26 October 2014

This monthly selection of articles has been carried out by Philippe Gugler and Michael Keller, the Center for Competitiveness, University of Fribourg. A full selection of the previous articles is available here.

The Competitive Advantage of Nations 20 years later: the cases of Sweden, South Korea and the


By : Timothy L. Wilson, Lars Lindbergh and Jens Graff. Competitiveness Review, Volume 24, Issue 4, pp 306 - 331.

Abstract: « The purpose of this paper is to reflect on some policy possibilities and outcomes for three countries of interest suggested in Porter’s The Competitive Advantage of Nations. This research was both exploratory  and  qualitative  in  nature  and  utilized  an  in-depth  case  study  approach  of three major  international  economies  reflecting  previous  observations  in  The  Competitive  Advantage of Nations. Personal  contemporaneous  observations  of  individuals  in  the  countries  of  interest were complemented  by  current  secondary  information.  The  three  countries  selected  for  analysis, South Korea, Sweden and the USA, reflected different stages of development at the time The Competitive Advantage  of  Nations  was  published  and  certainly  different  progress  since  then.  The Competitive Advantage  of Nations  advocated  new,  constructive  and  actionable  roles  for  government and business. These observations can now be tested after a reasonable time of development. In terms of development, Korea would appear to be the star of the group; Sweden has made strong progress in comparison with other members of  the European Union. Although  there are areas of strength, the USA recently has lost much of the edge it had at the time of the Advantage’s publication. 


Clusters, convergence, and economic performance

By  :  Mercedes  Delgado,  Michael  E.  Porter  and  Scott  Stern.  Research  Policy,  Volume  43, Issue10, Pages 1785–1799, 2014.

Abstract:  «  This  paper  evaluates  the  role  of  regional  cluster  composition  in  regional industry performance.  On  the  one  hand,  diminishing  returns  to  specialization  in  a  location  can result in a convergence  effect:  the  growth  rate  of  an  industry  within  a  region  may  be  declining  in  the level of  economic  activity  of  that  industry.  At  the  same  time,  positive  spillovers  across complementary economic activities can provide an impetus for agglomeration: the growth rate of an industry within a  region may  be increasing in  the  “strength”  (i.e.,  relative  presence)  of  related industries. Building on Porter (1998, 2003), we develop a systematic empirical framework to analyze the role of regional clusters  –  groups  of  closely  related  industries  operating  within  a  particular  region  –  in  the growth of regional industries. We exploit data  from the US Cluster Mapping Project to examine the effects of  agglomeration  within  regional  clusters  after  controlling  for  convergence  at  the  region-industry level.  Our  findings  suggest  that  industries  located  in  a  strong  cluster  register  higher employment and patenting growth. Regional industry growth also increases with the strength of related clusters in the region and with the strength of similar clusters in adjacent regions. We also find evidence of the  complementarity  between  employment  and  innovation  performance  in  regional  clusters: both the  initial  employment  and  patenting  strength  of  a  cluster  have  a  separate  positive  effect  on the employment and patenting growth of  the constituent industries. Finally, we  find  that new regional industries emerge where there is a strong cluster. These findings are consistent with multiple types of externalities arising in clusters, including knowledge, skills, and input–output linkages.» [ABSTRACT FROM AUTHORS]


Institutional Context and Cluster Emergence: The Biogas Industry in Southern Sweden

By : Hanna Martin and Lars Coenen. European Planning Studies, published online, 06 Oct 2014.

Abstract:  «  According  to  some  scholars  in  evolutionary  economic  geography  (EEG),  the  role of (territory-specific)  institutions  is  relatively  small  for  explaining  where  a  new  industry  emerges and grows  as  firms  develop  routines  in  a  path-dependent  and  idiosyncratic  manner.  This article evaluates this assertion  by  studying  the evolution  of  the  biogas  industry  in  the  region  of  Scania in Southern Sweden. The biogas is predominantly used as a fuel in the regional transport system and is considered as a crucial means to achieve environmental goals in the region. Recently, regional public policy has  been actively  promoting  this  biogas  industry,  aiming  for  cluster  development.  Drawing on  literature  from EEG  and  technological  innovation  systems,  this  article  seeks  to  unpack  the evolutionary process that has led to the emergence of this industry. In particular, it studies to what extent  territory-specific institutions  have  been  crucial  in  that  respect.  The  analysis  is  case-based, drawing predominantly  on  in-depth  interviews with  key  stakeholders and  firms  in  the  industry.  By doing  so,  the  paper  seeks  to  make  a  contribution  to  our  understanding  of  cluster  development, considering the  interplay  between  technology,  industry  dynamics  and  institutions.»  [ABSTRACT FROM AUTHORS]


