ABSTRACT
This chapter focuses on the concept of agglomeration economies in relation to firms’ competitive advantages, knowledge spillovers and knowledge externalities. It is often argued that these are more easily identified in cities, where many people are concentrated into a relatively small geographic space. By contrast, the urban field hypothesis – often applied in the Dutch case – emphasizes the absence of differentiated urban contexts in economic accumulation. Despite the large empirical literature on this subject, conclusions are manifold. In general, on a local scale agglomeration is usually related to urban density or city size, whereas on a regional scale agglomeration theories seem to reflect core-periphery patterns. Within these commonly perceived spatial contexts, we describe and model patterns of innovation of firms in relation to assets of the environment. We make a distinction in firm-internal knowledge assets and assets derived from the production environment in terms of the regional and international environment. Building on Porter’s cluster concept, we conclude on commonalities and complementarities in spatial production structures by applying a subdivision between network links (partnerships in innovation projects) and co-location in innovation processes of firms. Our empirical evidence supports the thesis that the regional fabric has to be linked to international networks of innovative firms. To leave out the international network dimension means missing out potentially important externality sources. Further, the urban field hypothesis regarding innovative behavior of firms in the Netherlands is rejected. The chapter is further structured as follows. The next section summarizes briefly the debate in the literature on the role of the regional production environment in innovation studies. A further section explains the necessity to extend the regional production environment of innovative firms with network-based externalities in studies on spatial externalities. The fourth section describes how innovation in the Netherlands is measured, and how subsequently geographical patterns are visualized. Spatial econometric models on municipal innovation intensity are presented in the final main section, followed by a conclusion.
