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Path Dependency and Path Plasticity: the Co-evolution of Institutions and Innovation - the German Customized Business Software Industry

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  • Simone Strambach

    ()
    (Department of Geography, Philipps University Marburg)

Abstract

Path dependence and the co-evolution of technology and institutions is a key concept to understand the dynamics of structural change at the level of firms, sectors and multi-level spatial scales. The concept of path dependency is often used in economic geography to explain the economic specialisation and long-standing success as well as crises and economically unfavourable development of regions. The understanding of the institutional dynamics within a well-established technological and institutional development path of territorial settings is a central but to a large extent also an open issue. The paper focuses on the role of institutions and modes of institutional change in path dependent processes of innovation, knowledge accumulation and competence building in innovation systems. Processes of institutional change are mainly seen either as incremental, leading to continuity of the present technological path or as abrupt and disruptive, leading to the breakdown and replacement of institutional settings. By using the notion of 'path plasticity' the paper argues that paths are not coherent in themselves. There is 'path plasticity', which describes a broad range of possibilities for the creation of innovation within a dominant path of innovation systems. Plasticity results among others from the elastic stretch of institutions and institutional arrangements and their interpretative flexibility through actors. Associated with this approach, the paper takes a closer look at path plasticity, its relation to institutional change and the role of geography. Empirical evidence is provided by exploring the evolution of the German software industry. Although comparative disadvantages are caused by the established institutional setting of the national innovation system, a sub sector of this industry - customized business software - was able to become internationally competitive. The customized business software industry can be seen as an example of innovation and successful change in what is described as non- favourable institutional settings.

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Bibliographic Info

Paper provided by Philipps University Marburg, Department of Geography in its series Working Papers on Innovation and Space with number 2008-02.

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Length: 31 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:pum:wpaper:2008-02

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  1. Ron Martin & Peter Sunley, 2006. "Path dependence and regional economic evolution," Journal of Economic Geography, Oxford University Press, vol. 6(4), pages 395-437, August.
  2. Nooteboom, Bart, 1999. "Innovation, Learning and Industrial Organisation," Cambridge Journal of Economics, Oxford University Press, vol. 23(2), pages 127-50, March.
  3. Franco Malerba, 2005. "Innovation and the evolution of industries," KITeS Working Papers 172, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Jul 2005.
  4. Pelikan, Pavel, 2003. "Bringing Institutions Into Evolutionary Economics: Another View with Links to Changes in Physical and Social Technologies," Ratio Working Papers 24, The Ratio Institute.
  5. Pavitt, Keith, 1998. "The social shaping of the national science base," Research Policy, Elsevier, vol. 27(8), pages 793-805, December.
  6. Ron A. Boschma & Koen Frenken, 2006. "Why is economic geography not an evolutionary science? Towards an evolutionary economic geography," Journal of Economic Geography, Oxford University Press, vol. 6(3), pages 273-302, June.
  7. Mark Lehrer, 2000. "From Factor of Production to Autonomous Industry: The Transformation of Germany's Software Sector," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 69(4), pages 587-600.
  8. Lundvall, Bengt-Ake & Johnson, Bjorn & Andersen, Esben Sloth & Dalum, Bent, 2002. "National systems of production, innovation and competence building," Research Policy, Elsevier, vol. 31(2), pages 213-231, February.
  9. Ron Boschma, 2005. "Proximity and Innovation: A Critical Assessment," Regional Studies, Taylor & Francis Journals, vol. 39(1), pages 61-74.
  10. Malerba, Franco & Orsenigo, Luigi, 2000. "Knowledge, Innovation Activities and Industrial Evolution," Industrial and Corporate Change, Oxford University Press, vol. 9(2), pages 289-313, June.
  11. Frank Stille, 2003. "Produktbegleitende Dienstleistungen gewinnen weiter an Bedeutung," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 70(21), pages 335-342.
  12. J├╝rgen Essletzbichler & David L. Rigby, 2007. "Exploring Evolutionary Economic Geographies," Papers in Evolutionary Economic Geography (PEEG) 0702, Utrecht University, Section of Economic Geography, revised Apr 2007.
  13. Steven Casper & Mark Lehrer & David Soskice, 1999. "Can High-technology Industries Prosper in Germany? Institutional Frameworks and the Evolution of the German Software and Biotechnology Industries," Industry and Innovation, Taylor & Francis Journals, vol. 6(1), pages 5-24.
  14. Carlsson, Bo, 2006. "Internationalization of innovation systems: A survey of the literature," Research Policy, Elsevier, vol. 35(1), pages 56-67, February.
  15. Ron Boschma & Ron Martin, 2007. "Editorial: Constructing an evolutionary economic geography," Journal of Economic Geography, Oxford University Press, vol. 7(5), pages 537-548, September.
  16. Pavel Pelikan, 2003. "Bringing institutions into evolutionary economics: another view with links to changes in physical and social technologies," Journal of Evolutionary Economics, Springer, vol. 13(3), pages 237-258, August.
  17. Richard Whitley, 2002. "Developing innovative competences: the role of institutional frameworks," Industrial and Corporate Change, Oxford University Press, vol. 11(3), pages 497-528, June.
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Citations

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Cited by:
  1. Ron Boschma & Koen Frenken, 2011. "The emerging empirics of evolutionary economic geography," Journal of Economic Geography, Oxford University Press, vol. 11(2), pages 295-307, March.
  2. Ron Boschma, 2014. "Towards an evolutionary perspective on regional resilience," Papers in Evolutionary Economic Geography (PEEG) 1409, Utrecht University, Section of Economic Geography, revised Mar 2014.
  3. Ron Boschma & Asier Minondo & Mikel Navarro, 2012. "The emergence of new industries at the regional level in Spain. A proximity approach based on product-relatedness," Papers in Evolutionary Economic Geography (PEEG) 1201, Utrecht University, Section of Economic Geography, revised Jan 2012.
  4. Ron Martin & Peter Sunley, 2014. "Towards a Developmental Turn in Evolutionary Economic Geography?," Papers in Evolutionary Economic Geography (PEEG) 1401, Utrecht University, Section of Economic Geography, revised Jan 2014.
  5. Ron Boschma & Pierre-Alexandre Balland & Dieter Franz Kogler, 2013. "Relatedness and Technological Change in Cities: The rise and fall of technological knowledge in U.S. metropolitan areas from 1981 to 2010," Papers in Evolutionary Economic Geography (PEEG) 1316, Utrecht University, Section of Economic Geography, revised Sep 2013.
  6. Simone Strambach, 2013. "Micro-dynamics of knowledge: actors, processes and territorial organization," Working Papers on Innovation and Space 2013-01, Philipps University Marburg, Department of Geography.
  7. Grillitsch, Markus, 2014. "Institutional Change and Economic Evolution in Regions," CIRCLE Electronic Working Papers 2014/1, Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy.

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