Working Paper: NBER ID: w17793
Authors: Ajay K Agrawal; Iain M Cockburn; Alberto Galasso; Alexander Oettl
Abstract: Large labs may spawn spin-outs caused by innovations deemed unrelated to the firm's overall business. Small labs generate demand for specialized services that lower entry costs for others. We develop a theoretical framework to study the interplay of these two localized externalities and their impact on regional innovation. We examine MSA-level patent data during the period 1975-2000 and find that innovation output is higher where large and small labs coexist. The finding is robust to across-region as well as within-region analysis, IV analysis, and the effect is stronger in certain subsamples consistent with our explanation but not the plausible alternatives.
Keywords: innovation; firm size diversity; regional development; R&D structure
JEL Codes: O31; R11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| spinout formation (C69) | innovation output (O36) |
| firm size diversity (L25) | innovation output (O36) |
| firm size diversity (L25) | citation-weighted patent counts (O34) |
| diverse regions (R12) | citation-weighted patent counts (O34) |
| firm size diversity (L25) | spinout formation (C69) |