Spill over or Spill out? - A multilevel analysis of the cluster and firm performance relationship

Regional clusters have become an inseparable component of modern economies. Spurred by the idea that clusters unrestrictedly encourage firm innovativeness, the cluster approach has particularly gained attention among politicians. Nevertheless, due to a lack of holistic consideration of different influencing variables, the scientific results about the effect of clusters on firm innovative performance are highly contradictive. Consequently, this paper aims to empirically investigate the conditions through which companies can gain from being located in clusters, focussing thereby particularly on moderating variables that relate to possible knowledge spillovers. Therefore, three different levels of analysis are considered separately and interactively. By analysing a unique multilevel dataset of 11.889 companies in Germany evidence is found that being located in a cluster has a positive impact on firm innovativeness. However, the results also indicate that firms benefit unequally within the cluster environment, depending on the specific firm, cluster and market/industry conditions.