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The coevolution of industries and national institutions: Theory and evidence

  • Murmann, J. Peter

A survey across space and time reveals that leading firms operating in global industries often cluster in one or a few countries. The paper argues that nations differ in how successful they are in a particular industry because coevolutionary processes linking a particular industry and national institutions powerfully shape the path of an industry.s development. Across a wide range of contexts, scientific progress and industrial leadership reinforce each other in spirals of cumulative national advantage. A historical case study of synthetic dyes from 1857 to 1914 provides a dramatic example of how these positive feedback processes gave German organic chemistry and German dye firms a dominant position in the world. Over time, the relative strength of a nation in a particular industry and the capability of the country in a relevant scientific or engineering discipline display a strong positive correlation. Additional shorter case studies of agriculture, packaged software, and biotechnology support this induced hypothesis. We argue that the exchange of personnel between industry and academic institutions, the formation of commercial ties between them, lobbying on each other.s behalf and direct support from state agencies constitute causal mechanisms that can explain why successful firms often cluster in particular countries.

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Paper provided by Social Science Research Center Berlin (WZB) in its series Discussion Papers, various Research Units with number FS IV 02-14.

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Date of creation: 2002
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Handle: RePEc:zbw:wzbdiv:fsiv0214
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  1. Olmstead, Alan L., 1999. "Biological Innovation And American Agricultural Development," 1999 Conference (43th), January 20-22, 1999, Christchurch, New Zealand 124504, Australian Agricultural and Resource Economics Society.
  2. Richard N. Langlois & David C. Mowery, 1995. "The Federal Government Role in the Development of the American Software Industry: An Assessment," Industrial Organization 9503001, EconWPA.
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