Firm Innovation Strategies: a Spatial Cohort Multinomial Probit Approach

This paper presents a multinomial extension of the binary probit model that allows for inter firm utility based on a spatially defined cohort of firms. Extending the class of Bayesian spatial logit/probit models, we investigate how firms decisions regarding innovation strategies are related to a spatially defined cohort of nearby firms' strategy choices. The results suggest that firms choice of innovation strategies are similar to those made by firms located nearby in space.