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ABSTRACT This paper uses data from the Community Innovation Survey for Belgium to evaluate to what extent firms located in sectors and regions characterised by high employment concentration innovate more. We analyse the innovative performance of Belgian firms and relate it to agglomeration measures, as well as to a number of control variables. Our findings show a positive impact of localisation and urbanisation economies on firm‐level innovation output, lending support to the hypothesis that firms can benefit from their location within regions/sectors characterised by high employment concentration. In an analysis of low, medium, and high‐tech manufacturing and service industries, localisation economies are shown to improve firms' innovativeness only for low‐tech manufacturing and service sectors, while urbanisation externalities are shown to matter more for high‐tech service sectors. This suggests that localisation economies can be an important source of competitiveness for low‐tech sectors, while urbanisation economies improve innovativeness of high‐tech service firms.
Beule et al. (Wed,) studied this question.
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