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Divide to conquer? The Silicon Valley - Boston 128 case revisited

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Kerstin Press ()

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Abstract

The present paper investigates the role of decentralisation for the adaptability of production networks in clusters. It develops a simulation model able to test to what extent decentralised, networked clusters with many small firms (Silicon Valley) can be more adjustable than those composed of fewer, large companies (Boston 128). The model finds that for limited degrees of product complexity, decentralisation increases cluster adaptability at the expense of greater instability. This increases the risk of firm failure. Moreover, it is shown that agent numbers matter greatly for the competitiveness of decentralised clusters. Only if they host more firms than integrated cluster types is their lead in performance maintained. As a result, an additional condition had to be met to allow the Silicon Valley type to outperform the Boston 128 one: Greater firm numbers and strong startup dynamics.

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File URL: http://econ.geo.uu.nl/peeg/peeg0610.pdf
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Publisher Info
Paper provided by Utrecht University, Section of Economic Geography in its series Papers in Evolutionary Economic Geography (PEEG) with number 0610.

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Length: 17 pages
Date of creation: Dec 2006
Date of revision: Dec 2006
Handle: RePEc:egu:wpaper:0610

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Related research
Keywords: Clusters; Adjustment; N/K model; Simulation; Decentralisation;

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Find related papers by JEL classification:
L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
C63 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Computational Techniques
R11 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Analysis of Growth, Development, and Changes

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Edward L. Glaeser, 2003. "Reinventing Boston: 1640-2003," NBER Working Papers 10166, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Pisano, Gary P., 1991. "The governance of innovation: Vertical integration and collaborative arrangements in the biotechnology industry," Research Policy, Elsevier, vol. 20(3), pages 237-249, June. [Downloadable!] (restricted)
  3. Guy Dumais & Glenn Ellison & Edward L. Glaeser, 2002. "Geographic Concentration As A Dynamic Process," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 193-204, May. [Downloadable!] (restricted)
    Other versions:
  4. Brusco, Sebastiano, 1982. "The Emilian Model: Productive Decentralisation and Social Integration," Cambridge Journal of Economics, Oxford University Press, vol. 6(2), pages 167-84, June.
  5. B Harrison, 1994. "Concentrated economic power and Silicon Valley," Environment and Planning A, Pion Ltd, London, vol. 26(2), pages 307-328, February. [Downloadable!] (restricted)
  6. Edward L. Glaeser, 2003. "Reinventing Boston: 1640-2003," Harvard Institute of Economic Research Working Papers 2017, Harvard - Institute of Economic Research. [Downloadable!]
  7. Giovanni Dosi & Daniel A. Levinthal & Luigi Marengo, 2003. "Bridging contested terrain: linking incentive-based and learning perspectives on organizational evolution," Industrial and Corporate Change, Oxford University Press, vol. 12(2), pages 413-436, April.
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  8. Storper, Michael & Harrison, Bennett, 1991. "Flexibility, hierarchy and regional development: The changing structure of industrial production systems and their forms of governance in the 1990s," Research Policy, Elsevier, vol. 20(5), pages 407-422, October. [Downloadable!] (restricted)
  9. Ron A. Boschma, 2002. "Knowledge, Market Structure, and Economic Coordination: Dynamics of Industrial Districts," Growth and Change, Gatton College of Business and Economics, University of Kentucky, vol. 33(3), pages 291-311. [Downloadable!] (restricted)
  10. Helsley, Robert W. & Strange, William C., 2002. "Innovation and Input Sharing," Journal of Urban Economics, Elsevier, vol. 51(1), pages 25-45, January. [Downloadable!] (restricted)
  11. Goldstein, G. S. & Gronberg, T. J., 1984. "Economies of scope and economies of agglomeration," Journal of Urban Economics, Elsevier, vol. 16(1), pages 91-104, July. [Downloadable!] (restricted)
  12. Langlois, Richard N., 2002. "Modularity in technology and organization," Journal of Economic Behavior & Organization, Elsevier, vol. 49(1), pages 19-37, September. [Downloadable!] (restricted)
  13. Ellison, Glenn & Glaeser, Edward L, 1997. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 889-927, October.
    Other versions:
  14. Kenney, Martin & von Burg, Urs, 1999. "Technology, Entrepreneurship and Path Dependence: Industrial Clustering in Silicon Valley and Route 128," Industrial and Corporate Change, Oxford University Press, vol. 8(1), pages 67-103, March.
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