Location: A Neglected Determinant of Firm Growth

Impact of local knowledge endowment on employment growth in nanotechnology

“…the growth of firms (e.g. Gabe and Kraybill 2002, Boschma and Weterings 2005, Audretsch and Dohse 2007, Weterings and Boschma 2009. We contribute to this literature by extending the basic question of the impact of specialised local knowledge endowment (both amount and composition).…”

“…This level is chosen as it is particularly suited to approximate spatial and functional interrelations between core cities and the corresponding hinterland (BBR 2001). Therefore, they are homogeneous and comparable entities, which are large enough to assume that spillovers are intraregional and hence no connection between the different regions has to be included in our estimations (Audretsch and Dohse 2007). It has to be mentioned that the nano-firms in our sample are not equally distributed: Out of the 97 planning regions, the nanotechnology firms in our sample are located in 62 different regions, some of them hosting a multitude of firms 1 .…”

“…Our paper is most closely related to Audretsch and Dohse (2007) who find that regions abundant in knowledge resources provide a particularly fertile soil for the growth of young, technology-oriented firms. They consider new market firms and point to the need of investigating the relationship between local knowledge endowment and firm performance in other high and emerging technologies.…”

“…Our unique data-set on German nanofirms allows us to test their main hypotheses in the promising field of nanotechnology. While Audretsch and Dohse (2007) only elaborate on the influence of the accessible stock-and hence the quantity -of local knowledge, we extend the analysis to the composition and hence the quality of the local knowledge base. Besides, we test the robustness of our hypotheses by two different econometric approaches and introduce novel measures that expand their explanatory power.…”

“…3 KIS is constructed by the share of 'knowledge workers' in an industry's labour force, which is measured by the share of employees with a university degree. Sectors with an above-average share of knowledge workers are hence seen as knowledge intensive (see Audretsch and Dohse 2007). We use this dummy in order to be able to distinguish between firms that are operating in above average knowledge-intensive industries among our sample of firms and hence especially prone to knowledge spillovers as positive externality raisinf their productivity.…”