Does Spatial Clustering Lead to Tangible Financial Advantages for Enterprises? Evidence from IT Firms in Estonian Smart Cities

The growing policy emphasis on innovation ecosystems and science parks raises the question of whether spatial clustering translates into measurable financial advantages at the firm level. This study aims to determine whether location within a science park is a significant determinant of firm financial performance, using evidence from IT firms in Ülemiste City (Estonia) and a comparable control group. The analysis is based on an unbalanced panel dataset of 190 firms (20 within the park and 170 outside) over the period 2020–2024 and employs descriptive statistics, parametric and non-parametric tests, and generalized least squares (GLS) regression modeling. The results indicate that firms located within the park demonstrate higher average sales revenue (4259.09 vs. 2525.70) and greater value added (728.51 vs. 578.32), suggesting a stronger scale of operations and higher economic output. Profitability indicators are also more stable within the park, with higher return on equity (25.59% vs. 22.13%) and a positive net profit margin (0.09 vs. −0.09), reflecting more consistent operational efficiency. In contrast, firms outside the park exhibit substantially higher growth rates in sales (674.45% vs. 25.19%) and net profit (253.95% vs. 213.77%), although these results are driven by extreme variability and outliers. Furthermore, liquidity levels are significantly higher outside the park (15.47 vs. 2.98), indicating more conservative financial management but also greater dispersion. The regression analysis reveals that firm-specific characteristics, particularly age, lagged sales revenue, and employment, have a stronger and statistically significant impact on performance than location. At the same time, the debt ratio negatively affects profitability indicators. These findings suggest that science park location contributes to scale and stability advantages but is not a dominant determinant of financial performance.