# 17.19 Industrial Clusters, Organized Crime and Productivity Growth in Italian SMEs

Roberto Ganau, Andrés Rodríguez-Pose

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We examine whether organized crime affects firms’ performance (defined using Total Factor Productivity growth) both directly and indirectly, by downsizing the positive externalities arising from the geographic concentration of (intra- and inter-industry) market-related firms. The analysis uses a large sample of Italian small- and medium-sized manufacturing firms over the period 2010-2013. The results highlight the negative direct effects of organized crime on firms’ productivity growth. Any positive effect derived from industrial clustering is thoroughly debilitated by a strong presence of organized crime, and the negative moderation effect of organized crime on productivity growth is greater for smaller than for larger firms.

# 17.18 Following Your Job

Martijn J. Smit

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Evolutionary economic geography has awoken an interest in the question how regions can attract new human capital. One method is to attract migration firms, who will bring (part of) their existing employees. These people can then attract or generate new jobs (Hoogstra, van Dijk, & Florax, 2005). In this paper, we study the mobility of employees when their firm decides to move: do they stick with their employer or not? And if they do, do they commute or not? Finally, we link the decision to commute longer distances to the availability of a company car. We use microdata on individual firms and employees to test whether employees choose to follow their firm to another region. We control for personal and job characteristics. We find that having a company car is not correlated with the decision to stay with or to leave the current firm, but those who have one are less likely to move house, as long as the employee has a wage in the top quartile, or lives in the urban areas of the Randstad with their stressed housing market. Employees who already experienced long commutes before their employer moved are not influenced by the presence of a company car.

# 17.17 Smart Specialization policy in the EU: Relatedness, Knowledge Complexity and Regional Diversification

Pierre-Alexandre Balland, Ron Boschma, Joan Crespo and David L. Rigby

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Smart specialization has become a hallmark of the EU’s Cohesion Policy. Envisaged as a bottom-up initiative identifying local knowledge cores and associated competitive advantages, the operationalization of smart specialization has been rather limited, as a coherent set of analytical tools to guide the policy directives remains elusive. To tackle the weak underpinning of smart specialization policy, we propose a policy framework around the concepts of relatedness and knowledge complexity. We use EPO patent data to provide evidence on how EU regions develop new technologies in the period 1990-2009. We find that diversifying into more complex technologies is highly attractive but difficult for EU regions to accomplish. Regions can overcome this diversification dilemma by developing new complex technologies that build on local related capabilities. We use these findings to construct a policy framework for smart specialization that highlights the potential risks and rewards for regions of adopting competing diversification strategies. We show how potential costs of alternative strategies in regions may be assessed by making use of the relatedness concept, and how potential benefits of various smart specialization strategies can be derived from estimates of the complexity of technologies. A series of case-studies of different types of regions illustrate the utility of this policy framework.

# 17.16 Industry Evolution in Varieties of Capitalism: a Comparison of the Danish and US Wind Turbine Industries

Max-Peter Menzel, Johannes Kammer

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In this study, we combine Klepper’s framework on the evolution of industries with the Varieties of Capitalism approach to argue that industry evolution is mediated by institutional differences. We expect that new industries will evolve with a stronger connection to established industries in coordinated marked economies than in liberal market economies. Our assumptions are supported by the survival analysis of US and Danish wind turbine manufacturers from 1974 to 2014.

# 17.15 Co-inventor Networks and Knowledge Production in Specialized and Diversified Cities

Frank van der Wouden, David L. Rigby

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Why do some cities produce more knowledge than others? The standard explanation rests upon the social networks that connect economic actors, within and between cities, and that structure the quantity and the quality of interactions from which new ideas are generated. These interactions are increasingly understood as shaped by different forms of proximity that congeal, at different times in different places, in complex assemblies that give rise to different forms of competitive advantage. Recent research focusing on the U.S. urban system has shown that metropolitan regions characterized by more extensive local and non-local network ties outperform cities where economic agents are isolated. However, across most of this work, little attention is given to the character of the local knowledge base and whether that is related to the structure of co-inventor networks. In this paper, we show that the social networks linking co-inventors differ between cities that produce specialized knowledge and those that produce diversified knowledge. These ideas are extended in models of tie-formation that show inventors in specialized cities value spatial proximity less and cognitive proximity more than inventors in diversified cities as they partner with collaborators from other urban areas.

