Geography Reference
In-Depth Information
capabilities in the horizontal dimension constantly imitate the proven or foreseeable
success of one another.
While suppliers and customers in a vertically organized production chain need to
interact with each other in order to do business, competitors do not. Introducing the
horizontal dimension means that localized learning in part may be independent of the
degree of internal interaction, at least in principle. The only requirement is that several
i rms undertaking similar activities are placed in circumstances where they can monitor
and compare each other's undertakings constantly, closely, and almost without ef ort or
costs.
Local competition between similar i rms may of course also make up a selection
mechanism in its own right. The fact that the co-presence of many similar i rms creates a
local environment in which it is hard to survive (recent studies show that spatial cluster-
ing may bring about a high degree of exits, see e.g. Boschma and Wenting, 2007) can be
seen as a cluster disadvantage (as a form of diseconomies of agglomeration) but also as
something that fosters globally competitive i rms.
In addition to the proximity ef ects that manifest themselves in interaction or encoun-
ters between collocated i rms, there are processes of localized learning that are inherent
in the everyday life of people working - and living - in any local setting. Information
exchange - or knowledge spillovers - does go on that is not related to the conscious
undertakings of i rms, but is rather to be seen as an unintended side ef ect of such
undertakings. By taking up a concept introduced by Storper and Venables (2004), the
authors have previously denoted this phenomenon as 'local buzz' (Bathelt et al., 2004).
In a similar way, Owen-Smith and Powell (2004) use the notion of 'local broadcasting'
and Grabher (2002) the term 'noise' to denote the idea that there are lots of useful things
going on simultaneously in a local milieu and therefore lots of inspiration and informa-
tion to receive for the perceptive local actor. Buzz refers to the information and commu-
nication ecology created by numerous face-to-face contacts as people and i rms within
the same industry collocate in the same city, district, or region. Buzz consists of specii c
information and continuous updates of this information; intended and unanticipated
learning processes in organized and accidental meetings; the application of the same
interpretative schemes and mutual understanding of new knowledge and technologies; as
well as shared cultural traditions and habits, which taken together make interaction and
learning less costly. Actors continuously contribute to and benei t from the dif usion of
information, gossip, and news by just dwelling in a certain place (Gertler, 2003).
Firms that are located in the same place are also able to understand the local buzz
in a meaningful and useful way. The reason is, as already noted, that spatial proximity
stimulates i rms to develop similar language, technology attitudes, and interpretative
schemes (Lawson and Lorenz, 1999; Maskell and Lorenzen, 2004). Also, as has been sug-
gested elsewhere (Maskell et al., 1998), trust tends to exist in local milieus as something
inherited, that any 'insider' will benei t from by default. Local milieus thus consist of
agents that are bound together by day-to-day interaction, based on the same expertise,
a common set of technological knowledge, and similar experience with a particular set
of problem-solving techniques. Such relations can develop within a i rm but also span a
single organization and include other i rms of a value chain (Gertler, 2001).
These processes can be seen as analogous with the neighborhood ef ect that has been
established, for example, in studies of voting behavior. In that context Johnson et al.
