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Edited by Léo-Paul Dana
19 The case of Canadian computer software ﬁrms Rod B. McNaughton and Peter Brown The concept of ‘clustering’ is now central to the design of economic development policies in many countries. The belief is that co-located ﬁrms experience externalities that improve their performance, and contribute to their innovativeness and international competitiveness. These beneﬁts arise from access to factors of production, and highly localized inter-ﬁrm relationships facilitated by place-speciﬁc history, economic factors, values and culture (Sabel, 1989; Becattini, 1990). The theory to support this argument comes from a diverse literature including Porter’s (1990) work on the creation of competitive advantage, the concepts of both milieu and industrial districts (for example, Camagni, 1991), and research that stresses the role of locally speciﬁc knowledge and learning (for example, Malmberg, 1997). The beneﬁts of co-location are also thought to help ﬁrms increase the scope of their markets, and clusters are increasingly seen as a driving force in international trade (Brown and McNaughton, 2002). Clusters are credited with providing an environment in which world-leading technology can be developed, credibility and reputation can be established, and linkages can be developed to gain access to international markets. However there is relatively little empirical evidence to show whether ﬁrms located in clusters indeed derive more of their total sales from foreign markets. This chapter reports research that tests whether co-located ﬁrms are more export-intense, using a sample of 537 Canadian software ﬁrms drawn from an Industry Canada directory. Firms in the sample include...
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