Cases and Policies
Edited by Charlie Karlsson
Chapter 4: High-Tech Firms and the Dynamics of Innovative Industrial Clusters
4 High-tech ﬁrms and the dynamics of innovative industrial clusters Mario A. Maggioni and Massimiliano R. Riggi Many of the existing theories of clusters of innovative activity focus on external eﬀects and the resulting agglomeration economies. One central feature of clusters of innovative activity is external eﬀects among the technology ﬁrms located there. A local external eﬀect is anything that raises the return to particular ﬁrms located in a region as a result of the location of other ﬁrms in the same region. External eﬀects can be direct, as when managers or technologists learn about market or technical developments from colleagues in neighboring ﬁrms, when ﬁrms in closely related industries serve as one another’s customers or suppliers, and so on. External eﬀects can also be indirect, as when key inputs are in abundant supply or when the overall level of commercial technology activity is high. These indirect external eﬀects arise from increasing returns to scale in the supply of key inputs such as venture capital, which may locate where entrepreneurship is dense but support the development of new entrepreneurial ﬁrms; a thick labor market in technical personnel; or commercially-oriented activities in universities or national laboratories, to name just a few. Both direct and indirect external eﬀects generate positive feedback loops that insure that technology-related ﬁrms locate in regions where other technology ﬁrms are already located. (Timothy Bresnahan et al., 2001) 1 Introduction: what are innovative industrial clusters? While there is a general agreement...
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