Geography Reference
In-Depth Information
Table 8
.
1
Industrial clusters: a transaction cost perspective
Characteristics
Pure agglomeration
Industrial complex
Social network
Firm size
Atomistic
Some i rms are large
Variable
Characteristics of
relations
Non- identii able
Fragmented
Unstable frequent
trading
Identii able
Stable and frequent
trading
Trust
Loyalty
Joint lobbying
Joint ventures
Non- opportunistic
Membership
Open
Closed
Partially open
Access to cluster
Rental payments
Location necessary
Internal investment
Location necessary
History
Experience
Location necessary but not
sui cient
Space outcomes
Rent appreciation
No ef ect on rents
Partial rental capitalisation
Example of cluster
Competitive urban
economy
Steel or chemicals
production complex
New industrial areas
Analytical
approaches
Models of pure
agglomeration
Location-
production theory
Input-output
analysis
Social network theory
(Granovetter)
Notion of space
Urban
Local or regional
but not urban
Local or regional but not
urban
l ows and inl ows, particularly when strong economies of scale and scope in research and
technology are active within the i rm (as in the case of large or multinational i rms). As
said above, the structure and organisation of an industry will af ect the i rm's perceptions
of knowledge l ows, and therefore, in particular, its choice to locate
in situ
technological
and innovative operations.
For example, we can consider the case of a broadly competitive market structure that
is characterised by a large number of i rms, each with a relatively small market share and
proi ts. In this case, competitor i rms will have less to lose from knowledge outl ows and
more to gain from inl ows stemming from a strong clustered location. In such a situation,
the public good aspect of local knowledge will predominate and knowledge outl ows will
be viewed as being generally positive. In the taxonomy of Table 8.1, this combination of
features is exhibited by the pure agglomeration model, where i rms are essentially atom-
istic, their relations are inherently transient, and the notion of space is mostly urban, in
that this type of clustering only exists within individual cities.
In an oligopolistic industry structure, on the other hand, particularly when character-
ised by a few large i rms or MNEs, each with a large market share and considerable stra-
tegic interdependence, i rms often perceive that knowledge outl ows to industry rivals
can be extremely costly in terms of lost competitive advantage. In these circumstances
the private good aspect of knowledge is generally the dominant consideration. In situ-
ations where any knowledge outl ows from a i rm are more valuable to its competitors
than are any potential knowledge inl ows to the i rm from its competitors, the overall net
ef ect of unintended knowledge outl ows will be perceived by the MNE to be negative
