An analysis of geographical agglomeration and modularized industrial networks in a regional cluster: A case study at Yamagata prefecture in Japan

In a regional innovation system, a dense inter-organizational network within the region is recognized as a key factor in enhancing knowledge diffusion, regional learning, and effective resource transfers. Therefore, understanding the network structure and physical proximity of organizations is essential. In this paper, we investigated the industrial structure of Yamagata prefecture in Japan as a case study. Because Yamagata is a representative industrial region, the analysis can also provide an insight into other industrial regions. Initially, we investigated the geographical dispersion of firms and found them to be agglomerated along Route 13 and the Tohoku Shinkansen railroad, indicating that infrastructures for transportation still have a decisive role in terms of site location. Subsequently, we analyzed the modular structure of the inter-firm network. The results showed that hub firms construct a different type of network and play different roles within the inter-firm network, reflecting their strategic choice. The results also showed that there is a tendency for firms to transact with those in close proximity, and that firm location is also affected by the location of the hub firm in the module in addition to the infrastructures.     

RATIONAL MODEL OF DECISION MAKING, STRATEGY, AND FIRM PERFORMANCE

The present study tests the proposition that the normative rational model of decision making influences diversification strategy which, in turn, influences the firm’s performance. Questionnaires measuring rational decision making were mailed to 441 large U.S. manufacturing firms with a response rate of 23%. Compustat was used to measure Palepu’s entropy measures of diversification: total, related, and unrelated diversification. The results show a significant positive relationship between top management’s emphasis on rational decision making and diversification as well as a significant negative relationship between diversification and firm performance. Thus, the study shows strong support for the role of diversification strategy as a mediator between rational decision making and firm performance.     

FDI Location and Special Economic Zones in the Philippines

This paper analyzes the location behavior of foreign direct investments (FDIs) in the Philippines from 1987–1998 and points out the role special economic zones (SEZs) and infrastructure play in this location decision. The effects of real income, wages, skills, SEZs, highways and ports on the probability that a manufacturing FDI firm chooses a region are estimated using a negative binomial count model. Results yield expected signs and significant coefficients for all variables except for skills. Regressions were also run for 1987–1992 and 1993–1998 sub-periods to examine structural changes. The stark shift of investments from Metro Manila into other regions during the latter period shows some possible spillover effects of the SEZs as well as infrastructure development carried out in the previous transitional sub-period. Significant marginal effects are highest for paved highways and ports, which strongly indicate that improvement of these two regional factors increase the probability of FDI location.     

Spinoff dynamics beyond clusters: pre-entry experience and firm survival in peripheral regions

This paper investigates local spinoff dynamics in manufacturing industries in peripheral areas. It focuses on the question whether local inheritance of competences and routines from parent firm to spinoff is also relevant for firm survival in peripheral areas. The analysis is based on a unique data-set, tracking all manufacturing firms at five observation points during the time span of 1980–2004 in two case study regions in Switzerland. The results show that the local inheritance of capabilities gives spinoffs a competitive advantage in peripheral regions as well. Further, the findings suggest that spinoff dynamics differ between different types of peripheral regions, depending on their varying local economic conditions. Finally, spinoff dynamics in the periphery might be characterized by a stronger hostility of larger parent firms towards spinoffs. This research adds a distinct peripheral perspective to the entrepreneurial heritage literature and advocates for a more nuanced discussion on spinoff dynamics in varying geographical settings.     

Monopsony and the production-location decision of the firm

This paper incorporates monopsony power in one of the input markets within the context of the Weber-Moses triangular framework and examines the effect of an increase in monopsony power on the production-location decision of the firm. In particular, this paper shows that the optimum location of the firm is independent of monopsony power if the production funstion is homogeneous of degree one. However, if the production function is not homogeneous of degree one, the firm possessing monopsony power will have an incentive to move its location away from the monopsonized input market towards other markets under certain reasonable assumptions. Finally, some important policy implications are generated from the analysis.     

