| The dissertation investigates the distinguishing nature of high-technology firm behavior. The first part builds on the previous literature on the economics of industry agglomeration. The major aim of the essay is to distinguish high and low-tech industry groups in benefiting from concentration and size of economic activity inside a locale. The estimation technique is non-linear least squares which is used to estimate a non-linear productivity equation. The non-linearity is based on the theoretical construction which involves an aggregation from county level to state level data. The results are suggestive of the behavioral differences between these two different industry groups.; In the second part, I move one step further to examine the distinguishing nature of high-tech inter-firm contracting; I analyze the effect of space, and in particular distance. I base my analysis on the idea that skill transfer among the contracting firms increases the risks of partner deviation from mutual goals. I claim that proximity between the firms enhances monitoring, which could prevent such hazards. Further, based on anecdotal evidence, I hypothesize that in clusters where firms are located in close proximity and form networks, such partner deviation might further be reduced.; In this second part of my dissertation, I use a commercial database which includes information on the partnership activity of Silicon Valley firms. The dataset includes 480 inter-firm partnerships. In order to test the above hypothesis, I form a skill quotient variable which is the proportion of scientists, engineers and mathematicians that are employed to achieve the mutual partnership activities. Next, I form two location variables which aim to distinguish the effect of distance versus being located inside a cluster on the form of partnerships. The results provide robust evidence that increased skills and distance induce firms to integrate. Furthermore, firms within clusters choose to engage in inter-firm contracting instead of integrating even when skills are increased. |
