The digital layer: alternative data for regional and innovation studies

Abstract

The lack of large-scale data revealing the interactions among firms has constrained empirical studies. Utilizing relational web data has remained unexplored as a remedy for this data problem. We constructed a Digital Layer by scraping the inter-firm hyperlinks of 600,000 German firms and linked the Digital Layer with several traditional indicators. We showcase the use of this developed dataset by testing whether the Digital Layer data can replicate several theoretically motivated and empirically supported stylized facts. The results show that the intensity and quality of firms’ hyperlinks are strongly associated with the innovation capabilities of firms and, to a lesser extent, with hyperlink relations to geographically distant and cognitively close firms. Finally, we discuss the implications of the Digital Layer approach for an evidence-based assessment of sectoral and place-based innovation policies.