Geography Reference
In-Depth Information
technological, business and marketing capabilities and competences from parent i rms
to their new ventures (Buenstorf, 2007; Klepper and Sleeper, 2005). Those spinof s that
inherit routines and competences from parent i rms in the same or a related sector have
often been found to be the most successful (Buenstorf and Klepper, 2008; Klepper,
2007). Where spinof s enter a new but related sector, this may lead to path-dependent
path creation, as spinof s increase the diversity of economic knowledge and hence the
potential for new products and technologies to emerge (Buenstorf and Fornahl, 2009;
Klepper and Sleeper, 2005). It is well known that entrepreneurs tend to show locational
inertia and prefer not to move home when starting a new venture, partly because of the
importance of local social and business communities in mitigating risk (Stam, 2007).
Related variety in a regional industrial structure is thus likely to be both an outcome
of this transfer, and a resource that facilitates further diversii cation and innovation
(Boschma and Frenken, 2006).
In an important sense, entrepreneurial opportunities are not exogenously given
but are deliberately made. New ventures are based on 'business conceptions' or the
entrepreneur's interpretation of the opportunity and the approach adopted to exploit
it (Buenstorf, 2007; Witt, 1998). Such intuitive conceptions characteristically mix past
experience, memory, and current intentions and they have important framing ef ects
on the new i rm's motivation and direction, and its capacity to discover new opportuni-
ties. The recognition of technological openings depends heavily on prior experience and
learning (Shane, 2000). What is particularly important here is that, as Buenstorf (2007)
notes, these conceptions help to pre-select among the variety of potential new activities.
Ex ante selection is much more signii cant than implied by accounts that emphasise
chance and 'accidental' events in path creation, as is illustrated by the example of tech-
nological niches.
Technological niches are usually shielded from some market selection pressures as they
depend on fringe markets, experimental and special purpose users, or state subsidies and
public research funding (Metcalfe et al., 2005; Schot and Geels, 2007). Ex post market
selection may be weak in these contexts but, at the same time, such niches are typically
marked by strong ex ante selection in which entrepreneurial agents imagine, conceive,
design and gradually improve products and systems that they anticipate will meet
demand or provide a basis for new growth. The critical moment here may be the applica-
tion of existing technology to a new economic domain (Levinthal, 1998). Technological
niches are typically marked by unstable technological rules and the lack of an established
technological paradigm (Utterback, 1996). Their linkages are friable and fragile. Hence
they exhibit a great deal of uncertainty and many information asymmetries and, in
such environments, face-to-face contacts and local networks are important in building
trust and knowledge exchange. Given that radical innovation is an inherently uncertain
process, there will inevitably be a high failure rate in niche formation. New i rms need to
identify a fringe market that is not well served by old technologies, products or services,
in order to keep themselves alive long enough to develop their own new technologies,
products or services (Malerba et al., 2007). The test of a technological niche will depend
on whether it can grow in small fringe market niches and then, ultimately, whether it
can break through into a more general socio-technical regime (Geels, 2002, 2005; Geels
and Schot, 2007). But we suspect that place plays an important role here as technologies,
markets and selection pressures co-evolve.
