Emergence of Regional Clusters: The Role of Spinoffs in the Early Growth Process

Abstract

The literature on regional clusters has increased considerably during the last decade. The emergence and growth patterns are usually explained by such factors as unique local culture, regional capabilities, tacit knowledge or the existence of location-specific externalities (knowledge spillovers, networks, labour market pooling and specialised suppliers). However, these factors are not sufficient to explain the early formation of clusters. The dominant theories focus more on explaining ex-post dynamics than their early development. This chapter focuses on the early phase and uses an alternative approach to analyse how successful early firms can lead to formation of clusters. Three key determinants are identified: (1) the geographical dimension of entrepreneurial activity, (2) spinoffs from successful firms and (3) new market opportunities. The chapter studies in great detail the evolution of the wireless communications cluster in Northern Denmark and compare it with the evolution of other clusters.