Clusters, Innovacion Regional

Clusters, Innovation and Regional Development
Ian R. Gordon* and Philip McCann**
Abstract:1 This paper provides a critical examination of the widely disseminated view that innovation in all or most activities is favoured by certain common characteristics in the local ‘milieu’, involving a cluster of many small firms benefiting from flexible inter-firm alliances, supported by mutual informationexchanges of both an informal and formal nature. The general applicability of this model, and the localness of crucial linkages, is questioned on the basis of a theoretical analysis of the innovation processes, and relations between actors and their environments, leading to the identification of a range of different hypotheses about the geography of innovation. Examination of new survey evidencefrom a large number of firms in the London conurbation suggests that the importance of informal information spillovers enabled by spatial proximity for successful innovation is much more limited than has been suggested, both in relation to wider agglomeration economies and to non-local business linkages.

Key words: Innovation Agglomeration Industrial Clusters Innovative Milieux

JELclassifications: O310 R300

Email Contact: p.mccann@reading.ac.uk I.R.Gordon@lse.ac.uk

Department of Geography and Environment, London School of Economics, Houghton Street, London WC2A 2AE, UK
**

*

Department of Economics, The University of Reading, PO Box 218, Whiteknights, Reading, RG6 6AW, UK

1

We are very grateful for helpful comments on earlier drafts of this paper from Peterhall, Gilles Duranton, Andres Rodriguez-Pose, James Simmie and Michael Storper. This paper draws on work undertaken under a project ‘London: economic competitiveness, social cohesion and the policy environment’ funded by the (UK) Economic and Social Research Council, under award L130 25 1027. Data from the London Employer Survey were kindly made available by the London TEC Council.

Clusters,Innovation and Regional Development
Ian R. Gordon and Philip McCann 1. Introduction Over recent years, the topic of innovation has received growing attention from urban and regional analysts. Much of the recent growth in interest in this issue has arisen in part out of a generally renewed interest in agglomeration economies, on the part of both economists (Krugman 1991) and business analysts (Porter1990). This is because questions concerning the relationship between innovation and regional development have tended to focus on the role played by agglomeration economies in fostering localised learning processes within the economy (Glaeser 1999). In particular, informal information spillovers (Jaffe et al. 1993; Almeida and Kogut 1997) as well as the information transfers associated with localinter-firm labour mobility (Simpson 1992), are perceived to contribute to the creation of an environment in which the external net benefits of localisation more than compensate for any congestion costs associated with industrial clustering. These localised net benefits are often assumed to include the genesis of new products and processes, the initial development of which is perceived to befacilitated by geographical proximity (Saxenian 1994). These are crucial elements in the quality-based competition recognised by Porter (1990) as the key to national and regional advantage. Apart from intellectual curiosity, the renewed interest in the relationship between innovation and regional development has also arisen due to the performance of a few key industrial clusters, so called ‘newindustrial areas’ (Scott 1988), which appear to spawn a high degree of industrial innovations, such as Silicon Valley (Saxenian 1994; Larsen and Rogers 1984; Scott 1988), the Southern California electronics industry (Scott 1993), the Emiglia-Romagna region of Italy (Scott 1988; Castells and Hall 1994), and the science-based industrial cluster around Cambridge, England (Castells and Hall 1994). These...