probabilities are not only dependent on initial conditions of entrants, but also on the R&D
activities they undertake during their lifetime. These contributions suggest that survival analysis
is a promising research methodology in evolutionary economic geography.
Importantly, in an evolutionary context, spatial concentration (or its absence) is not only an
outcome of a process of industrial evolution, but also affects an industry’s further evolution. This
recursive relationship is central in another empirical tradition in industrial dynamics known as
organisational ecology or firm demography (Hannan et al. 1995; Carroll and Hannan, 2000;
Stuart and Sorenson, 2003; Van Wissen, 2004). First, geographical concentration of industrial
activities can generate positive feedbacks on entry rather then performance. This means that an
industry can become concentrated through a self-reinforcing process of entry triggering more
entry. Second, geographical concentration of firms increases the level of competition and makes
entry less likely. This negative feedback set limits to spatial concentration. Typically, positive
feedbacks operate at the start of an industry life-cycle, while negative feedback takes over after a
certain threshold of spatial concentration is passed. Interestingly, the two processes causing
positive and negative feedbacks may well operate at different spatial scales depending on the type
of industry (Jacob and Los, forthcoming). In industries where demand is local and knowledge
spillovers more global, one expects negative feedbacks to operate at a lower spatial level than
positive feedbacks, resulting in a more even spatial distribution (Hannan et al., 1995). However,
in markets where competition is global, but knowledge spillovers rather local, the reverse may
well be the case.
Institutions also affect the spatial evolution of industries. From an evolutionary perspective,
the question is not so much whether particular institutions triggered the development of a
particular industry in a certain region, but rather how institutions have co-evolved with the
emergence of a new sector (Nelson, 1995). The co-evolutionary perspective is important because
it acknowledges that innovations leading to new sectors often require the restructuring of old
institutions and the establishment of new institutions (Freeman and Perez, 1988). Examples of the
co-evolution of new sectors and institutions are the rise of the synthetic dye industry in the
second half of the nineteenth century in Germany (Murmann, 2003) and the evolution of the U.K.
retail banking industry from the 1840s to the 1990s (Consoli, 2005). In their study of the spatial
diffusion of renewable energy technology, Lee and Sine (forthcoming) also emphasise the
differential institutional changes occurring in different American states.
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