ENTREPRENEURSHIP AND THE SPATIAL CONTEXT: EVIDENCE ON THE LOCATION OF FIRM BIRTHS IN GREECE

This paper analyses the effect of the spatial context upon entrepreneurship in Greek regions. Cross‐sectional data referring to 4151 births at NUTS III level (prefecture) are used for firm births in four industries, namely manufacturing, commerce, services, and tourism. The formulated hypotheses are in regard to the effect of agglomeration economies, defined here as urbanization and localization economies, and other factors that typically affect the location of start‐ups. Results indicate that strong localization economies exist (both of the Marshallian and the Jacobian type) while, in addition, the spatial context of entrepreneurship affects different industries in different ways.     

Scientific research,firm heterogeneity,and foreign R&D locations of multinational firms

We examine the influence of host countries’ scientific research strengths on global R&D location choices by multinational firms. In an analysis of 277 new R&D activities identified for 175 firms in 40 host countries and 30 technology fields, we find that the strength of relevant university research positively affects the likelihood that host countries attract foreign R&D. When allowing for firm heterogeneity, university scientific research appears only a significant factor for firms with a strong science orientation in their R&D activities. Host countries’ corporate scientific research has no systematic influence on R&D location choices. Empirical results are replicated in an analysis at the regional level covering regions in Europe, the United States, and Japan.     

The spatial dynamics of new firm births during an economic crisis: the case of Great Britain, 2004–2012

Abstract

Spatial variations in entrepreneurial activity have been shown to be a time persistent phenomenon in many countries. This paper analyses how these spatial variations have been affected by the recent financial crisis within the context of theories of regional resilience and adaptability. The analysis applies Exploratory Spatial Data Analysis techniques to data on firm births across Local Authority Districts of Great Britain during the period 2004–2012. The results demonstrate that, whilst the overall shape of the spatial distribution of firm births remained persistent, there is evidence of an increase in regional inequality. This is primarily associated with a divergence between London and the rest of the distribution. London, together with part of its surrounding area, appears to constitute a resilient entrepreneurial regime that has generated a dynamic, adaptive response to the crisis with high rates of new firm formation in contrast to other regions which have remained locked into lower rates of entrepreneurship. This supports the view that regional entrepreneurship is a path dependent process: entrepreneurial regions are more adaptable to the effects of an exogenous shock than less entrepreneurial regions. Accordingly, entrepreneurship is a critical factor influencing the resilience of regions in responding to an economic crisis.     

Through the Looking‐Glass: The Impact of Regional Institutional Logics and Knowledge Pool Characteristics on Opportunity Recognition and Market Entry

This study investigates how regional variations in institutions and knowledge pools impact new firm entry into emerging industry sectors. Using the cleantech industry sector as a research context, we hypothesize and find that supportive regional institutional logics – shared meaning systems in a community that confer legitimacy upon particular goals and practices – generate cognitive schemas (mental models) that facilitate opportunity recognition and increase new firm entry rates. Drawing from research on socially situated cognition, we demonstrate that supportive institutional logics have a greater impact on new firm entry when a regional knowledge pool is larger, but a reduced impact on new firm entry when the knowledge pool is more specialized. These findings integrate previously distinct perspectives from institutional theory and knowledge economics, while contributing to research on how new industry sectors emerge.     

Green technology innovation: Anatomy of exploration processes from a learning perspective

This paper examines how established firms use their core competences to diversify their business by exploring and ultimately developing green technologies. In contrast to start‐ups dedicated to a green mission, diversifying into green markets by developing new products based on existing core competences has proven to be challenging. This is because the exploration processes to find a match between green technology opportunities and internal competences is complex and new to most established firms. This paper gains insights into exploration processes for green technologies and the learning modes and outcomes linked to these processes. We examined exploration processes at the microlevel in an embedded case study of an engineering firm using a combination of the “fireworks” innovation process model and organizational learning theory. First, we found that developing green technologies involves a long‐term exploratory process without guarantee of (quick) success and likely involves many exploration failures. Second, as exploration unfolds along multiple technology trajectories, learning occurs in individual exploration paths (on‐path), when new paths are pursued (path‐initiation), and when knowledge from one path is spilled over to subsequent paths (across‐paths). Third, to increase their chances for success, firms can increase the efficiency of exploration by fostering a failure‐friendly organizational culture, deliberately experimenting, and purposefully learning from failures.     

