TY  - JOUR
AU  - Agrawal,Ajay K.
AU  - Cockburn,Iain M.
AU  - Galasso,Alberto
AU  - Oettl,Alexander
TI  - Why are Some Regions More Innovative than Others? The Role of Firm Size Diversity
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 17793
PY  - 2012
Y2  - January 2012
UR  - http://www.nber.org/papers/w17793
L1  - http://www.nber.org/papers/w17793.pdf
N1  - Author contact info:
Ajay K. Agrawal
Rotman School of Management
University of Toronto
105 St. George Street
Toronto, ON M5S 3E6
CANADA
Tel: 416/946-0203
Fax: 416/978-5433
E-Mail: ajay.agrawal@rotman.utoronto.ca

Iain M. Cockburn
School of Management
Boston University
595 Commonwealth Ave
Boston, MA 02215
Tel: 617/588-1486
Fax: 815/550-2353
E-Mail: cockburn@bu.edu

Alberto Galasso
Rotman School of Management
University of Toronto
105 St. George Street
Toronto, ON
CANADA  M5S 3E6
Fax: 905-569-4397
E-Mail: Alberto.Galasso@Rotman.Utoronto.Ca

Alexander Oettl
College of Management
Georgia Institute of Technology
800 West Peachtree Street, NW
Atlanta, GA 30308
Tel: 404.385.4570
E-Mail: alexander.oettl@mgt.gatech.edu
AB  - 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.
ER  -