# 17.14 Promoting regional growth and innovation: relatedness, revealed comparative advantage and the product space

Gloria Cicerone, Philip McCann, Viktor A. Venhorst

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We adapt the product-space methodological approach of Hausmann and Klinger to the case of Italian provinces and regions in order to examine the extent to which the network connectedness and centrality of a province’s exports is related to its economic performance. We construct a new Product Space Position (PSP) index which retains many of the Hausmann-Klinger features but which is also much better suited to handling regional and provincial data. We also compare PSP performance with two other export composition indices. A better positioning in the export-network product space is indeed associated with a better local economic outcomes.

# 17.13 Technological Coherence and the Adaptive Resilience of Regional Economies

Silvia Rocchetta, Andrea Mina

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This paper explores the effect of different regional technological profiles on the resilience of regional economies to exogenous shocks. We conduct an empirical examination of the determinants of resilience through panel analyses of UK NUTS III level data for the 2004-2012 period. The results indicate that regions endowed with technologically coherent – and not simply diversified – knowledge bases are better prepared to face an unforeseen downturn and display resilience. Moreover, local economies tend to be more adaptable if they innovate in sectors with the strongest growth opportunities, even though firms’ net entry does not appear to contribute significantly towards resilience.

# 17.12 Knowledge bases and relatedness: A study of labour mobility in Norwegian regions

Rune Dahl Fitjar, Bram Timmermans

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Two ideas have emerged as central in evolutionary economic geography in recent years: First, innovation is often the result of meetings between related ideas, and regions are therefore best served by hosting a variety of related industries. Second, innovation often comes from the combination of different knowledge bases. However, there have been few attempts at linking these approaches in empirical studies. This paper connects the dots by examining relatedness among industries with similar and different knowledge bases in specific regional contexts. We focus on regions expected to have different types of innovation systems, from the organisationally thick and diversified RIS of large cities through the more specialised RIS in intermediate cities to the organisationally thin RIS found in small rural regions. The analysis finds that industries with different knowledge bases are related in various regional settings, with combinatorial knowledge base industries having a central role in many regions. However, there are also cases of potential lock-in, where relatedness is mainly found among regions with the same knowledge base.

# 17.11 Critical links in knowledge networks – What about proximities and gatekeeper organizations?

Tom Broekel and Wladimir Mueller

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The paper analyzes links in knowledge networks that are essential for the integration and knowledge diffusion properties of the entire network. By focusing on critical links, as defined in network science, we evaluate these links’ properties from the perspective of the proximity and regional gatekeeper literature. We thereby gain insights into likely conditions of their emergence and functions. Moreover, we extend the dyadic perspective on regional gatekeeper organizations and link it more strongly to the network science and proximity framework literature. An empirical study applies these arguments and investigates the proximity characteristics of critical links in 132 technology-specific subsidized knowledge networks in Germany. The results show that critical links tend be formed between regional gatekeepers that offer related knowledge resources. The links bridge institutional distances by utilizing the benefits of geographic and social proximity.

# 17.10 Local Discoveries and Technological Relatedness: the Role of Foreign Firms

Alessia Lo Turco and Daniela Maggioni

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We explore the role of local intra and extra-regional product-specific capabilities in foster ing the introduction of new products by firms active in the Turkish manufacturing sector. We model firms’ product additions to their product basket as dependent on extra and intra-regional knowledge. We find that regional “discoveries”, that is newly introduced products never produced before in the region, are positively and significantly affected by external related knowledge spurring from foreign firms active in the same location as well as by firm internal capabilities. Technologically related intra-regional knowledge spillovers and extra-regional knowledge spilling from imported inputs do not play a relevant role. The former, however, matter when we extend the analysis to all new products introduced by firms, regardless of their previous presence in the regional production basket. We interpret this evidence as foreign affiliates bringing new and exclusive capabilities which are missing in the region where they locate, thus providing a stimulus for regional production diversification and upgrading. This hypothesis is validated by exploring the heterogeneous role of the different intra and extra-regional knowledge sources according to products’ complexity.