The Importance of Agglomeration or Cluster Economies

Generally speaking, geographical proximity or regional clustering of SMEs brings few benefits, although it is a necessary pre-condition for their development. Clustering is the tendency of companies in similar lines of business to concentrate geographically. California’s Silicon Valley – the industrial strip between San Francisco and San Jose in northern California – is the most well-known recent example of agglomeration. There are quite a few clusters in Europe that resemble Silicon Valley, from the high-tech agglomeration of Cambridge’s Silicon Fen to low-tech ones, such as northern Italy’s textile and ceramic tile businesses. Continue reading

The Evolutionary Theory of Technological Change

The evolutionary economics pioneered in the mid-1980s by Nelson and Winter, and developed and presented by Dosi and others (Nelson and Winter, 1982; Dosi et al, 1988), has identified aspects of regional economy that underlie innovative agglomerations of both the high- and low-technology variety. The evolutionary school claims that technological change is dependent on a path or trajectory. Interdependent choices are made by actors about changes made over time, which are entirely different from those of orthodox economics. Continue reading

The Concept of the Innovative Milieu

In order to understand the importance of regional innovation in the West of England and the Singapore-Johor cross-border area, it will be necessary to present the latest theoretical concepts found in economic and management disciplines. It should be pointed out that no major new theories on innovation and entrepreneurship have been developed since those of early economists such as Adam Smith, David Ricardo, Alfred Marshall and Joseph Schumpeter. Perhaps Galar’s reminder of the ancient dictum natura horret vacuum – that there are no empty places waiting for new theories to be nested (2000, p. 288) – is appropriate in this context. However, during the last fifteen years, two concepts complementing the theories have emerged.3 These concentrate respectively on the innovative milieu (innovative environment), and on technological change. Continue reading

Innovative Environments and the Importance of Proximity

Most firms in Europe and South-East Asia are well aware of the importance of innovation in achieving commercial success. However, relatively few firms are becoming innovators; most are content to adopt existing innovations. It seems that it is not only difficult to define precisely what innovation is, but also difficult to measure it, as it is not always directly reflected in the profitability of firms. It is more or less accepted that innovation means the creation of a better product or process. Dyson Ltd., based in the West of England, did exactly that when James Dyson and his research team designed a new type of high quality vacuum cleaner. This innovative product has been an outstanding commercial success, with sales of over £3 billion worldwide. Continue reading

The structure of the book

This book is divided into three parts. Part I sets out the theoretical framework for the empirical analysis. Here we consider questions about the significance of the spatial dimension in conducting research, and about the innovative activities of SMEs. In addition, the views that have come to dominate the debate on innovation in the emerging global knowledge-based economy are discussed.  Continue reading

The main research questions

The objective of this book is to develop a knowledge base on the learning and innovative behaviour of clustered SMEs in the South West of England and the Singapore-Johor cross-border area. Specifically, the factors which stimulate or inhibit innovation (inter-firm, regional/local, institutional or structural) are identified. Advancing the understanding of learning behaviour patterns of SMEs is crucial to improving the competitiveness of regional agglomerations around the world. Continue reading

The origins of the research

A large part of industry in the developed and developing countries consists of indigenous small and medium-sized enterprises (SMEs). Within countries, the spread of such SMEs is variable. Some regions, such as the South West of England, have a relatively large number of indigenous SMEs1 and a strong culture of entrepreneurship2, and this is often reflected in high levels of self-employment. Previous research in the South West of England and South Wales3 has indicated that almost a half of all regional SMEs lack the resources to benefit from the adoption of new technologies. Such innovation-averse SMEs are also resistant to change, and lack an overall innovation strategy. Continue reading

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