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The Origin and Growth of Industry Clusters: The Making of Silicon Valley and Detroit

In: Cities and Entrepreneurship

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  • Steven Klepper

Abstract

Data for all producers of automobiles and integrated circuits on their origins, base location, and performance are used to analyze the factors behind the historical clustering of the two industries in Detroit and Silicon Valley, respectively. Key ideas concerning organizational reproduction and heredity are elaborated and used to explain how spinoffs from incumbent firms in the same industry can lead to clustering. Findings concerning the spawning of spinoffs, entry by firms in related industries, and firm performance suggest that organizational reproduction and heredity were the primary forces underlying the clustering of the two industries.
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Suggested Citation

  • Steven Klepper, 2010. "The Origin and Growth of Industry Clusters: The Making of Silicon Valley and Detroit," NBER Chapters,in: Cities and Entrepreneurship National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:11897
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    1. Bruce Fallick & Charles A. Fleischman & James B. Rebitzer, 2006. "Job-Hopping in Silicon Valley: Some Evidence Concerning the Microfoundations of a High-Technology Cluster," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 472-481, August.
    2. Guido Buenstorf & Steven Klepper, 2009. "Heritage and Agglomeration: The Akron Tyre Cluster Revisited," Economic Journal, Royal Economic Society, vol. 119(537), pages 705-733, April.
    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.
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    7. Belleflamme, Paul & Picard, Pierre & Thisse, Jacques-Francois, 2000. "An Economic Theory of Regional Clusters," Journal of Urban Economics, Elsevier, vol. 48(1), pages 158-184, July.
    8. Buenstorf, Guido & Klepper, Steven, 2010. "Why does entry cluster geographically? Evidence from the US tire industry," Journal of Urban Economics, Elsevier, vol. 68(2), pages 103-114, September.
    9. Bruno Cassiman & Masako Ueda, 2006. "Optimal Project Rejection and New Firm Start-ups," Management Science, INFORMS, vol. 52(2), pages 262-275, February.
    10. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    11. Helsley, Robert W. & Strange, William C., 2002. "Innovation and Input Sharing," Journal of Urban Economics, Elsevier, vol. 51(1), pages 25-45, January.
    12. 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.
    13. Steven Klepper & Sally Sleeper, 2005. "Entry by Spinoffs," Management Science, INFORMS, vol. 51(8), pages 1291-1306, August.
    14. Rosenthal, Stuart S. & Strange, William C., 2004. "Evidence on the nature and sources of agglomeration economies," Handbook of Regional and Urban Economics,in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 49, pages 2119-2171 Elsevier.
    15. Michael S. Dahl & Olav Sorenson, 2008. "The Social Attachment to Place," DRUID Working Papers 08-24, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    16. Figueiredo, Octavio & Guimaraes, Paulo & Woodward, Douglas, 2002. "Home-field advantage: location decisions of Portuguese entrepreneurs," Journal of Urban Economics, Elsevier, vol. 52(2), pages 341-361, September.
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    20. repec:hhs:iuiwop:430 is not listed on IDEAS
    21. Kristina von Rhein, 2008. "Heritage and Firm Survival - An Analysis of German Automobile Spinoffs 1886-1939," Economics Bulletin, AccessEcon, vol. 12(13), pages 1-8.
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    23. Paul Gompers & Josh Lerner & David Scharfstein, 2005. "Entrepreneurial Spawning: Public Corporations and the Genesis of New Ventures, 1986 to 1999," Journal of Finance, American Finance Association, vol. 60(2), pages 577-614, April.
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