Trajectories of Industrial Districts: Impact of Strategic Intervention in Medical Districts

Abstract

Actors employ strategic intervention to alter the trajectory of an industrial district because they are dissatisfied with an existing or expected trajectory. In this study we examine two medical industrial districts. In the Philadelphia biotechnology district, strategic intervention altered its trajectory; and in the Minneapolis biomedical technology district, the trajectory of the district has altered but no strategic intervention emerged to redirect the trajectory. The structure and functioning of social networks within each district had an impact on the strategic interventions. Philadelphia housed a larger array of powerful firms and institutions than Minneapolis, but no pharmaceutical giant dominated the spawning of spin-offs in Philadelphia comparable to the dominance of Medtronic in Minneapolis. Diverse medical facilities in Philadelphia diffuse technological information and contacts about starting firms, whereas the University of Minnesota Medical School and its research institutes create a centralized source of information and contacts. The venture-capital sector of Philadelphia draws on diverse pools of capital, with no dominant vested interest to defend sectors of biotechnology; however, in Minneapolis, a few financial actors and large firms direct that allocation of capital. Philadelphia contains numerous public-private partnerships; Minneapolis does not have that diversity. As increased FDA regulation and pressure from managed care firms create conditions that favor large firms, the Philadelphia region continues to support small firms, whereas the Minneapolis region is withdrawing support. Philadelphia’s wide-ranging social networks provide a more supportive framework for small firms than exists in Minneapolis, where the social networks have greater centralization and redundancy.