Assessing the Impact of Science and Technology Parks on Firm Profitability: A Comparative Study of On-Cluster and Off-Cluster Dynamics

Mousa Al-Kfairy, Zayed University

Document Type

Conference Proceeding

Source of Publication

Proceedings of the European Conference on Knowledge Management, ECKM

Publication Date

1-1-2024

Abstract

Science and Technology Parks (STPs) are pivotal in driving regional development, primarily through fostering innovation and enhancing regional wealth. However, the impact of STPs on regional development remains a contentious topic with inconclusive findings. This study digs into the contribution of STPs to the profitability of firms by conducting a comparative analysis of profitability and salary data between firms located within these parks (on-cluster) and those outside them (off-cluster). The research adopts a two-pronged approach: initially, it examines firm profitability and employee salaries at an aggregate level to understand the overall economic impact of STPs. Following this, it models the various factors that influence firm profitability, offering a nuanced understanding of the dynamics at play. The findings are revealing – being located within an STP (on-cluster) appears to significantly boost a firm's profitability, but only up to a certain size of the cluster. This suggests that the benefits of being in an STP diminish beyond a certain scale. At a more granular, micro level, the study finds that a firm's previous innovation output has a positive impact on its profitability. This underscores the importance of continuous innovation for sustained economic success within these clusters. Conversely, a larger firm size seems to negatively impact profitability within STPs, indicating a potential strategy for growing firms to relocate off-cluster to mitigate this effect. For firms operating outside STPs (off-cluster), the scenario differs. Here, innovation plays a partial role in influencing profitability, and interestingly, the size of the firm does not significantly impact its profitability. This distinction between on- and off-cluster firms highlights the unique economic ecosystems fostered by STPs and their varied effects on firm performance. Overall, this study contributes to the ongoing debate on the role of STPs in regional development, offering new insights into how these entities affect firm profitability and suggesting potential strategies for firms operating within and outside these parks.

ISBN

[9781917204101]

ISSN

2048-8963

Publisher

Academic Conferences International Ltd

Volume

2024-September

First Page

18

Last Page

25

Disciplines

Computer Sciences

Keywords

Cluster Dynamics, Firm Profitability, Innovation Output, Knowledge Management, Science and Technology Parks (STPs)

Scopus ID

85206669559

Indexed in Scopus

yes

Open Access

no

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