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Knowledge Spillovers and Growth in the Disagglomeration of the Us Advertising‐Agency Industry

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  • Charles King
  • Alvin J. Silk
  • Niels Ketelhöhn
Abstract
We investigate knowledge spillovers and externalities in the disagglomeration and growth of the advertising‐agency industry. A simple model of high demand, low wages, and externalities associated with clusters of related industries can explain the dispersion of advertising agency employment across states. Other factors affected the industry growth rate within states. Consistent with Jacobs and Porter but contrary to Marshall, Arrow, and Romer, competition, but not specialization, enhanced growth. In accord with Porter (1990), growth increased with buyer cluster size. Diversity had no effect on growth. Despite improvements in telecommunications and transportation reducing effective distances, location still matters.

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  • Charles King & Alvin J. Silk & Niels Ketelhöhn, 2003. "Knowledge Spillovers and Growth in the Disagglomeration of the Us Advertising‐Agency Industry," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(3), pages 327-362, September.
    • Handle: RePEc:bla:jemstr:v:12:y:2003:i:3:p:327-362
    DOI: 10.1111/j.1430-9134.2003.00327.x
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    References listed on IDEAS

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    Cited by:

    1. Robert Faff & Tribeni Lodh & Jerry Pawada, 2012. "Location Decisions of Domestic and Foreign-Affiliated Financial Advisors: Australian Evidence," Journal of Financial Services Research, Springer;Western Finance Association, vol. 42(3), pages 207-228, December.
    2. Henri L.F. de Groot & Jacques Poot & Martijn J. Smit, 2007. "Agglomeration, Innovation and Regional Development: Theoretical Perspectives and Meta-Analysis," Tinbergen Institute Discussion Papers 07-079/3, Tinbergen Institute.
    3. Mohammad Arzaghi & Ernst R. Berndt & James C. Davis & Alvin J. Silk, 2008. "Economic Factors Underlying the Unbundling of Advertising Agency Services," NBER Working Papers 14345, National Bureau of Economic Research, Inc.
    4. Belal Fallah & Mark D. Partridge & Dan S. Rickman, 2014. "Geography and High-Tech Employment Growth in US Counties," Journal of Economic Geography, Oxford University Press, vol. 14(4), pages 683-720.
    5. Martijn J. Smit & Maria A. Abreu & Henri L.F. Groot, 2015. "Micro-evidence on the determinants of innovation in the Netherlands: The relative importance of absorptive capacity and agglomeration externalities," Papers in Regional Science, Wiley Blackwell, vol. 94(2), pages 249-272, June.
    6. Mikaela Backman, 2014. "Human capital in firms and regions: Impact on firm productivity," Papers in Regional Science, Wiley Blackwell, vol. 93(3), pages 557-575, August.
    7. Argentino Pessoa, 2014. "Agglomeration and regional growth policy: externalities versus comparative advantages," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(1), pages 1-27, August.
    8. Mohammad Arzaghi, 2005. "Quality Sorting and Networking: Evidence from the Advertising Agency Industry," Working Papers 05-16, Center for Economic Studies, U.S. Census Bureau.
    9. Alvin J. Silk & Charles King III, 2008. "Concentration Levels in the U.S. Advertising and Marketing Services Industry: Myth vs. Reality," Harvard Business School Working Papers 09-044, Harvard Business School.
    10. Guangchao Charles Feng & Yuting Zhang & Qiuyu Hu & Hong Cheng, 2018. "Performance of China’s advertising agencies: a time series cross-sectional analysis," Asia Pacific Business Review, Taylor & Francis Journals, vol. 24(5), pages 656-674, October.
    11. Marian Gorynia & Barbara Jankowska, 2007. "Wpływ klasterów na konkurencyjność i internacjonalizację przedsiębiorstw," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 7-8, pages 1-18.

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