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technological and institutional development path is an important condition for avoid-
ing undesired ef ects of stability, or reducing what Martin (2006) describes as 'negative
lock- in ef ects'. Negative lock-in ef ects emerge when processes, structures and coni gu-
rations built up as a result of positive 'lock-in' become a source of increasing rigidity
and inl exibility (Martin, 2006; Martin and Sunley, 2006, p. 415, and Chapters 3 and 4
in this topic). Garud and Karnøe (2001) place emphasis on the strategic, deliberate and
mindful
action
of actors that enable the break-out of path dependence and institutional
stability. They focus on the micro level in which powerful actors can strategically create
new institutions, push innovation and create new paths.
The notion of 'path plasticity' does not question path dependency or the option of
deliberate path creation. It is introduced here to make the point that there is 'plasticity'
within a well-established institutional setting of technological development paths, which
enables innovation even with only a minor degree of compatibility to come into being
without necessarily breaking out of a path. Path plasticity is used here to set the focus
on the continuity of dynamic change, while path creation puts emphasis on the 'creative
destruction' and the mode of disruptive institutional change.
The term 'plasticity' was i rst introduced by Alchian and Woodward (1988, p. 69), who
used plasticity in the theory of economic organization to show that resources and invest-
ments are plastic. They indicated that there is a wide range of discretionary, legitimate
decisions the user may choose, thus claiming that this is underestimated in transaction
cost theory, especially with regard to the moral hazard and principal-agent problem.
Zysman (1994, p. 261) used the term 'social plasticity' to make the case that technology
is a socially created constraint. Thus strategies and tactics for approaching technological
problems will vary from place to place. Strambach and Storz (2008) argue there are two
sources of plasticity of innovation systems for which they use the notions numerical and
functional plasticity. Systems are coni gurated by a multitude of elements. The notion of
numerical plasticity is understood as the sum of these elements in relation to the whole
system, and is seen as a precondition for functional plasticity. The latter refers to the
way coni gurations can be moulded to produce new uses and can be adapted to new
functions or purposes. According to Strambach and Storz (2008) there is numerical and
functional plasticity in any given innovation system. They consider the institutional and
structural variety proved by the literature on regional and sectoral innovation systems in
recent years as evidence for the high degree of numerical plasticity in national innovation
systems.
In the following, the chapter builds on this dif erentiation and expands more specii -
cally on the plasticity of institutions and institutional arrangements and their contribu-
tion to the plasticity of paths. Geography does play an important role in the exploration
and exploitation of institutional plasticity through proximity ef ects and place-specii c
characteristics.
Plasticity of institutions
Besides their action-guiding function highlighted by the work on systems of innovation,
institutions simultaneously act as enablers, while actors can use institutions as toolkits in
a myriad of ways to solve innovative problems. They are able to recombine and convert
or reinterpret institutions for their new objectives or transfer institutions to dif erent
contexts. By doing this, actors shape and form institutions and are themselves becom-
