Clustering and firm performance in project-based industries: The case of the global video game industry, 1972-2007

Mathijs De Vaan, Ron Boschma () and Koen Frenken

No 1221, Papers in Evolutionary Economic Geography (PEEG) from Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography

Abstract: Explanations of spatial clustering based on localization externalities are being questioned by recent empirical evidence showing that firms in clusters do not outperform firms outside clusters. We propose that these findings may be driven by the particularities of the industrial settings chosen in these studies. We argue that in project-based industries, negative localization externalities associated with competition grow proportionally with cluster size, while positive localization externalities increase more than proportionally related to cluster size. By studying the survival patterns of 4,607 firms and 1,229 subsidiaries in the global video game industry, we find that the net effect of clustering becomes positive after a cluster reaches a critical size. We further unravel the subtleties of the video game industry by differentiating between exits by failure and exit by acquisition, and conclude that being acquired is best considered as a sign of success rather than as a business failure.

Keywords: localization externalities; survival analysis; acquisition; spinoff; cluster; video game industry (search for similar items in EconPapers)
JEL-codes: L25 R11 R12 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2012-11, Revised 2012-11
New Economics Papers: this item is included in nep-bec, nep-cse, nep-ent, nep-sbm and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Journal Article: Clustering and firm performance in project-based industries: the case of the global video game industry, 1972--2007 (2013)
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