ASSESSING THE EFFECT OF PUBLIC SUBSIDIES ON FIRM R&D INVESTMENT: A SURVEY

This survey examines the empirical literature on the relationship between public R&D subsidies and private R&D investment over the past five decades. The survey reveals a considerable heterogeneity of empirical results that cannot be explained fully by methodological issues. We aim to provide further explanations of the possible causes of that heterogeneity. In particular, we emphasise a set of issues that, in our view, are critical to understanding the potential effect of public R&D subsidies on private R&D spending. Special attention is paid to the dynamic aspects and composition of firm R&D, the constraints faced by the firm (such as financial constraints), and the amount and source of public subsidies. None of these issues have been investigated in depth. We formulate a set of research assumptions to guide future empirical research in this field.     

The national innovation policy effect according to firm location

The regional nature of innovation and innovation policy was investigated. The aim of this study was to determine whether the specific economic and institutional conditions of a region had an influence on the results of a national policy intended to support entrepreneurial innovation. The analysis compared the effect of the national R&D subsidies on the innovation effort of firms located in central regions, which concentrate an important percentage of the national innovation activity, together with those firms located in periphery regions. Significant regional differences were detected with regard to the national R&D subsidies’ effect and distribution. The central regions manifested a higher subsidy effect compared to the periphery regions. The results of this study have allowed us to conclude that the region plays an important differentiating role in connection with the final result of the innovation policy aimed at the entire national territory. Therefore, this study recommends including the geographical location of the firm in future evaluations.     

Traces of the Iron Curtain: A multivariate analysis of regional cohesion in Europe

The present study aims to test relative welfare differences among regions in Europe, so as to examine whether the post-communist era has led to more socio-economic cohesion in Europe. The performance of European regions is analysed, compared, and assessed by using the Regional Competitiveness Index (RCI) and stylised fixed nominal categories. The current status of regional cohesion is tested on the basis of detailed data on 268 NUTS 2 European regions by using a robust methodology oriented towards univariate comparison of location parameters, multivariate classification by the decision tree and CHAID algorithm, and comparison of nominal variables with four values based on density plots.Multivariate classification appears to offer statistically excellent results with an overall correct prediction rate for post-socialist and capitalist regions in Europe of 99.6%. The research results from the Higher education and Innovation pillars, reveal a convergence of capitalist and post-socialist regions with capital cities and a divergence of regions with administrative capitals and other regions. Relatively, the two groups which perform best are both groups with capitals, while the group of capitalist regions with a capital city is significantly better in almost all pillars.The key message is that the transition of post-socialist regions is not yet over. Capitalist regions in Europe perform better than post-socialist regions in eight of the nine pillars of regional competitiveness. Our research results also reveal that the group of post-socialist regions without capital cities are significantly lagging behind the rest of the regions in Europe, and thus form the most vulnerable group of European regions. As there is data continuity in the official RCI classification and measurement, policy makers will be able to compare the performance of their own regions over time and to design appropriate concerted strategies accordingly. From this perspective, our study draws several interesting lessons and results for policy makers at various levels. Place-based regional planning and policy based on our analysis framework may be helpful in developing effective measures to cope with the socio-economic legacy of the “Iron Curtain” and get closer to regional cohesion in Europe.     

Measuring regional efficiency: A method tested on the fabricated metal products industry in Sweden, 1973–1975

This paper presents a method of measuring the efficiency of regions as production environments of manufacturing industries. The approach is a rather general view of the firm in a market economy. The functions which the firms must perform are discussed. From that, hypotheses are made regarding the elements of the environment which should constitute the regional production milieu and thus influence the efficiency of the firms. By way of factor analysis the original variables are reduced to seven regional factors, which are put into productivity functions where their parameters are estimated. From those parameters indexes of regional efficiency are calculated.     

