Do spinoff dynamics or agglomeration externalities drive industry clustering? A reappraisal of Steven Klepper’s work

Abstract

Klepper's theory of industry clustering based on organizational reproduction and inheritance through spinoffs challenged the Marshallian view on industry clustering. The paper provides an assessment of Klepper's theoretical and empirical work on industry clustering. We explore how 'new' his spinoff theory on industry clustering was, and we investigate the impact of Klepper's theory on the economic geography community. Klepper's work has inspired especially recent literature on regional branching that argues that new industries grow out of and recombine capabilities from local related industries. Finally, the paper discusses what questions on industry location are still left open or in need of more evidence in the context of Klepper's theory.

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“…In this domain, Rojas and Huergo (2016) acknowledged 2015), especially when start-ups are involved in strategic alliances (Kaplan and Lerner 2014;Lindsey 2008;Hsu 2006).…”

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“…The fact that the competitiveness of start‐ups can be explained with the work experience of its founders confirms the assumption that regional characteristics are not inevitably the primary reason for a firm's competitiveness. But “as the Marshallian view is not necessarily incompatible with the heritage thesis” (Boschma :866), this paper examines if implementation strategies of founders are influenced by local economic conditions.…”

“…Over the last decade, economists and economic geographers have increasingly discussed the heritage theory, which emphasizes the importance of spinoff dynamics for regional development (Agarwal et al ; Boschma ; Klepper ). Within this literature, spinoffs are defined as “firms started by individuals who had previously worked at an incumbent firm in the same industry that the new venture entered” (Agarwal et al :744).…”

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“…This paper analyses new firm formation in the Amsterdam restaurant industry, on the basis of an in‐depth research of 37 new restaurants, through the lens of evolutionary economic geography and in the light of the following debate among evolutionary economic geographers (Boschma ; Cusmano et al . ).…”

“…Evolutionary economic geographers have largely confirmed Klepper's theory by presenting a lot of quantitative research which shows that intra‐industry spinoffs perform better than other entrants (inter industry spinoffs, startups, and diversifying firms) (for an overview see Frenken et al . ), although some of them have recently expressed a more nuanced view on the relation between spinoff dynamics and Marshallian externalities in industry clustering (Boschma ; Cusmano et al . ).…”