The Journal of Technology Transfer

, Volume 44, Issue 6, pp 1784–1815 | Cite as

Geographical clustering and the effectiveness of public innovation programs

  • Dirk Crass
  • Christian RammerEmail author
  • Birgit Aschhoff


The paper analyses how geographical clustering of beneficiaries might affect the effectiveness of public innovation support programs. The geographical proximity of firms operating in the same industry or field of technology is expected to facilitate innovation through knowledge spillovers and other localization advantages. Public innovation support programs may leverage these advantages by focusing on firms that operate in a cluster. We investigate this link using data from a large German program that co-funds R&D projects of SMEs in key technology areas called ‘Innovative SMEs’. We employ three alternative cluster measures which capture industry, technology and knowledge dimensions of clusters. Regardless of the measure, firms located in a geographical cluster are more likely to participate in the program. Firms being part of a knowledge-based cluster significantly increase their chance of receiving public financial support. We find no effects, however, of geographical clustering on the program’s effectiveness in terms of input or output additionality.


Geographical clustering Effectiveness of public programs Innovation 

JEL Classification

C35 H50 O31 O32 O38 R59 



This research emerged from an evaluation study of the efficiency and effectiveness of the ‘Innovative SMEs’ scheme commissioned by the German Federal Ministry of Education and Research and conducted by the Centre for European Economic Research in co-operation with Prognos AG and the Institute for SME research at the University of Mannheim. We thank Thomas Eckert for processing administrative project data. We would also like to thank two anonymous reviewers for their very helpful comments. The usual disclaimer applies.


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Copyright information

© Springer Science+Business Media New York 2017

Authors and Affiliations

  1. 1.Landesbank Hessen-Thueringen GirozentraleFrankfurt am MainGermany
  2. 2.Department Economics of Innovation and Industrial DynamicsCentre for European Economic Research (ZEW)MannheimGermany
  3. 3.Landesbank Baden-WuerttembergStuttgartGermany

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