innovation, growth and survival. Int J Ind Organ 13:441–457

    Article  Google Scholar 

  • Bosma N, Stam E, Schutjens V (2011) Creative destruction and regional productivity growth: evidence from the Dutch manufacturing and services industries. Small Bus Econ 36(4):401–418

    Article  Google Scholar 

  • Bottazzi L, Peri G (2003) Innovation and spillovers in regions: evidence from European patent data. Eur Econ Rev 47(4):687–710

    Article  Google Scholar 

  • Breschi S, Lissoni F (2001) Knowledge spillovers and local innovation systems: a critical survey. Ind Corp Change 10(4):975–1005

    Article  Google Scholar 

  • Brixy U, Grotz R (2007) Regional patterns and determinants of birth and survival of new firms in Western Germany. Entrep Reg Dev: Int J 19(4):293–312

    Article  Google Scholar 

  • Broekel T, Brenner T (2011) Regional factors and innovativeness: an empirical analysis of four German industries. Ann Reg Sci 47(1):169–194

    Article  Google Scholar 

  • Buss TF, Lin X (1990) Business survival in rural America: a three state study. Growth Change 21(3):1–8

    Article  Google Scholar 

  • Cassia L, Colombelli A, Paleari S (2009) Firms’ growth: does the innovation system matter? Struct Change Econ Dyn 20(3):211–220

    Article  Google Scholar 

  • Cleves M, Gutierrez R, Gould W, Marchenko Y (2010) An introduction to survival analysis using Stata. Stata Press, College Station

    Google Scholar 

  • Elandt-Johnson R, Johnson N (1999) Survival models and data analysis, vol 74. Wiley, New York

    Google Scholar 

  • Fertala N (2008) The shadow of death: do regional differences matter for firm survival across native and immigrant entrepreneurs? Empirica 35:59–80

    Article  Google Scholar 

  • Feser EJ (2002) Tracing the sources of local external economies. Urban Stud 39(13):2485–2506

    Article  Google Scholar 

  • Fotopoulos G, Louri H (2000) Location and survival of new entry. Small Bus Econ 14:311–321

    Article  Google Scholar 

  • Fritsch M, Brixy U, Falck O (2006) The effect of industry, region, and time on new business survival – a multi-dimensional analysis. Rev Ind Organ 28:285–306

    Article  Google Scholar 

  • Glaeser EL, Kallal HD, Scheinkman JA, Shleifer A (2002) Growth in cities. J Polit Econ 100(1):125–152

    Google Scholar 

  • Globerman S, Shapiro D, Vining A (2005) Clusters and intercluster spillovers: their influence on the growth and survival of Canadian information technology firms. Ind Corp Change 14(1):27–60

    Article  Google Scholar 

  • Gordon I, McCann P (2000) Industrial clusters: complexes, agglomeration and/or social networks? Urban Stud 37(3):513–532

    Article  Google Scholar 

  • Griliches Z (1979) Issues in assessing the contribution of R&D to productivity growth. Bell J Econ 10:92–116

    Article  Google Scholar 

  • Griliches Z (1990) Patent statistics as economic indicators: a survey. J Econ Lit 28(4):1661–1707

    Google Scholar 

  • Headd B (2003) Redefining business success: distinguishing between closure and failure. Small Bus Econ 21:51–61

    Article  Google Scholar 

  • Henderson JV, Shalizi Z, Venables AJ (2001) Geography and development. J Econ Geogr 1(1):81–105

    Article  Google Scholar 

  • Ibrahim SE, Fallah MH, Reilly RR (2009) Localized sources of knowledge and the effect of knowledge spillovers: an empirical study of inventors in the telecommunications industry. J Econ Geogr 9:405–431

    Article  Google Scholar 

  • Knoben J, Oerlemans LAG (2006) Proximity and inter-organizational collaboration: a literature review. Int J Manag Rev 8(2):71–89

    Article  Google Scholar 

  • Koo J (2005) Technology spillovers, agglomeration, and regional economic development. J Plann Lit 20:99–115

    Article  Google Scholar 

  • Krugman P (1991) Geography and trade. MIT Press, Cambridge

    Google Scholar 

  • Lehto E (2007) Regional impact of research and development on productivity. Reg Stud 41(5):623–638

    Article  Google Scholar 

  • Littunen H (2000) Networks and local environmental characteristics in the survival of new firms. Small Bus Econ 15:59–71

    Article  Google Scholar 

  • Manjon-Antolın MC, Arauzo-Carod J-M (2008) Firm survival: methods and evidence. Empirica 35:1–24

    Article  Google Scholar 

  • Pakes A, Griliches Z (1980) Patents and R&D at the firm level: a first report. Econ Lett 5(4):377–381

    Article  Google Scholar 

  • Porter M (1990) The competitive advantage of nations. Free Press, New York

    Google Scholar 

  • Renski H (2009) New firm entry, survival, and growth in the United States: a comparison of urban, suburban, and rural areas. J Am Plann Assoc 75(1):60–77

