Evidence for value added contributions of STPs?

Due to the direct regional and local policy implications of STPs (i.e. economic and innova-tion policies), the academic literature has widely discussed STPs’ multifaceted value added for residents firms, local scientific institutions and the region overall. Research on STPs predominantly focuses on 1) socio-economic effects of STPs (e.g. number of companies, employees, tax impact and innovation output), 2) on-park firms’ performance (e.g. turnover, employment and innovation output in terms of patents and new products), and, finally 3) localized knowledge spillovers, in particular between co-located industry and academia.

In regard to the regional socio-economic impact of STPs, a large number of scientific stud-ies and policy reports have broadly examined whether STPs achieve their role in the

15 Examples for areas of innovation mentioned in the literature include 22@Barcelona, which is an urban redevelopment project of ca. 200 hectares of industrial land into an innovation district in the Poblenou dis-trict in Barcelona, Medion Valley that comprises ca. 300 organizations in life sciences and medical technol-ogies in Denmark’s Greater Copenhagen region, and the Skane region in Sweden (European Commission, 2013).

16 Three sub-types of innovation districts are observed in the USA. Anchor Plus Innovation Districts usually are clustered around an established anchor institution, for example, Kendall Square near the Massachu-setts Institute of Technology (MIT) in Cambridge. Re-imagined Urban Areas refer to innovation districts, where underused space in the urban centre is revitalized. Boston’s South Waterfront Innovation District is one example. Finally, Urbanized Science Parks are science parks that expand upon the classical suburban, rather isolated research park by increasing its urban density and adding additional resources and ameni-ties. The currently modernized Research Park Triangle represents such type (Brookings, 2014; Lyndon B.

Johnson School of Public Affairs, 2015). In addition, several metropolitan universities in the U.S. are cur-rently building new innovation districts. Examples include Allston campus of Harvard University, Manhat-tanville Campus of Columbia University and East Baltimore’s redevelopment of John Hopkins University (Ehlenz & Birch, 2014).

talization of regional and local economies, in particular regarding the creation of new jobs and technology-based firms, (e.g. University of Arizona, 2009; Handrich et al., 2008).¹⁷ Ap-plied methods range from descriptive analyses to highly sophisticated analyses of multiplier effects.¹⁸

Furthermore, the asserted value to resident firms is related to distinct advantages over STP locations. In particular due to the spatial proximity to universities and non-university research institutions, STP resident firms are expected to show better perfor-mance in three dimensions in particular; 1) business perforperfor-mance (e.g. survival rate, growth, R&D productivity and innovative capacity), 2) knowledge spillovers, and 3) image advantages. Extensive research has been conducted to evaluate STPs’ value to resident firms. Empirical studies (e.g. Quintas et al., 1992; Westhead & Storey, 1994; Vedovello, 1997; Siegel et al., 2003a; Link & Scott, 2003a; Fukugawa, 2006; Bilgiardi et al., 2006;

Kulke, 2008; Yang et al., 2009; Chan et al., 2010) have covered STPs around the world, for example, Europe (e.g. Sweden, UK, Spain, Greece, Spain, Italy, Germany, Netherlands), North America (e.g. USA, Canada), Australia, as well as more recently Asia (e.g. Japan, China, Taiwan, Korea, Malaysia) and Africa (e.g. South Africa).¹⁹

Yet, clear postive results were only established for on-park firms’ image advantages and an increased technology reputation associated with a STP location, prestigious address and social signalling.²⁰ Hence, the STP’s image enhances the resident firms’ credibility as high-technology firms, which in turn raises their ability to attract customers and cooperation partners (e.g. Monck et al., 1988; Westhead & Storey, 1994; Ferguson & Olofsson, 2004).

In some cases, STP resident firms only seek to benefit from STP-related image advantages than other kinds of anticipated externalities, such as, localized knowledge

17 Table A4 in the Appendix provides an overview of exemplary studies of the regional economic impact of STPs.

18 The regional impact and multiplier analysis determines the total of direct, indirect and income-induced stim-uli (e.g. employment, turn over, value added, tax income) on the regional economy resulting from the re-spective STP. For further details about the measuring methodology, for example, see WISTA-MANAGEMENT (2011b) and Handrich et al. (2008).

19 Table A5 in the Appendix provides an overview of empirical studies (non-exhaustive) that have examined the varying effects of STPs on resident companies. A large number of empirical studies focus on the analy-sis of on-park firms’ performance in terms of R&D intensity, innovative outputs (e.g. patent activity, market launches of new products and services), growth (employment and turnover), survival/closure rates, as well as knowledge ties with scientific institutions. In order to examine STP’s ability to function as seedbeds for new innovative firms and growth environments for high-technology SMEs, scholars have often used the so-called matched pair method. This methodology compares individual or multiple dimensions of business per-formance (e.g. employment and turnover growth, patent activity, new products) of on-park and off-park high-technology companies, ceteris paribus.

