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Agglomeration and firm performance: One firm’s medicine is another firm’s poison

Year: 2015

Type: article

Abstract: In this paper, we aim to reduce the ambiguity surrounding the agglomeration–performance relationship. We do so by taking firm-level and agglomeration-level heterogeneity into account simultaneously and focusing on the interactions between these two levels of analysis in explaining the effect of agglomeration on firm performance. Our central argument is that while some firms will benefit from agglomeration, others will be harmed by it. To assess our claims, we estimate multilevel models on firms’ productivity with nonlinear interaction effects between the agglomeration-level (urbanization, specialization, and knowledge intensity) and firm-level variables (size, internal knowledge base, and face-to-face contacts) using data from a sample of Dutch firms. Our results show that the effects of different dimensions of agglomeration on firm performance are strongly and nonlinearly moderated by firm characteristics. Moreover, the moderation effect is not uniform across the different agglomeration dimensions.

Source: Environment and Planning A Economy and Space

DOI: 10.1177/0308518x15602898

Authors: J Knoben, AT Arikan, F van Oort, O Raspe

Institutions: Radboud University Nijmegen, Florida Atlantic University, Utrecht University, Erasmus University Rotterdam, Netherlands Environmental Assessment Agency

Language: English

Topic: Regional Economics and Spatial Analysis

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: green

OpenAlex ID: W2266401637

FWCI: 11.27

Cites: 103

Cited by: 61

Related to: 10