Geography Reference
In-Depth Information
has taken root in a particular place, several mechanisms come into play at the micro
level of explicit agency.
A potential entrepreneur will decide to start a business similar or complementary to
what already exists locally, because (myopic) cognitive limitations reinforce powerful
economic incentives. Firms with similar competencies are attracted because collocation
implies economizing on locational search costs: the prior local existence of one or more
successful i rms in an industry proves that no obvious or obscure locational factor makes
the area less suitable for that specii c kind of economic activity. Collocation furthermore
enables latecomers to piggyback on pioneering i rms' investments in labor market devel-
opment, infrastructure adjustments and institution building. Firms with complementary
competencies will, in turn, become attracted by the commercial possibilities of increased
local demand or the opening of new local sources of supply. A chain of cumulative cau-
sation (Myrdal, 1957; Veblen, 1898) can be set in motion where the vertical expansion
of the cluster through attraction of i rms with complementary competencies adds to the
initial attractiveness of the cluster along the horizontal dimension of i rms with similar
competencies.
The decisions made by the i rms have a parallel at the level of individual workers, as
the most talented wannabes of an industry will tend to l ock around the hotspots where
i rms in this line of business agglomerate. But over time, some employees will leave the
incumbent i rms to start their own business while utilizing i rm-specii c routines learnt
before the spin-of . Particularly successful routines would thus not only provide parent
i rms with above-average chances of survival but, consequentially, also enable numer-
ous spin-of s, each endowed with inherited and previously tried-out routines. Through
rounds of selection and intensii ed local rivalry (Porter, 1990) the spin-of s help create
stable clusters with i rms that through generations can dominate an industry nationally
or even globally (Boschma and Wenting, 2007; Buenstorf and Klepper 2005; Thompson
and Klepper, 2005; Klepper, 2002; Dahl et al., 2003, 2005).
The assertion that clusters are essentially the result of myopic behavior should thus
not be taken to indicate that clusters cannot for shorter or longer periods be ei cient,
or indeed competitive, spatio-organizational forms. On the contrary, clusters represent
a possibility to circumscribe some of the potential problems stemming from myopia.
The variety that follows from the parallel experimentation going on when a number of
i rms set out to solve similar problems while competing locally can be seen as a localized
capability. If functional and spatial myopia is indeed a human condition, those actors
lucky enough to i nd world-class solutions and global best practices in their backyard
gain advantages over those who do not. In this way, a set of decisions and actions, partly
framed by the cognitive and other constraints of the actors involved, can combine to
create an aggregate structure that turns out to be not just economically sustainable but
indeed globally successful.
But, as shown in previous sections, the success also carries with it the seeds of future
destruction as the evolutionary process of selecting temporarily best practices accumu-
late to isomorphic pressures that gradually reduce existing variety in routines. Lack of
variety combined with spatial myopia leads to an insular mind-set that, in turn, enables
local actors to ignore signs of needed readjustment. However, the potentially most dam-
aging long-term consequences may be avoided as long as at least some of the collocated
i rms actively invest in building absorptive capacities and pipelines to external knowledge
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