Firm entry and institutional lock-in: an organizational ecology analysis of the global fashion design industry

Abstract

Few industries are more concentrated than the global fashion industry. We analyse the geography and evolution of the ready-to-wear fashion design industry by looking at the yearly entry rates following an organizational ecology approach. In contrast to earlier studies on manufacturing industries, we find that legitimation effects are local and competition effects are global. This result points to the rapid turnover of ideas in fashion on the one hand and the global demand for fashion apparel on the other hand. We attribute the decline of Paris in the post-war period to 'institutional lock-in', which prevented a ready-to-wear cluster to emerge as vested interested of haute couture designers were threatened. An extended organizational ecology model provides empirical support for this claim.

Industrial Dynamics and Clusters: A Survey

“…Furthermore, numerous industry studies have found that regional firm density affects regional entry rates. This includes studies on industries like automobile (BIGELOW et al, 1997), computer (BAPTISTA andSWANN, 1999), footwear (SORENSON and AUDIA, 2000), accounting (CATTANI et al, 2003), biotechnology (STUART and SORENSON, 2003), motorcycles (WEZEL, 2005), fashion houses (WENTING and FRENKEN, 2011) and video games (DE VAAN et al, 2011).…”

“…Note that localisation economies and the quality of institutions are intertwined: larger concentrations of firms may lead to local institutions that are better adapted to the needs in question, while such institutions in turn, may enhance the advantages of co-location. At the same time, when local institutions become very specific to the interests of incumbents and their networks, institutional lock-in (GRABHER, 1993;HASSINK, 2005;WENTING and FRENKEN, 2011) and over-identification (STABER and SAUTTER, 2011) may hamper diversification and reform. Regarding these questions concerning the dynamics of clustering and institutions, theories from organizational ecology remain under-explored in the field of economic geography (BOONE and VAN WITTELOOSTUIJN, 1995;GEROSKI, 2001;STABER 2001;CATTANI et al 2003).…”

The Aims and Scope of Evolutionary Economic Geography

“…Since firms' relations at the sector level are mainly of a competitive nature, entry-and-exit models and survival analysis are techniques that are often employed. The core models on the spatial evolution of industry are the organizational ecology framework as developed by Hannan and colleagues (Hannan and Freeman 1989;Hannan et al 1995;Carroll and Hannan 2000;Wenting and Frenken, 2008;Wezel, 2005) and Klepper's industry lifecycle model (Klepper 2007). These approaches provide additional insights to the extensive but rather descriptive literature on clusters.…”

Making Places While Building Networks. An exploration of the role of the urban environment in book publishing

“…In a cluster, firms compete for inputs, skilled labour and market share. Although local competition for market shares is not always relevant because markets usually operate on a larger spatial scale (Wenting & Frenken, 2008), local competition could still be highly relevant for publishing where it is reviewers and book shops who decide which books reach the market in which quantities. In a study on the long-term evolution of the British car industry, Boschma and Wenting (2007) found that the more the industry concentrated spatially, the harder it was for new entrants to survive in such an environment, possibly due to more intense local competition.…”