Scandinavian Working Papers in Economics

Papers in Innovation Studies,
Lund University, CIRCLE - Centre for Innovation Research

No 2017/6: Knowledge externalities and firm heterogeneity: Effects on high and low growth firms

Markus Grillitsch () and Magnus Nilsson ()
Additional contact information
Markus Grillitsch: CIRCLE, Lund University, Postal: CIRCLE, Lund University, PO Box 117, SE-22100 Lund, Sweden
Magnus Nilsson: CIRCLE, Lund University, Postal: CIRCLE, Lund University, PO Box 117, SE-22100 Lund, Sweden

Abstract: Knowledge externalities affect high and low growth firms differently. The paper develops two theoretical arguments. The knowledge equilibrium argument postulates that knowledge externalities weaken high growth firms for the benefit of low growth firms until performance differences vanish. The knowledge competition argument claims that high growth firms are in a better position to identify, attract, and integrate knowledge, thereby benefiting more from knowledge externalities than low growth firms. Based on 188,936 observations of 32,736 Swedish firms from 2004 to 2011, it is analyzed whether knowledge centers enable high growth firms to surge ahead or low growth firms to catch up.

Keywords: knowledge spillovers; externalities; firm growth; competitiveness; core-periphery

JEL-codes: O18; O30; P48; R10; R12

26 pages, April 27, 2017

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201706_grillitsch_et_al.pdf PDF-file

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