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

Kerstin Press

No 610, Papers in Evolutionary Economic Geography (PEEG) from Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography

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.

Keywords: Clusters; Adjustment; N/K model; Simulation; Decentralisation (search for similar items in EconPapers)
JEL-codes: C63 L22 R11 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2006-12, Revised 2006-12
New Economics Papers: this item is included in nep-cmp and nep-ino
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Persistent link: https://EconPapers.repec.org/RePEc:egu:wpaper:0610

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