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Small worlds, inheritance networks and industrial clusters

Journal article
Authors Mark Bagley
Published in Industry and Innovation
ISSN 1366-2716
Publication year 2018
Published at Department of Economy and Society, Innovation and Entrepreneurship (IIE)
Language en
Keywords Industrial clusters, small-world networks, pulled spinoffs, firm heredity, localization economies
Subject categories Economic Geography, Economics


The performance of firms within industrial clusters has been the subject of a multitude of studies. The organizational attributes inherited by spinoffs from parent firms is one explanation behind performance premiums. This paper examines the relationship between a spinoff’s network and its geographic location in an industrial cluster. We hypothesize that there is a negative relationship between a spinoff’s network efficiency and its distance from the cluster’s centroid. Although recent literature infers that the transmission of knowledge in industrial clusters is accomplished via inherited network ties, this has not been directly measured. This paper aims to fill that research gap. We find that, after controlling for firm size, parent size and age, there is indeed a statistically significant and negative relationship between network efficiency and geographic distance to a cluster’s core.

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