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

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  • Kerstin Press

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.

Suggested Citation

  • Kerstin Press, 2006. "Divide to conquer? The Silicon Valley - Boston 128 case revisited," Papers in Evolutionary Economic Geography (PEEG) 0610, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Dec 2006.
    • Handle: RePEc:egu:wpaper:0610
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    File URL: http://econ.geo.uu.nl/peeg/peeg0610.pdf
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    More about this item

    Keywords

    Clusters; Adjustment; N/K model; Simulation; Decentralisation;
    All these keywords.

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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