Firm-strategic behavior with industry-demand externalities

This paper investigates the effects of industry-demand externalities on the firm's strategic decision making, with an industry-demand externality being defined as a change in industry demand resulting from the efforts of a particular firm to develop, advertise or price a particular product. Profit-maximization models of the firm's strategic behavior that incorporate industry-demand externalities created by a particular firm and the competitive responses of its rivals reveal that the presence of such an externality serves as an incentive for the firm to engage in the form of strategic behavior that generates the externality.     

Agglomeration, Dispersion, and the Pioneer Firm

This paper models industry location as a process of successive stages of agglomeration, dispersion, and reagglomeration. External economies lead firms to agglomerate in an industry center. Agglomeration drives up wages in the center, compelling firms to move low-skill activities to low-wage regions. A pioneer firm provides intermediation services between outlying regions and the center. The result is a regional production network: an industry center served by high-volume production sites, where pioneers are active, and low-volume production sites, where they are not. Evidence from the Mexican garment industry supports the theory.     

Non‐competes,business dynamism,and concentration: Evidence from a Florida case study

Most research on non‐competes has focused on employees; here we study how non‐competes affect firm location choice, growth, and consequent regional concentration, using Florida's 1996 legislative change that eased restrictions on their enforcement. Difference‐in‐differences models show that following the change, establishments of large firms were more likely to enter Florida; they also created a greater proportion of jobs and increased their share of employment in the state. Entrepreneurs or establishments of small firms, in contrast, were less likely to enter Florida following the law change; they also created a smaller proportion of new jobs and decreased their share of employment. Consistent with these location and job creation dynamics, regional business concentration increased following the law change in Florida. Nationwide cross‐sections demonstrate consistent correlations between state‐level non‐compete enforcement and the location, employment, and concentration dynamics illustrated in Florida.     

THE IMPORTANCE OF INDUSTRY STRUCTURE FOR THE DETERMINATION OF FIRM PROFITABILITY: A NEO-AUSTRIAN PERSPECTIVE

This paper is concerned with exploring the degree to which industry structure determines firm performance. Most of the business policy literature follows Porter in arguing that industry structure has an important influence on firm level profit rates. the arguments contained in this paper take a counter position. It is argued that a plausible alternative to the hypothesis that industry structure matters is the hypothesis that (holding demand constant) individual firm differences are the most important determinant of firm profitability.     

Linking learning with governance in networks and clusters: key issues for analysis and policy

In this paper we analyse the relationship between governance and learning in clusters and networks. In particular, we see these two key elements as interdependent, suggesting that, under particular circumstances, such interdependence may drive clusters and networks towards a dynamic development trajectory. A pure ‘governance perspective’ makes the development of any locality dependent on the system of powers which exists within the locality or across the global value chain. In parallel, a pure ‘competence-based approach’ focuses mainly on the capabilities of actors to learn and undertake activities. In contrast, we open the prospects for an interdependent relation that may change the actual competences of actors as well as the governance settings and dynamics in networks and clusters. When supported by public policies, the learning process may have the potential to modify the governance environment. Simultaneously, the learning process is intrinsically influenced by economic power, which may seriously affect the development prospects of clusters and networks. This is why an intertwined consideration of both aspects is necessary to promote specific approaches to learning and to design appropriate policies. In this paper we offer two preliminary case studies to clarify some of these dynamics: the first taken from the computers cluster in Costa Rica and the second from an Italian bio-pharmaceutical firm and its production network. The first case study refers to the software cluster that was created from scratch in Costa Rica thanks to an enlightened government policy in coordination with new local enterprises and an important foreign direct investor; while the second reflects on the ability of an individual company to create a network of relationships with large transnational companies in order to acquire new competences without falling into a subordinate position with respect to its larger partners.