The impact of local technology institutions and R%D investments on information and knowledge flows inside clusters

This research evaluates the role of local technology institutions as an external source of ideas, information and knowledge that foster innovation and enhance the performance of firms. It is argued that firms that establish links with local technology institutions have access to valuable external information and knowledge flows, which in turn improve their export performance. We also examine differences in their absorptive capacity, which is their ability to recognise and assimilate information and knowledge spillovers, which depends on their existing internal knowledge stock. Empirical evidence from 106 exporting companies in the Iberian Ham cluster confirms that links with local technology institutions improve export performance. Contrary to expectations, the stock of internal knowledge does not increase a firm's ability to absorb external knowledge. It appears that firms reduce the spillovers created around the technology institution network, either to protect their internal investments or to develop links outside the cluster.