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

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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.

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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.

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Correspondence to Alexandra Tsvetkova .

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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

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

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