A mix of small and large firms can be key to regional innovation

Areas such as Silicon Valley and Boston are often held up as examples of innovative regions to be emulated, but what makes them this way? By analysing patent data on computers and communication technology, Ajay K. Agrawal, Iain Cockburn, Alberto Galasso, and Alexander Oettl, argue that the mix of large and small firms in a region is very important to regional innovation. He writes that regions where a number of small and large lists coexist are more productive in terms of innovation, when compared to those that have only a small number of large firms or a large number of small ones.