Firm evolution and cluster specialization: a social network analysis of resource industry change in two Australian cities

Glen Searle, Thomas Sigler and Kirsten Martinus

Regional Studies, Regional Science, 2018, vol. 5, issue 1, 369-387

Abstract: Evolutionary perspectives have been increasingly applied to understanding industry agglomeration. By tracking change over time, evolutionary perspectives shed a light on firm-level and sectoral changes that are contextualized within global industrial shifts. This paper addresses a research gap in evolutionary economic geography and regional science by applying network dynamics of industrial agglomeration though industry- rather than firm-level relations. It uses network analysis techniques to track the evolution of two industry agglomerations between 1993 and 2015. It focuses on the resource agglomerations in Brisbane and Perth, Australia, to evaluate changes that occurred over the period of the most recent commodities-driven economic boom period. By highlighting changes in forward- and backward- linkages within firms in resource economy agglomerations, it unpacks the shifting position of core industries in inter-industry networks. Results indicate that firms either consolidated around competencies or broadened towards greater flexibility, the extent depending on the local environment. Professional services and specific resource-related activities gained centrality, while manufacturing and various intermediary services such as transportation and warehousing lost centrality. This indicates that core competencies were built around key resource sectors (notably oil and gas), while companies ‘shed’ activities that were beyond their core competencies, particularly those that could be outsourced to outside firms. This paper ultimately proposes a novel way of tracking the evolution of industry agglomeration, and by focusing on the resource industry it provides insight beyond other studies focusing on manufacturing or services.

Date: 2018
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DOI: 10.1080/21681376.2018.1539347

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