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Virtual Products and Physical Resources: Software Companies and Spatial Agglomeration

In: University Evolution, Entrepreneurial Activity and Regional Competitiveness

Author

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  • Alexander Werbik

    (Ludwig-Maximilians-University)

Abstract

According to established agglomeration theories, companies located in clusters face a permanent stress field: They profit from better access to resources such as skilled labor, capital, and business partners, but also face increased competition for these resources. Established cluster concepts emanate from the assumption that companies within such a stress field generate competitive characteristics. The paper examines whether this mechanism is also transferable to the producers of virtual products. Empirical evidence from a large-scale study of the German software industry is used to analyze whether software companies headquartered in one of the 25 biggest German software clusters are more competitive than those outside these areas of industrial agglomeration. Evidence is provided that software firms in clusters are neither more competitive, nor do they have a better access to relevant resources. It is argued that the software industry is increasingly integrated into a global competitive environment and is less dependent on physical proximity regarding local resource allocation. Since several traditional factor-based arguments of various established cluster theories are not entirely transferable to producers of virtual products, the stress field of local resource access and competition is partially suspended.

Suggested Citation

  • Alexander Werbik, 2016. "Virtual Products and Physical Resources: Software Companies and Spatial Agglomeration," International Studies in Entrepreneurship, in: David Audretsch & Erik Lehmann & Michele Meoli & Silvio Vismara (ed.), University Evolution, Entrepreneurial Activity and Regional Competitiveness, edition 127, chapter 0, pages 373-384, Springer.
    • Handle: RePEc:spr:inschp:978-3-319-17713-7_17
    DOI: 10.1007/978-3-319-17713-7_17
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