Abstract
It was widely observed in empirical studies that frequent interactions between economic actors within a relatively short space are potentially leading to localized knowledge spillovers. Strengthening of collaboration ties in knowledge networks and agglomeration forces continually reenforce each other leading to formation of technological clusters.
Despite a growing popularity of a 'cluster' notion, there is still a lack of consensus on its precise definition and a need for consistent bottom-up approach to cluster identification not relaying on predefined administrative borders or geographical concentration of related activities. This paper's contribution to the literature is a novel approach to cluster identification which simultaneously exploits both important sources of information: relative allocation of economic actors across space and patterns of interconnections among them.
Using sets of identified clusters, we show how combination of both proximity and interconnectedness of inventors within clusters is related to the quality of resulting innovations.