Agglomeration and spillovers: concentration versus dispersion. Evidence from regional innovative startups in Italy

Abstract Tracking more than 9000 Italian innovative start-ups geocoded at the one-kilometer resolution, we deploy a multilevel space–time model, instrumented with historical road networks, to examine how regional ecosystems shape entrepreneurial concentration. We revisit the three classical Marshallian channels (specialization, competition, and labor pooling), and we test asymmetric, cross-border knowledge spillovers and show that agglomeration can either amplify or dilute technology transfer across neighboring territories. Our results reveal sharp regional–sector asymmetries: some pairs intensify clustering while others next door disperse, exposing hidden dynamics that uniform models overlook. By reframing agglomeration as both conduit and barrier to technology transfer, we demonstrate that firm intensity depends not only on local Marshallian forces but also on the relative stocks of high-skilled human capital that mediates “push” and “pull” spillovers along shared borders. Sector-level decomposition further indicates that manufacturing and knowledge-intensive services respond differently to diversity and specialization, challenging one-size-fits-all prescriptions. Because identical policy levers yield divergent outcomes, the implications of this study suggest that policymakers need to be well aware that agglomeration is industry-sector-specific and conditional on the existing level of industry development already existing in each location. Therefore, place-sensitive policies in specific regional corridors accounting for industry mix and existing agglomeration levels should be the approach to follow for designing regional economic policy. We position cross-border technology transfer as the missing link reconciling the long-standing debate between concentration and dispersion strategies, providing a roadmap for place-based innovation policy.