    Article  Google Scholar 

  • Renski H (2011) External economies of localization, urbanization and industrial diversity and new firm survival. Pap Reg Sci 90(3):473–502

    Article  Google Scholar 

  • Rodriguez-Pose A, Comptour F (2012) Do clusters generate greater innovation and growth? An analysis of European regions. Prof Geogr 64(2):211–231

    Article  Google Scholar 

  • Rodriguez-Pose A, Crescenzi R (2008) Research and development, spillovers, innovation systems, and the genesis of regional growth in Europe. Reg Stud 42(1):51–67

    Article  Google Scholar 

  • Schmutzler A (1999) The new economic geography. J Econ Surv 13(4):355–379

    Article  Google Scholar 

  • Schumpeter J (1942) Capitalism, socialism and democracy. Harper and Row, New York

    Google Scholar 

  • Scott A (2006) Entrepreneurship, innovation and industrial development: geography and the creative field revisited. Small Bus Econ 26(1):1–24

    Article  Google Scholar 

  • Segarra A, Callejón M (2002) New firms’ survival and market turbulence: new evidence from Spain. Rev Ind Organ 20(1):1–14

    Article  Google Scholar 

  • Sorenson O, Audia P (2000) The social structure of entrepreneurial activity: geographic concentration of footwear production in the United States, 1940–1989. Am J Sociol 106(2):424–461

    Article  Google Scholar 

  • Stephan A (2011) Locational conditions and firm performance: introduction to the special issue. Ann Reg Sci 46(3):487–494

    Article  Google Scholar 

  • Stough R, Nijkamp P (2009) Knowledge spillovers, entrepreneurship and economic development. Ann Reg Sci 43(4):835–838

    Article  Google Scholar 

  • Strotmann H (2007) Entrepreneurial survival. Small Bus Econ 28(1):87–104

    Article  Google Scholar 

  • Stuart T, Sorenson O (2003) Geography of opportunity: spatial heterogeneity in founding rates and the performance of biotechnology firms. Res Policy 32(2):229–253

    Article  Google Scholar 

  • Tödtling F, Wansenböck H (2003) Regional differences in structural characteristics of start-ups. Entrep Reg Dev 15:351–370

    Article  Google Scholar 

  • Uyarra E (2010) What is evolutionary about ‘regional systems of innovation’? Implications for regional policy. J Evol Econ 20(1):115–137

    Article  Google Scholar 

  • Wang Z, Ma C, Weng G, Wang Y (2004) A study on temporal and regional process of knowledge spillover. Ann Reg Sci 38(4):595–606

    Article  Google Scholar 

  • Wennberg K, Lindqvist G (2010) The effect of clusters on the survival and performance of new firms. Small Bus Econ 34(4):221–241

    Article  Google Scholar 

  • Zachariadis M (2003) R&D, innovation, and technological progress: a test of the Schumpeterian framework without scale effects. Can J Econ 36(3):566–586

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. School of Public Policy, George Mason University, 3351 Fairfax Dr, Arlington, VA, 22201, USA

    Alexandra Tsvetkova

  2. Department of Geography and Earth Sciences, University of North Carolina – Charlotte, 9201 University City Boulevard, Charlotte, NC, 28223, USA

    Jean-Claude Thill & Deborah Strumsky

Authors
  1. Alexandra Tsvetkova
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Jean-Claude Thill
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Deborah Strumsky
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Alexandra Tsvetkova .

Editor information

Editors and Affiliations

  1. Department of Spatial Economics, VU University, Amsterdam, The Netherlands

    Karima Kourtit

  2. Department of Spatial Economics, VU University, Amsterdam, The Netherlands

    Peter Nijkamp

  3. Building and Planning Level 5 Architecture Building, University of Melbourne Faculty of Architecture,, Parkville, VIC, Australia

    Robert Stimson

Rights and permissions

Reprints and permissions

Copyright information

© 2014 Springer-Verlag Berlin Heidelberg

About this chapter

Cite this chapter

Tsvetkova, A., Thill, JC., Strumsky, D. (2014). External Effects of Metropolitan Innovation on Firm Survival: Non-Parametric Evidence from Computer and Electronic Product Manufacturing and Healthcare Services. In: Kourtit, K., Nijkamp, P., Stimson, R. (eds) Applied Regional Growth and Innovation Models. Advances in Spatial Science. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-37819-5_5

Download citation

  • DOI: https://doi.org/10.1007/978-3-642-37819-5_5

  • Published:

  • Publisher Name: Springer, Berlin, Heidelberg

  • Print ISBN: 978-3-642-37818-8

  • Online ISBN: 978-3-642-37819-5

  • eBook Packages: Business and EconomicsEconomics and Finance (R0)

Publish with us

Policies and ethics

Search

Navigation