Elisenda Paluzie (p), Diego Ocampo, Mayra Janet Ortega (p)

Renato Garcia

The theoretical literature has reached no consensus on whether international trade liberalization increases concentration of economic activities within a given country or whether dispersion occurs as the country progressively opens to trade. This paper contributes to this literature by analyzing the experience of Ecuador in the first decade of the 21st century. This country is an interesting case study because it has two economic centres of similar size (Quito, the capital, and Guayaquil) which is different from other Latin American countries. At the same time, the trade liberalization policies followed a similar path as those in other Latin American countries that dismantled the import substitution regime. Our econometric results based on a sample of 20 provinces and 20 industrial sectors in two periods of time, 2000 and 2010, suggest that trade policy did not substantially modify the patterns of location of manufacturing in Ecuador during this period. If anything, it only reinforced, a little, the concentration of economic activities in Quito.

Marina Van Geenhuizen (p)

Elisenda Paluzie

Growth and market introduction of new technology: startups in contrasting entrepreneurial ecosystems

This paper responds to an increased need for attention to growth of high-tech start-ups and role of entrepreneurial ecosystems. The focus is on a specific type of start-ups, namely, university spin-offs (USOs). Such firms primarily aim to bring new technology or services developed at university to the market and to upscaled production. The paper investigates the performance of USOs in Northwest Europe under influence of founding teams and initial networks in contrasting entrepreneurial ecosystems, using a longitudinal approach. In theory, team and network diversity is associated with contradictory trends, namely, benefits from rich capabilities and information, however, also risks of fragmentation and fault-lines. In addition, it is explored whether rich and varied ecosystems in metropolitan area merely reinforce positive start-up development, or can also reverse negative development rooted in poor founding teams or networks.
The first part of the paper, as quantitative groundwork, briefly explores influence of diversity in founding teams and early networks on business performance, in a metropolitan and non-metropolitan ecosystems. A survey of about 100 USOs is used to asses a regression model including these factors. The trends suggest that founding team diversity has a negative relationship with business performance, while diversity in networks has a positive influence, which is also reflected in positive influence of a metropolitan ecosystem.
In the next part, using selected case studies covering 10-20 years of USOs’ life including age-related events, the perspective on USOs performance is broadened with innovation radicalness and market introduction of the invention. Accordingly, the interplay of team and network diversity with innovation suggests several ‘life trajectories’, including closure. For example, persistent weakness in team and/or network diversity tends to lead to firm closure without market introduction, or to failure later-on in upscaling of production. Such negative developments seem not to be affected by the character of the ecosystems.
By contrast, balancing of weak teams through co-creation networks and/or related product diversification, tends to enhance market introduction and scaling up, which can be reinforced by metropolitan ecosystems. The first tend to be more varied in relationships with customers (co-creation), whereas non-metropolitan ecosystems tend to be more specialized, however, with an inherent danger of tight relationships between partners in financial consortia. Subject matter for informing local/regional policy-makers and for future research conclude the paper.

Jose M. Gaspar (p), Minoru Osawa

Marina Van Geenhuizen

We explore the mechanisms through which knowledge spillovers influence the spatial distribution
of economic activities in a two-region economic geography model with vertical innovations.
The chance of innovation depends on the related variety, i.e., the importance of
interaction between researchers within the same region rather than across different regions. If
related variety is high, knowledge spillovers are more localized and a higher economic integration
leads to progressive agglomeration. If related variety is low, economic activities may
re-disperse after an initial phase of agglomeration as integration gradually increases, because
firms relocating to the smaller region leverage the concentrated knowledge base of the larger
region to enhance their chance of innovation. The transition between spatial patterns may
exhibit very diverse qualitative properties depending on the particular level of related variety.the quality of manufactured varieties produced in each region. The chance of innovation
depends on the related variety, i.e. the importance of interaction between researchers within
the same region rather than across different regions. As economic integration increases from a
low level, a higher related variety is associated with more agglomerated spatial configurations.
However, if the interaction with foreign scientists is relatively more important for innovation,
economic activities may (completely) re-disperse after an initial phase of agglomeration due
to the increase in the relative importance of a higher chance of innovation in the less industrialized
region. This non-monotonic relationship between economic integration and spatial
imbalances may exhibit very diverse qualitative properties, not yet described in the literature.

Renato Garcia (p), Veneziano Araujo, Sarah Ferreira

Jose M. Gaspar

Public policies meant to support private R&D are usually justified by their goal of enabling an increase in private firms’ R&D expenditure, with positive effects on innovation outputs. This paper aims to evaluate the main effects on innovation of an R&D grant programme for small and medium-sized enterprises (SMEs) in the Brazilian state of São Paulo. This policy supporting R&D expenditures represents an appropriate tool for evaluating the effectiveness of locally based, SME-oriented R&D policies. We use a rich and unique database that covers all expenditures of the program from 1999 to 2020, which allows us to analyse the main effects of the grant program on innovation over time. Our methodological strategy involves a counterfactual dose‒response regression model to evaluate the policy effects on SME innovation. Our findings show that granted firms present better innovative performance since we identified a positive average difference in their patents, evidencing the existence of output additionality among the granted firms. In addition, our estimated dose‒response function reveals an inverted U-shape curve, showing that the effect of public support on firms’ innovative performance decreases when the grant for individual firms is either too large or too small.