Exploring the Constituents of Growth in a Technology Cluster: Evidence from Cambridge, UK

Centre for Technology Management (CTM) Working Paper 2010/01

29 Pages Posted: 6 Sep 2011

See all articles by Vivian Mohr

Vivian Mohr

University of Cambridge - Centre for Technology Management

Elizabeth W. Garnsey

University of Cambridge - Judge Business School

Date Written: September 1, 2010

Abstract

High-growth firms appear to be key drivers of new industries and technologies. Here we investigate the contribution of these and other types of firm to a technology cluster, in the context of ‘creative destruction’ shaping the evolution of the cluster. Evidence on the reallocation of scarce resources through processes of creative destruction is scarce. But in a cluster the effects of creative destruction can be traced through such developments as firm exits and entries change in firm size distribution and acquisition of firms. We apply churn analysis, firm size transition analysis and analysis of acquisition to the technology cluster in Cambridge UK over twenty years. Firm growth contributed two-thirds of all new job creation, while entry-exit turbulence accounted for one third of job creation. High-growth firms accounted for a quarter of jobs created in the Cambridge cluster during this period, without ever making up more than 3% of all tech firms. There has been an increase in average firm size and profitability. A fall in entry rates and fewer firms moving up into larger size categories in recent years point to adverse conditions for innovative new firms even before the financial crash.

Keywords: firm growth, cluster evolution, entry, exit, acquisition, job creation, technology-based firm, creative destruction

JEL Classification: M13, 018

Suggested Citation

Mohr, Vivian and Garnsey, Elizabeth W., Exploring the Constituents of Growth in a Technology Cluster: Evidence from Cambridge, UK (September 1, 2010). Centre for Technology Management (CTM) Working Paper 2010/01, Available at SSRN: https://ssrn.com/abstract=1923065 or http://dx.doi.org/10.2139/ssrn.1923065

Vivian Mohr (Contact Author)

University of Cambridge - Centre for Technology Management ( email )

Engineering Department
Trumpington Street
Cambridge, CB2 1PZ
United Kingdom

Elizabeth W. Garnsey

University of Cambridge - Judge Business School ( email )

Trumpington Street
Cambridge, CB2 1AG
United Kingdom
+44 (0) 1223 338183 (Phone)

HOME PAGE: http://www.jims.cam.ac.uk/people/faculty/garnseye.html

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