Geography Reference
In-Depth Information
approach a radical invention induces i rms to enter a new industry. Those that are suc-
cessful innovators expand their production, and the pressure of output growth on prices
causes the less successful innovators to exit the industry. In another approach, i rms enter
an industry with alternative and competing product designs. During the course of time
one design becomes the 'dominant' or standard design. Subsequently, opportunities to
enter the market based on new designs are diminished and i rms compete on the basis of
process innovations. In other words, the lock-in of the dominant design reduces opportu-
nities to enter (Klepper, 1996). In the third approach, described by Klepper (2002), prices
tend to fall as output in an industry expands, and this limits the ability of later entrants
to catch up with the size of earlier entrants. But larger i rms benei t most from R&D as
they can apply its benei ts to the largest amounts of output. As price continues to fall,
therefore, the smallest i rms and least able innovators are driven out of the market. While
this debate continues, it is clear that all these varieties of explanation rely on forms of
path dependence. Whether it is the lock-in of a dominant design through network exter-
nalities and learning ef ects, or the positive feedback from R&D and learning-by-doing
advantages to i rst movers, these dynamics envisage types of cumulative process. They
all suggest that the sequencing of i rm entry and the accumulation of capabilities through
time are crucial to industrial evolution, and hence to the path-dependent development of
local and regional economies.
A non-equilibrium interpretation emphasises that such cycles are not deterministic.
In the i rst place, industrial trajectories are not exclusively determined by their product
market maturity. For example, Hudson (2005) argues that the trajectories of industries in
north east England were 'path contingent' as they depended not only on trends in inter-
national markets but also national political decisions. Second, learning by experience
and the accumulation of resources actually facilitate actors' rel exive adaptation (Rantisi,
2002). As a consequence, important departures from the life-cycle model have been found
in some industries as new markets and niches are repeatedly constructed and exploited.
For example, Klepper and Thompson (2006) suggest that the continual rise in the number
of entrants in the laser industry may be because of the importance of specialised submar-
kets. The proliferation of submarkets provides new niches for entrants and, as the nature
of the technology does not allow signii cant economies of scope, established incumbent
i rms cannot dominate these new markets. Where new entrants can occupy distinctive
market niches and dif erentiate themselves from incumbent i rms, they prove resilient and
sustainable. Further evidence of enabling forms of path dependence is that product inno-
vation does not always wane in the mature phase of certain industries. Instead, it may rise
sharply. For example, in the mature automobile industry, Japanese and some European
producers gained an innovative lead over American producers through both process and
product innovations (Hef ernan, 2003; Klepper, 1997). Such cases of 'resurgent innova-
tion' have been widely described as evidence of a phase of 'dematurity' (Storper, 1985).
Processes of this sort would seem to i t a path-dependent model in which an industry (and
that part of a local or regional economy dependent on it) undergoes radical adaptation,
in ef ect renewing (or extending) the industry's development path.
In order to explain why some mature sectors succumb to negative lock-in and com-
placency while others demonstrate increased innovativeness, it is crucial that we examine
the intersection of enabling and constraining processes. For instance, cognitive path
dependence means that cognitive priorities and frames are typically less than fully