20 Here, social signalling refers to transmitted signals of on-park NTBFs to other firms and organizations, conferring an enhanced reputation or legitimacy due to their STP location (Siegel et al., 2003b).

interaction. Royal Kaskoning (2011) has referred to these resident firms as image builders.²¹

In contrast, there is no clear empirical evidence for resident firms’ augmented business performance (e.g. survival rate, closure rate, employment and sales, as well as innovative capacity) as a result of subsidized business environments, active business support ser-vices and facilitated access to scientific institutions.²² Some empirical studies of STPs in Sweden and Italy have found proof for higher growth of on-park firms’ employment and sales, as well as higher survival rates (e.g. Löfsten & Lindelöf, 2001; Ferguson & Olofsson, 2004, Colombo & Delmastro, 2002). In addition, numerous scholars have underlined the STPs’ positive role in enabling better innovation performances of resident firms, for exam-ple, measured in terms of patent activity (e.g. Siegel et al., 2003a, Squicciarini, 2008; Yang et al., 2009). As an illustration, on-park firms in the Hsinchu Science Industrial Park (HSIP) in Taiwan show higher R&D elasticity, i.e. impact of firms’ R&D on their productivity perfor-mance, and thus, invest more efficiently in innovation (Yang et al., 2009).²³

Yet, a large number of studies that conducted matched-pair analyses of on-park and off-park businesses, for example, in the UK, Sweden and Israel, did not detect any clear evi-dence of significant positive effects and benefits of the STP location on resident firms’

business performance (e.g. higher survival and growth rates). Also, no significant differ-ences concerning the firms’ innovative capacity (e.g. number of issued patents) and the ability to translate R&D investments into innovative outputs have been identified (e.g.

Westhead 1997; Lindelöf & Löfsten, 2003, Siegel et al., 2003b).

Most importantly for this thesis, the academic discussion has also revealed mixed findings about STPs’ impact on knowledge interaction and knowledge spillovers between resident firms and co-located academic institutions. On the one hand, several studies (e.g. Vedovel-lo, 1997; Phillimore, 1999; Löfsten & Lindelöf, 2002) have found evidence for augmented

21 To describe the different motivations of firms to locate at STPs, Royal Kaskoning (2011) has applied the dichotomy of knowledge seekers and image builders.

22 However, Siegel et al. (2003b) have criticized that research findings derived from empirical studies of firms in single STPs or a small number of STPs are characterized by several limitations. For example, small firm samples to not represent the entire population of firms in STPs. Moreover, other studies have not matched their results with a control group of equivalent off-STP firms (along dimensions such as age of firm, main industrial activity, ownership status, among others) in order to determine the impact of STPs correctly.

23 In this particular case, the efficiency gains are related to several advantages allocated to the firms’ location at the HSIP, for example, enhanced local accessibility to the complete component design and manufactur-ing supply chain for IT, to R&D-related government support programmes and skilled human resources. In addition, HSIP is characterized by strong links to Silicon Valley-based MNEs due to ties of American Edu-cated engineers returning to Taiwan. It strongly enables local firms’ access to advanced international tech-nologies and know-how (Yang et al., 2009; Saxenian, 2001).

localized knowledge spillovers between firms and academia, which are intermediated by STPs. The studies mainly observed informal and human resource linkages, i.e. rather low-level modes of interaction, between co-located firms and research institutions. Formal knowledge relations, however, were only of minor significance. As an illustration, also Lin-delöf and Löfsten (2004) have shown that resident firms of Swedish STPs strongly take advantage of informal contacts, as well as the access to scientific equipment and university graduates of universities in vicinity in particular. Industry-academia R&D projects were also implemented, but to a significantly lower degree. Overall, these findings support the notion that spatial proximity is important to enable knowledge spillovers between industry and academia in particular due to the implicit and non-codified nature of knowledge (Jaffe, 1989; Fritsch & Franke, 2004).

On the other hand, many other studies (e.g. Monck et al., 1988; Westhead, 1997; Fukuga-wa, 2010) have only identified weak interaction between co-located firms and universities in STPs. Consequently, many match-pair analyses have not revealed significant differ-ences between on-park and off-park firms’ knowledge linkages to academia in terms of informal interaction or formal cooperation. For example, Westhead and Storey (1994) have stressed that on-parks firms even showed similarly weak levels of information about possi-ble areas of cooperation and potentially availapossi-ble resources of co-located academia.²⁴ In sum, the positive impact of STPs often is primarily associated with positive externalities strengthening the regional economy, improving businesses’ performances and stimulating predominantly informal and talent-based industry-academia interaction (Anttiroiko, 2004;

Thune, 2009). Nonetheless, the diverse research findings show that the effectiveness of STPs is not guaranteed per se. It varies instead from example to example. Many science parks are considered as successful in fulfilling their goals as anticipated, while many others have failed (Appold, 2004).²⁵ In the academic discussion, it has become clear that STPs do not generate positive effects automatically, and especially not in the short term (Anttiroiko, 2004). More specifically, the development of knowledge relations leading to interactive learning processes in STPs is an incremental and long-lasting process, one that is

24 The empirical divergence is well illustrated in an empirical study of the Sophia-Antipolis technopole. Tel Wal (2008) has provided evidence for localized industry-academia learning processes in the STP’s IT cluster, whereas equivalent knowledge interaction could not be detected for the STP’s life sciences cluster.

25 Interestingly, findings from STPs in weak and less advanced economies and lagging innovation systems, for example, less developed regions in Italy and Spain, tend to portray a rather positive assessment (e.g.

Colombo & Delmastro, 2002; Albahari et al., 2013). In contrast, diverging and more heterogeneous results have been presented for science parks in the UK, Sweden and the USA (Squicciarini, 2008).

ent on a large variety of framework conditions and influential effects.²⁶ Also, time is critical for the development of knowledge interaction between co-located firms and research institutions in STPs (Ter Wal, 2008; Longhi, 1999). In other cases, it is simply unclear whether STP resident firms only look for something different in their business location or locate in STPs due to anticipated economic, technological and knowledge-related externalities (Westhead

& Storey, 1994).

2.1.4 Challenges for STPs as designated knowledge-creating and