Geography Reference
In-Depth Information
seen as nodes of communication channels that are the result of an endogenous emerg-
ing process that shares the complex dynamics of the creation of the Internet network
(Antonelli, 2007; Pastor -Satorras and Vespignani, 2004).
Take as a starting point a population of heterogeneous and idiosyncratic i rms, distrib-
uted in dif erent regions, that have access to dif erent sources of knowledge and factor
markets and have a well-dei ned location in knowledge space. Each i rm, exposed to a
mismatch between beliefs and related plans, and the eventual factor and market condi-
tions, is pushed to generate new knowledge and to introduce new technologies. This
creative reaction requires dedicated activities: valorizing internal learning, carrying out
formal research and development activities, and acquiring external knowledge, both
tacit and codii ed. Such activities entail the assessment of specii c costs, such as the costs
of the coordination of the valorization of internal learning, the knowledge transaction
costs necessary to purchase codii ed knowledge in the markets for knowledge, and the
networking costs necessary to implement the acquisition of external knowledge, both
codii ed and tacit. Even tacit external knowledge does not spill freely into the air: its
acquisition is itself the result of intentional activities. Relevant absorption costs add to
the actual purchasing costs of external knowledge. The selection of the kind of tech-
nological knowledge is af ected both by the conditions for its generation and by the
conditions for its exploitation. Each i rm has a clear incentive to direct the generation of
new technological knowledge towards applications that make it possible to combine its
internal competence with the knowledge inputs that are locally abundant and that have a
strong idiosyncratic character. The intentional technological convergence, in fact, makes
it possible to generate more knowledge and to produce it at a lower cost.
Each i rm discovers that the convergent alignment of its internal research activities
with the complementary research activities of other i rms, co-localized in both geograph-
ical and knowledge space, is a powerful factor of competitive strength. It is immediately
clear that the lower the unit costs of external knowledge, the larger the amount of knowl-
edge that the i rm is able to generate, and the wider its localization in the specii c context
will be. A i rm that is located in a conducive knowledge environment, and that is able to
identify and access the local pools of knowledge at low costs, is induced to take advan-
tage of it and hence to root the generation of its new knowledge in the characteristics of
the environment into which it is based.
The amount of knowledge generated by i rms is larger when they are able to align their
research strategies in such a way as to take advantage of locally abundant knowledge.
Consistently, in the downstream applications, i rms can rely on a larger increase in ei -
ciency with the same amount of budget available to fund the generation of new knowl-
edge. The amount of external knowledge that is used in the knowledge generation process
has a direct bearing not only on the amount of knowledge being generated and hence on
the shift ei ciency engendered in the production process, but also on its characteristics.
Firms that rely more on external knowledge are more likely to produce complementary
knowledge. The technological path of each i rm will rel ect the characteristics of both
its own internal quasi-irreversibilities and learning processes, and the local context. The
initial conditions play a key role in dei ning the context of action. The external context
however, at each point in time, af ects the dynamics powerfully. The direction of the
process is constrained by the initial conditions, but it can change at each point in time.
The path dependence limits, at each point in time, the span of possible directions. Path
