The Effects of Location on Firm Innovation Capacity
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The Effects of Location on Firm Innovation Capacity João J. M. Ferreira 1 & Cristina I. Fernandes 2 & Mário L. Raposo 1
Received: 3 April 2014 / Accepted: 7 July 2015 # Springer Science+Business Media New York 2015
Abstract This research seeks to ascertain the extent of the effects of location on the innovation capacities of companies across different industrial sectors. We thus answer the question: Does company location near an urban centre enable innovation capacities? This article argues that company location does wield an effect on innovation capacities, and it is therefore correspondingly relevant to fill this current gap in the literature. Based upon a sample of 884 companies, the econometric models estimated report location as a variable bearing influence on the innovative capacities prevailing in companies. Our results also confirm that the greater the geographic proximity of a company to urban centres, the greater their capacity to innovate. The study also enabled the identification of different levels and types of innovation in accordance with the respective company location. Keywords Location . Innovation . Performance . Geographic proximity
Introduction Diverse schools of thinking have proposed theories on regional economies and explaining how regional development incorporates economic, social, institutional, and cultural characteristics that render unique capacities that foster and drive regional development (Cooke et al. 1997; Maskell et al. 1998), interdependent transactions (Storper 1997), or even the building up of the regional infrastructures able to facilitate * João J. M. Ferreira [email protected] Cristina I. Fernandes [email protected] Mário L. Raposo [email protected] 1
Management and Economics Department, University of Beira Interior and NECE-Research Unit in Business Sciences, Covilhã, Portugal
2
NECE-Research Unit in Business Sciences, Estrada do Sineiro, Pólo IV, 6200-209 Covilhã, Portugal
J Knowl Econ
mutual learning between regional actors (Florida 1995; Morgan 1997). One factor these approaches share is the importance attributed to learning and innovation within the framework of economic development alongside relational exchanges between regional actors as a means for advancing and developing (Rutten 2003). According to Scott (1998), space may shape and effect transactions between companies in three different ways: (i) low levels of transaction scale and generally of an economic nature when only undertaken over short distances as this prevents economies of scale; (ii) irregular transactions and becoming more difficult to sustain over longer distances than standardised and predictable transactions; (iii) different modes of transaction (for example, face-to-face encounters versus electronic transactions) and leading to different outcomes in terms of spatial costs. Porter (1998) defends how local clusters are destined to become commonplace as competitive advantage closely interlinks with local characteristics including knowledge, relationships and motivation, thereby renderin
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