Knowledge Spillover Effects and Employment Productivity in the Innovative Startups: Evidence from Italy

Abstract

This paper analyzes the determinants and effects of technological catch-up and knowledge spillover effects on employment productivity in the Innovation Startup Segment in Italy using a sample of 260 Innovative Startup companies. Estimates indicate that regional specialization provides the highest potential for employment productivity gains, while higher levels of competition and higher regional diversity suppress the prospects for knowledge spillover effects to develop. Particularly, the analysis using the comprehensive sample of firms indicates the presence of forces leading to output per worker convergence at the national level, i.e., technological catch-up is present at the per-worker level; yet, the overall value of production convergence across regions is not present. We also detect the presence of Spatial Dependency in relation to the neighboring firms. That is, there is support for weak convergence across regions in favor of the Marshallian hypotheses. However, sectorial estimations for the Services, Information Technology, and Manufacturing sector indicate the presence of large differences in terms of technological catch-up effects.