An empirical test of geographic knowledge spillovers using geographic information systems and firm-level data

Abstract

Most research on economic geography focuses on large geographic areas, such as nations and states. I use a geographic information system and a firm-level dataset to explore agglomeration and spillovers at the firm level over discrete distances. I calculate the distance between each firm-pair to explore co-location, and use these calculations to devise a test of spillovers: is participation in the Small Business Innovation Research (SBIR) program, which provides R&D grants to small firms, a function of whether nearby firms win SBIR grants? I find that the number of other SBIR firms within a fraction of a mile predicts whether a firm wins awards, even controlling for regional, firm, and industry characteristics.