Don’t throw the baby out with the bath water”. Network failures and policy challenges for cluster long run dynamics

By : Jérôme Vicente. Papers in Evolutionary Economic Geography, 14.20, 2014.

Abstract:  «  Cluster  policies  have  been  recently  called  into  question  in  the  aftermath  of several empirical  evidences.  Disentangling  how  market  and  network  failures  arguments  play together in cluster policy design, we look for more robust micro foundations of network structuring in clusters. Our aim is to show that, in spite of this growing skepticism, new opportunities for cluster policy exist.They  require moving  their  focus  from  the “connecting people” one best way  that gets  through the whole  of  cluster  policy  guidelines,  to more  surgical  incentives  for  R&D  collaborations,  which favor suited structural properties of local knowledge networks along the life cycle of clusters.» [ABSTRACT FROM AUTHOR]


Enterprise- and Industry-Level Drivers of Cluster Evolution and Their Outcomes for Clusters from Developed and Less-Developed Countries

By : Marta Gancarczyk. European Planning Studies, published online, 02 Oct 2014.

Abstract:  «  This  article  aims  to  discuss  the  international  strategies  of  lead  companies  and the modularization  of  production  networks  as  drivers  of  cluster  evolution  in  developed  countries, and to formulate  propositions  regarding  the  impact  of  those  drivers  on  relationships  with  clusters in less-developed  countries,  based  on  literature  reviews. Three  streams  of  literature were combined, namely, that  on  (1)  the  role  of  lead  companies  in  the  development  of  industrial agglomerations, (2)  the  life  cycle  and  evolution  of  clusters,  founded  on  evolutionary  economic geography  and  (3) the possibilities of upgrading by suppliers  from less-developed countries. The article contributes by proposing a conceptual model that covers internal cluster evolution and the evolution of inter-cluster relationships globally to inform business and policy choices. Moreover, the research gap is addressed to  study  how  the  cluster  dynamics  in  developed  countries  affect  the  upgrading opportunities for  clusters  in  less-developed  countries.  The  theoretical  input  consists  in  using  the constructs of  knowledge  exploration  and  exploitation  as  mechanisms  that  determine  cluster development prospects. Cluster development perspectives are shown as determined by those clusters' capacity to jointly pursue knowledge exploration and exploitation activities.» [ABSTRACT FROM AUTHOR]


Innovation drivers, value chains and the geography of multinational corporations in Europe

By  :  Riccardo  Crescenzi,  Carlo  Pietrobelli  and  Roberta  Rabellotti.  Journal  of  Economic Geography, Volume 14, Issue 6, Pages 1053-1086, 2014.

Abstract : «This paper investigates  the geography of multinational corporations’ investments in  the EU regions. The ‘traditional’  sources  of location advantages  (i.e. agglomeration economies, market access and labour market conditions) are considered together with innovation and socio-institutional drivers  of investments,  captured  by  means  of  regional  ‘social  filter’  conditions. This  makes it possible  to empirically assess  the different  role played by  such advantages in  the location decision of investments at different stages of the value chain and disentangle the differential role of national vs. regional factors. The empirical analysis covers the EU-25 regions and suggests that regional socio-economic  conditions  are crucially  important  for  the  location  decisions  of  investments  in  the  most sophisticated knowledge-intensive stages of the value chain.» [ABSTRACT FROM AUTHORS]


Interfirm networks in periods of technological turbulence and stability

By : Mathijs de Vaan. Research Policy, Volume 43, Issue 10, Pages 1666–1680, 2014.

