1 Firm Location, Corporate Structure, R&D Investment, Innovation and Productivity

This study elucidates how firm characteristics, innovation-system collaboration, market extension and firm location influence economic performance, innovation efforts and innovation output. Firm characteristics include corporate structure, size, capital and knowledge assets, R&D persistence etc. The location variable separates Sweden into five areas, one of which is the Stockholm metropolitan region. The study is based on 2,083 Community Innovation Survey firm level observations for Sweden. The first stage of the empirical analysis shows that the propensity to be an innovative firm (making innovation efforts) is an increasing function of size, profitability, human capital, and extensive markets. For the subgroup of innovative firms, return to product innovations is positively related to location in the Stockholm region, multinational firms, R&D investment and persistence, and negatively related to firm size. For the same subgroup, total sales per employee follow a similar pattern, but value added per employee does not. The paper also reports about firms ’ R&D investment, external collaboration on innovation, and non-imitation innovations across the same regions. The results suggest that a firm’s R&D- embeddedness in scientific, horizontal and vertical innovation systems is primarily determined by its corporate structure, not geographic location