The role of fields of study for the effects of higher education institutions on regional firm location

Plain English SummaryUniversities of applied sciences (UASs) foster regional firm location but not for all fields of study or industries. Most gains stem from UASs in Chemistry & Life Sciences or Business, Management & Services and emerge mainly in service industries. UASs as knowledge suppliers provide regional firms as knowledge consumers with results of applied research and with human capital. However, positive effects on firm location only emerge if knowledge outputs of UASs as suppliers match knowledge needs of firms as consumers. Our study shows that good matches occured for UASs in Chemistry & Life Sciences or Business, Management & Services with service industries, which are typically characterized by radical service innovations and incremental product or process innovations. For policymakers who want to push regional innovation ecosystems, our findings imply that establishing UASs which promote these ecosystems requires careful consideration of regional firms' knowledge needs. If UASs provide matching knowledge, UASs stimulate the regional innovation ecosystem and thereby firm location. The literature on knowledge spillovers provides evidence that higher education institutions (HEIs) positively affect regional firm location (i.e., start-ups or firms located in a region). However, less is known about how HEIs in different fields of study impact regional firm location in different industries. To investigate this question, we exploit the establishment of universities of applied sciences (UASs)-bachelor's degree-granting three-year HEIs in Switzerland. We find that the effects of UASs are heterogeneous across fields of study and industries. UASs specializing in "chemistry and the life sciences" and "business, management, and services" are the only UASs that positively affect regional firm location across several industries. Positive effects emerge in service industries characterized by radical service, incremental product, or process innovations. Thus, UASs are not a one-size-fits-all solution for increasing regional firm location. Instead, only UASs specializing in particular fields of study positively influence firm location in certain industries.