Handbook of Research on Innovation and Clusters
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Handbook of Research on Innovation and Clusters

Cases and Policies

Edited by Charlie Karlsson

The role of innovations and clusters has increasingly dominated local and regional development policies in recent decades. This authoritative and accessible Handbook considers important aspects of high-tech clusters, analyses insightful cluster case studies, and provides a number of recommendations for cluster policies.
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Chapter 4: High-Tech Firms and the Dynamics of Innovative Industrial Clusters

Mario A. Maggioni and Massimiliano R. Riggi


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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