Scandinavian Working Papers in Economics

Working Paper Series in Economics and Institutions of Innovation,
Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

No 31: Firm Location, Corporate Structure, R&D Investment, Innovation and Productivity

Börje Johansson (), Hans Lööf () and Amy Rader Olsson ()
Additional contact information
Börje Johansson: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden
Hans Lööf: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden
Amy Rader Olsson: CEFIN, Postal: The Royal Institute of Technology, 100 44 Stockholm

Abstract: This study elucidates how firm location and corporate structure influence R&D-intensity, external collaboration on innovation, return on R&D and economic performance. The study, based on 1,907 firm level observations, essentially compare a functional region with four other regional areas in Sweden. In this context, the Stockholm region is assumed as an integrated functional urban region with innovation-proximity characteristics. The paper examines systematically the influence of location versus various firm characteristics. The econometric results suggest the following: First, a typical Stockholm firm has a significantly larger likelihood than other firms of being engaged in innovation activities. Second, among innovative firms, the R&D intensity and global collaboration on innovation is primarily determined by its corporate structure, not geographic location. Third, the embeddedness in regional and national scientific and vertical innovation systems is relatively more intense outside Stockholm. Finally, the advantage of being located within Sweden’s most strongest concentration of R&D spending, universities, human capital and multinational enterprises with their global networks is reflected by a superior return on R&D investments and higher productivity, when controlling for firm size, human capital, physical capital, R&D-intensity, market orientation and sector classification.

Keywords: Regional economy; multinational companies; R&D; innovation; innovation system

JEL-codes: C21; G34; L22; O33

32 pages, May 9, 2005

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