Geography Reference
In-Depth Information
dependence consists of the continual redei nition of a limited span of possible directions.
The convergence of the research strategies of each i rm can gain momentum.
There are strong incentives that favor the convergence of the research projects of each
i rm towards local pools of common knowledge. Positive feedbacks are likely to rein-
force the process as the ef orts to increase the complementarity of the research activities
of i rms create the local pools of knowledge, with the result that the chances to access
external knowledge increase. At the population level, the ef ects of individual conver-
gence are reinforced by selection mechanisms. The success of the localized knowledge
generation strategies acts as a powerful focusing mechanism that, by means of selection
processes, favors the survival and growth of i rms that have selected a convergent path
of knowledge generation.
Systems of innovation emerge. They develop in technological districts and clusters,
when the generation of new technological knowledge is reinforced by the emerging struc-
ture of complementarities implemented by communication channels provided by the
intentional research strategies of i rms that discover new sources of complementarities
and move in the knowledge space. In special circumstances the emergence of innovation
systems driven by highly performing network structures that have emerged through the
collective dynamics of a myriad of agents in search for potential complementarities may
lead to Schumpeterian gales of innovations.
At each point in time each i rm is rooted in a well-dei ned location in knowledge space.
The dynamics of the emergence (and decline) of technological systems based on potential
knowledge complementarities can be grasped when we appreciate that each i rm is able
to move in such a knowledge space and generate new knowledge taking advantage of
increased proximity and reinforced communication channels with other i rms clustering
in nodes. As a result, new systems of innovation based on nodes of coherent knowledge
complementarity emerge (and others decay) while the direction of technological knowl-
edge is shaped by the emergent collective convergence of each i rm's research strategy
(David et al., 1995).
Pecuniary externalities however are neither exogenous nor, by dei nition, static. The
convergent dynamics may exhibit both positive and negative ef ects. On the one hand
the amount of external knowledge available within the district keeps increasing and its
costs are lower and lower. On the other hand, however, knowledge governance costs may
increase as the number of i rms accessing the same knowledge pools increase because of
the ef ects of congestion in coordination. Density may have negative ef ects in terms of
reduced knowledge appropriability: the case for excess clustering can take place when
proximity favors the uncontrolled leakage of proprietary knowledge. In the same way
the price of idiosyncratic inputs may increase with the increasing levels of their derived
demand as shaped by the introduction of directional technological change.
The dynamics of the process rel ect the interplay between the positive and negative
changes of the levels of pecuniary externalities, both in knowledge generation and
knowledge exploitation. The convergence of the direction of technological change and
the emergence of innovation systems in geographical and technological space takes place
as long as the rising levels of knowledge governance costs, and the rising prices of the
idiosyncratic inputs do not exhaust pecuniary externalities. Innovation systems emerge
depending on the relative weights of the positive and negative pecuniary externalities. 5
Innovation systems can emerge and decline depending on specii c factors such as the
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