How to Catch Mutual Effects in Clusters: Comparative Study of Transitional and Developed Economies

Abstract

In recent years, links between spatial proximity, and firms’ formal and informal contacts have become a sufficient subject for research in the field of innovation, competitiveness and sustainable economic growth. We introduce a model for the quantitative evaluation of the relationship between cluster participation and innovation capabilities, as well with a company’s growth in value. The paper focuses on comparison in mutual effects for companies from transitional and developed economies. We use a sample of 284 traded European companies between 2005 and 2009 which were carefully applied and subjected to panel data analysis techniques. Our empirical findings show the positive mutual effects on innovation capabilities measured as intangible assets and companies’ economic value added for both transitional and developed economies. Hereby, these links are stronger in developed countries. Moreover, we identify the complementary factors to clustering, such as industry-level public R&D expenses, country innovation infrastructure development and location in a megalopolis.