Geography Reference
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to better understand the dynamism of co-evolutionary processes. They suggest linking
learning-associated changes in the capabilities of a i rm with changes in transaction costs
in such a way that the altered scope of a i rm can be explained. A reduction of the scope
of the i rm implies the de-integration of the vertical chain and the development a new
supplier sector. However, for Jacobides and Winter this is not an irreversible process.
Using the example of two sectors they show how, i rst, specialisation through outsourc-
ing, and second, renewed intensii cation of scope through insourcing can take place over
a medium-term period of about ten years.
The starting point for their considerations is the given heterogeneity of i rms in a
sector with regard to production costs and the vertical extent of their capabilities. Insofar
as the more specialised i rms have a cost advantage, the market will likewise force the
others towards specialisation, and vice versa; this is the 'classical' selection of evolution-
ary economics. Which process dominates is determined by the respective sector, but is
also subject to the learning processes of each individual i rm. If i rms succeed in chang-
ing their environment with regard to transaction costs then a process of variation of the
scope of the i rm and a selection of what is then the 'best' path begins. If the best path is
vertical de-integration, this can lead to a cumulative process of knowledge accumulation
through specialisation, which in turn drives the creation of a new supply sector.
In this approach to co-evolution oriented toward change in institutional conditions,
a new but reversible sector emerges, dependent on the i rm-internal capabilities, i rm-
internal learning and changing transaction costs of a 'core sector'. This, however, raises
new questions. According to Jacobides and Winter (2005), a new technology, quartz
technology, was responsible for the reintegration of the watchmaking industry, particu-
larly in the Swatch company. But is the watchmaking industry of 2000 the same as that
of the 1980s? What justii es speaking of reversibility and not of fundamental reinvention
of the (quartz) watchmaking industry? The theory of the endogenisation of changes in
transaction costs through learning processes in the i rm and selection processes in the
sector is a useful insight, but it cannot ignore the fact that exogenous processes continue
to have considerable inl uence on transaction costs. Current trends towards outsourcing
and of shoring of business processes may be associated with painful learning processes
for individual i rms, but are subject to further conditions that are now summarised under
the heading of 'globalisation'.
Jacobides and Winter (2005) presented a conceptual framework for the co-evolution
of sectors but made no reference to the necessity of co-location. If economic geographers
are primarily interested in co-location as has been the case up to now, further arguments
are necessary to explain why the mechanisms of co-evolution should lead to the spatial
proximity of the af ected sectors. The answer is sought in specii c spatially tied institu-
tions that facilitate or enable co-evolution in spatial proximity. According to Brenner
(2004, p. 23f .) one should, however, dif erentiate more precisely between three types of
self-reinforcing process in clusters: direct cooperation processes between i rms, the 'indi-
rect' appearance of local externalities (see Schamp, 2002), and the emergence of associ-
ated supplier i rms for goods and services. It has remained unclear to what extent local
'symbiosis with other industries' can actually be proven (Brenner, 2004, p. 46). In his
attempt to understand the evolution of industrial clusters in a general sense by develop-
ing a model, the co-evolution of associated i rms had largely to be excluded.
The co-evolution of populations of i rms as a long-term process is very plausible.
