Geography Reference
In-Depth Information
cities, where product innovation i rst occurs, towards lower labour cost locations in
more peripheral regions and countries (see, for example, Vernon, 1966). The predictable
evolution along a path determined by the maturity of the product thus leads to the dis-
persal of production and growing wealth in lower cost regions. This evolution towards
predictable types of development path is, of course, highly problematic (Markusen,
1985; Storper, 1985; Taylor, 1986). In Storper's (1985) evaluation, for example, the
product cycle approach was too essentialist as it sought regular mechanical, and closed
system relationships among variables, and failed to recognise the full open-ended ontol-
ogy of economic processes. In particular, he suggested that industrial 'life-cycle' notions
extrapolate from transitory and contingent empirical phenomena and credit them with
the status of a teleological developmental logic. The choices in manufacturing and
business strategy envisaged are too determinate and too closely related to the extent
and maturity of the market: 'the cycle conceives of technological history as a series of
determinate, repeating events, which it assumes to be a common to all industries. Thus
it would turn economic history into a kind of “natural history”' (Storper, 1985, p. 271).
Storper advocated a more open-ended view of history as a series of unfolding events
and in this way he dismissed evolution as an endogenous organic unfolding and instead
gestured towards a more neo-Darwinian view of industrial change. However, while his
argument leant towards a more idiographic and unpredictable understanding of indus-
trial and regional paths, a completely open-ended approach risks losing sight of path
dependence altogether.
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More recent explanations of industrial life-cycles certainly identify generic forms of
path dependence in a range of industries. There are several dif erent varieties of the
industry life-cycle approach but they share a similar schematic interpretation of how
industries develop (Agarwal, 1998; Agarwal and Gort, 1996; Klepper, 1997). Most
accounts distinguish between an early formation stage, an intermediate development
stage and a mature stage. During the formative stage, i rms enter a new industry by pro-
ducing a relatively new product and face a great deal of uncertainty. During the second
stage, process techniques become more rei ned, and markets and outputs grow rapidly.
During the mature stage, production techniques are further rei ned, market growth levels
of and signii cant innovations are fewer. In terms of population dynamics, the entry
of new i rms is greatest during the formation stage. Typically it is argued that a sharp
drop, or shakeout, in the number of producers occurs during the development phase
and the number of i rms continues to decline in the mature stage (Klepper and Simons,
2005). Klepper (2002) argues that innovation also tends to evolve during the course of an
industry's evolutionary life-cycle. Innovative activity is greatest during the early forma-
tion stage and new and small entrants have an innovative advantage. In the development
phase, there is a reduction in innovative activity and a shift towards established large
enterprises. In the mature phase, any new entrants face a comparative technological
disadvantage. Audretsch and Feldman (1996) spell out some geographical implications
and argue that the propensity for innovative activity to be geographically clustered is
strongly related to the stage of the industry life-cycle. Innovative activity tends to be
more clustered in the early and formation stages as small new entrants benei t greatly
form localised knowledge spillovers.
The stylised facts of industry life-cycles suggest that path dependence arises from
several dif erent forces (Klepper, 1996, 2002; Klepper and Simons, 2005). In one
