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Clustering and firm performance in project-based industries: the case of the global video game industry , 1972--2007

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  • Mathijs De Vaan
  • Ron Boschma
  • Koen Frenken

Abstract

Explanations of spatial clustering based on localization externalities are being questioned by recent empirical evidence showing that firms in clusters do not outperform firms outside clusters. We propose that these findings may be driven by the particularities of the industrial settings chosen in these studies. We argue that in project-based industries, negative localization externalities associated with competition grow proportionally with cluster size, while positive localization externalities increase more than proportionally related to cluster size. By studying the survival patterns of 4,607 firms and 1,229 subsidiaries in the global video game industry, we find that the net effect of clustering becomes positive after a cluster reaches a critical size. We further unravel the subtleties of the video game industry by differentiating between exits by failure and exit by acquisition, and conclude that being acquired is best considered as a sign of success rather than as a business failure.
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  • Mathijs De Vaan & Ron Boschma & Koen Frenken, 2013. "Clustering and firm performance in project-based industries: the case of the global video game industry , 1972--2007," Journal of Economic Geography, Oxford University Press, vol. 13(6), pages 965-991, November.
    • Handle: RePEc:oup:jecgeo:v:13:y:2013:i:6:p:965-991
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    Cited by:

    1. Ron Boschma & Matté Hartog, 2014. "Merger and Acquisition Activity as Driver of Spatial Clustering: The Spatial Evolution of the Dutch Banking Industry, 1850–1993," Economic Geography, Taylor & Francis Journals, vol. 90(3), pages 247-266, July.
    2. Goumagias, Nikolaos & Fernandes, Kiran Jude & Nucciarelli, Alberto & Li, Feng, 2022. "How to overcome path dependency through resource reconfiguration," Journal of Business Research, Elsevier, vol. 145(C), pages 78-91.
    3. Gong, Huiwen & Hassink, Robert, 2016. "What drives the geographies of creative industries? From literature review to research agenda," Papers in Innovation Studies 2016/9, Lund University, CIRCLE - Centre for Innovation Research.
    4. Canfei He & Qi Guo & David Rigby, 2015. "Industry Relatedness, Agglomeration Externalities and Firm Survival in China," Papers in Evolutionary Economic Geography (PEEG) 1528, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Sep 2015.
    5. Amel Ben Abdesslem & Raphaël Chiappini, 2019. "Cluster policy and firm performance: a case study of the French optic/photonic industry," Regional Studies, Taylor & Francis Journals, vol. 53(5), pages 692-705, May.
    6. Andrea Morrison & Ron Boschma, 2019. "The spatial evolution of the Italian motorcycle industry (1893–1993): Klepper’s heritage theory revisited," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 28(3), pages 613-634.
    7. Roberto Dellisanti, 2023. "Spatial patterns of Cultural and Creative Industries: Creativity and filière behind concentration," Papers in Regional Science, Wiley Blackwell, vol. 102(3), pages 533-564, June.
    8. Mark J. O. Bagley, 2019. "Networks, geography and the survival of the firm," Journal of Evolutionary Economics, Springer, vol. 29(4), pages 1173-1209, September.
    9. Xi, Xun & Xi, Baoxing & Miao, Chenglin & Yu, Rongjian & Xie, Jie & Xiang, Rong & Hu, Feng, 2022. "Factors influencing technological innovation efficiency in the Chinese video game industry: Applying the meta-frontier approach," Technological Forecasting and Social Change, Elsevier, vol. 178(C).
    10. Patrick Cohendet & David Grandadam & Chahira Mehouachi & Laurent Simon, 2018. "The local, the global and the industry common: the case of the video game industry," Journal of Economic Geography, Oxford University Press, vol. 18(5), pages 1045-1068.
    11. Thomas Brenner & Johann Peter Murmann, 2016. "Using simulation experiments to test historical explanations: the development of the German dye industry 1857-1913," Journal of Evolutionary Economics, Springer, vol. 26(4), pages 907-932, October.
    12. Jean Dubé & Cédric Brunelle, 2014. "Dots to dots: a general methodology to build local indicators using spatial micro-data," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(1), pages 245-272, August.
    13. Shengjun Zhu & Canfei He & Qian Luo, 2019. "Good neighbors, bad neighbors: local knowledge spillovers, regional institutions and firm performance in China," Small Business Economics, Springer, vol. 52(3), pages 617-632, March.
    14. Ron Boschma, 2015. "Do spinoff dynamics or agglomeration externalities drive industry clustering? A reappraisal of Steven Klepper’s work," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 24(4), pages 859-873.
    15. Koen Frenken & Elena Cefis & Erik Stam, 2020. "Industrial Dynamics and Clusters: A Survey," Regional Studies, Taylor & Francis Journals, vol. 49(1), pages 10-27, July.
    16. Gutierrez-Posada, Diana & Kitsos, Tasos & Nathan, Max & Nuccio, Massimiliano, 2021. "Do Creative Industries Generate Multiplier Effects? Evidence from UK Cities, 1997-2018," SocArXiv xs8zg, Center for Open Science.
    17. Maddah, Lina & Arauzo Carod, Josep Maria & López, Fernando A., 2021. "Clusters of Cultural and Creative Industries: Any Role in Location Decisions of Firms?," Working Papers 2072/534912, Universitat Rovira i Virgili, Department of Economics.
    18. Su-Hyun Berg, 2018. "Local Buzz, Global Pipelines and Hallyu: The Case of the Film and TV Industry in South Korea," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 4(1), pages 33-52, January.
    19. Burlina, Chiara & Casadei, Patrizia & Crociata, Alessandro, 2023. "Economic complexity and firm performance in the cultural and creative sector: evidence from Italian provinces," LSE Research Online Documents on Economics 116979, London School of Economics and Political Science, LSE Library.
    20. Maddah, Lina & Arauzo Carod, Josep Maria & López, Fernando A., 2021. "Clusters of Cultural and Creative Industries: Empirical Evidence for Catalonia," Working Papers 2072/534911, Universitat Rovira i Virgili, Department of Economics.
    21. Nilsson, Pia, 2016. "The influence of related and unrelated industry diversity on retail firm failure," Journal of Retailing and Consumer Services, Elsevier, vol. 28(C), pages 219-227.
    22. Antoine Habersetzer, Rikard Eriksson, Heike Mayer, 2017. "Entrepreneurship in the periphery: The role of pre-entry experience and home advantage for newly founded firms," Diskussionsschriften credresearchpaper14, Universitaet Bern, Departement Volkswirtschaft - CRED.
    23. Hervas Oliver,Jose Luis & Gonzalez,Gregorio & Caja,Pedro, 2014. "Clusters and industrial districts: where is the literature going? Identifying emerging sub-fields of research," INGENIO (CSIC-UPV) Working Paper Series 201409, INGENIO (CSIC-UPV).

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    More about this item

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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