Abstract:  «  This  paper  examines  how  network  relations  between  firms  influence  firm  survival by explicitly addressing the moderating role of changing technological regimes. Using longitudinal data on 1385 developers and 190 publishers of video games in  the global video game industry between 1972 and 2007, the analyses show that the effect of network ties between developers and publishers on the survival probability of developers is moderated by the level of technological turbulence in the industry. The  results show  that  the effect  of  network  partner  failure  on  firm  survival is  dependent on  the  strength  of ties. The  failure  of  strongly  tied  network  partners  harms  developers  in  stable periods and benefits them in turbulent eras, while no such relation is found for weakly tied network partners.  Network  partner diversity positively  affects  firm  performance  in  epochs  of  technological turbulence, while  the effect plays no significant  role  for  firm  survival in  stable  settings. The  results indicate  that  the  relation  between interfirm  network  relations and  firm  survival are moderated  by sequences  of  technological  renewal  in the  video  game  industry  which  causes  the  industry  to  go through an evolution that deviates from the typical S-shaped trajectory found in industries that are characterized by strong path-dependent processes.» [ABSTRACT FROM AUTHOR]


Creative Cluster Evolution: The Case of the Film and TV Industries in Seoul, South Korea

By : Su-Hyun Berg. European Planning Studies, published online, 12 Sep 2014.

Abstract:  «  Can  the  concept  of  co-evolution  help  to  analyse  and  explain  the  dynamics  of creative industries? This article  tackles  the question by investigating  the  film and TV cluster in Seoul, South Korea. The analysis of  the  35  semi-structured interviews confirms  the dynamics of  the  film and TV industries in Korea. First, Hallyu began with  the export of Korean TV drama series across East Asia. The  state  deregulation and  neo-liberal  reforms  during  the  1990s in  Korea  boosted an explosion  of the export  of  the  Korean  film  and  TV  industry.  Second,  the  core  of  the  film  and  TV productionis concentrated  within  Seoul,  while  dispersion  of  those  industries  occurred  in  Gyeong-gi province. Third, from an institutional perspective, tensions between the central government and the film and TV  industry  can  be  observed,  which  have  been  intensifying  since  2006.  This  paper  concludes that particularly co-evolution could potentially be an important concept to explain and analyse dynamics in creative industries.» [ABSTRACT FROM AUTHOR]


The emergence of new technology-based sectors in European regions: A proximity-based analysis of nanotechnology

By : Alessandra Colombelli, Jackie Krafft and Francesco Quatraro. Research Policy, Volume 43, Issue 10, Pages 1681–1696, 2014.

Abstract: « This paper analyzes the emergence of new technology-based sectors at the regional level focusing  on  nanotechnology,  an  infant  technology  whose  evolution  can  be  traced  on  the  basis of patent  application  filings.  We  employ  a  methodological  framework  based  on  the  ‘product-space’ approach,  to  investigate  whether  the  development  of  new  technologies  is  linked  to  the  structure of the  existing  local  knowledge  base. We  conduct  a  15  EU  country  analysis  at  NUTS  2  level  using patent data for 1986–2006. The results of the descriptive and econometric analysis support the idea that history matters in the spatial development of a sector, and that the technological competences accumulated at the local level are likely to shape the future patterns of technological diversification.» 



Do spinoff dynamics or agglomeration externalities drive industry clustering? A reappraisal of Steven Klepper’s work

By : Ron Boschma. Papers in Evolutionary Economic Geography, 14.18, 2014.

Abstract:  «  Klepper’s  theory  of  industry  clustering  based  on  organizational  reproduction  and inheritance  through  spinoffs  challenged  the  Marshallian  view  on  industry  clustering.  The  paper provides an  assessment  of  Klepper’s  theoretical  and  empirical  work  on  industry  clustering.  We explore  how ‘new’  his  spinoff  theory  on  industry  clustering was, and we  investigate  the  impact  of Klepper’s theory  on  the  economic  geography  community.  Klepper’s  work  has  inspired  especially very  recent  literature  on  regional  branching  that  argues  that  new  industries  grow  out  of  and recombine capabilities  from local  related industries. Finally,  the paper discusses what questions on industry location are still left open or in need of more evidence in the context of Klepper’s theory.» [ABSTRACT FROM AUTHOR]


The political economy of global production networks: regional industrial change and differential upgrading in the East European clothing industry 

By  :  Adrian  Smith,  John  Pickles,  Milan  Buček,  Rudolf  Pástor  and  Bob  Begg.  Journal  of Economic Geography, Volume 14, Issue 6, Pages 1023-1051, 2014.

