Knowledge Spillover - MAR Spillover

MAR Spillover

MAR spillover has its origins in 1890, where the English economist Alfred Marshall developed a theory of knowledge spillovers. Knowledge spillovers later were extended by economists Kenneth Arrow (1962) and Paul Romer (1986). In 1992, Edward Glaeser, Hedi Kallal, José Scheinkman, and Andrei Shleifer pulled together the Marshall-Arrow-Romer views on knowledge spillovers and accordingly named the view MAR spillover in 1992.

Under the Marshall-Arrow-Romer (MAR) spillover view, the proximity of firms within a common industry often affects how well knowledge travels among firms to facilitate innovation and growth. The closer the firms are to one another, the greater the MAR spillover. The exchange of ideas is largely from employee to employee, in that employees from different firms in an industry exchange ideas about new products and new ways to produce goods. The opportunity to exchange ideas that lead to innovations key to new products and improved production methods.

Business parks are a good example of concentrated businesses that may benefit from MAR spillover. Many semiconductor firms intentionally located their research and development facilities in Silicon Valley to take advantage of MAR spillover. In addition, the film industry in Los Angeles, California and elsewhere relies on a geographic concentration of specialists (directors, producers, scriptwriters, and set designers) to bring together narrow aspects of movie-making into a final product.

However, research on the Cambridge IT Cluster (UK) suggests that technological knowledge spillovers might only happen rarely and are less important than other cluster benefits such as labour market pooling.