On the Spatial Determinants of Firm Growth: A Microlevel Analysis of the Italian SMEs

In this chapter, we carried out an empirical analysis to study how localization economies shape the patterns of firm growth. Our investigation departs markedly from most of the recent literature on the subject, inthat we adopt an alternative way of quantifying the effects of spatial externalities based on micro-data. In this respect, we suggested to use the Getis local K-function (Getis1984;GetisandFranklin1987) todefine firm-level indicators that endogenize the emergence of geographical economies. In this way, we are able to tackle two methodological problems typically arising in empirical work when considering regional aggregated data: (a) the dependence of the results on the particular adopted geographical partition (into, e.g., counties or regions) and (b) the restrictive assumption of spatial homogeneity of the phenomenon within regions which does not allow to take into consideration the intra-regional variability.