Abstract : «Recent years have been testing times for the Eastern European clothing sector. Following two  decades  of  deepening  integration  into  European  production  networks,  the  sector  has been struggling  with  the  removal  of  trade  quotas,  increasing  competitive  pressures  and  the  global economic crisis. This article takes a long-term view of the trajectories of change in the East European clothing  industry  drawing  on  the  experience  of  the  Slovak  Republic.  It  examines  the  regional economic  transformations  that  have  resulted,  how  regional  concentrations  of  clothing production sustained employment during the 1990s, and how tightening competitive pressures have unravelled these  regional  production  systems  leading  to  a  differentiated  landscape  of  firm-level upgrading strategies. The article argues  that understandings of  firm and  regional upgrading and downgrading need  to be attentive  to  the  role of labour in  the  tightening landscape of ‘relative competitiveness’ and the political economy of regional integration policies, foreign ownership and the global economic crisis.» [ABSTRACT FROM AUTHORS]


Strategic decoupling, recoupling and global production networks: India’s pharmaceutical industry

By : Rory Horner. Journal of Economic Geography, Volume 14, Issue 6, Pages 1117-1140, 2014.

Abstract  :  «Contemporary  debates  on  economic  globalization  have  emphasized  the  development opportunities  for  the  Global  South  through  local  firms  becoming  integrated  into  the global commodity chains (GCCs), value chains (GVCs) and production networks (GPNs) governed by leading multinational  corporations.  With  increasing  attention  to  the  negative  sides  of  integration,  an emergent issue is the role of disengagement from, and operation outside of, the GPNs of lead firms. Through the case of the Indian pharmaceutical industry, where a selective and short-term strategic decoupling and subsequent recoupling has played a crucial role in the development of what is now the largest  such industry in  the Global South,  this article explores how decoupling  from GPNs may lead  to  positive  development outcomes.  The  experience  of  India  and  the  pharmaceutical  industry shows that a sequence of decoupling and recoupling can be an alternative to strategic coupling as a route to economic development.» [ABSTRACT FROM AUTHOR]


Global Clusters Of Innovation

Edited by Jerome S. Engel. Edward Elgar Publishing Limited, Cheltenham, UK, 2014. 

Abstract:  «  Entrepreneurship  and  innovation  are  the  drivers  of  value  creation  in  the  twenty-first century.  In  the  geography  of  the  global  economy  there  are  ‘hot  spots’  where  new technologies germinate at an astounding  rate and pools of capital, expertise, and  talent  foster  the development of new industries, and new ways of doing business. These clusters of innovation have key attributes distinct from traditional industrial clusters that allow them to extend beyond geographic boundaries and serve as models  for economic expansion in both developed and developing countries. How do these clusters emerge? What is the role of individual institutions such as governments, universities, major  corporations,  investors, and  the  individual entrepreneur?  Are  there  systemic  underpinnings, an invisible hand, that encourage these communities?The  book  begins  with  a  presentation  of  the Clusters  of  Innovation  Framework  that  identifies  the salient  components,  behaviors,  and  linkages that characterize  an  innovation  cluster,  followed by  an  analysis  of  the  archetypal  cluster,  Silicon  Valley.  Subsequent  chapters  probe  how  these characteristics  apply  in  a  diverse  selection  of  economic communities  in  Germany,  Belgium,  Spain, the United Kingdom, Israel, Japan, Taiwan, China, Colombia, Mexico, and Brazil. Concluding chapters investigate the role of transregional organizations as cross-border disseminators of best practices in entrepreneurship and innovation.Students and professors of economics, business, public policy, management, entrepreneurship, and innovation  will  find  this  book  a useful  resource.  Corporate  executives,  university  administrators, government  officials,  policy  makers,  and  entrepreneurs  will  also  find  it  an  insightful  guide.» [ABSTRACT FROM EDITOR]