Agglomeration and Clustering Over the Industry Life Cycle: Toward a Dynamic Model of Geographic Concentration

Strategic Management Journal, Forthcoming

37 Pages Posted: 23 May 2014

See all articles by Liang Wang

Liang Wang

University of San Francisco

Anoop Madhok

York University - Schulich School of Business

Stan Xiao Li

York University - Schulich School of Business

Date Written: April 20, 2013

Abstract

Research on agglomeration finds that either a higher survival rate of incumbent firms or a higher founding rate of new entrants, or both, can sustain an industry cluster. The conditioning effects of time on the two distinct mechanisms of survival and founding are, however, rarely examined. We argue that the forces driving geographic concentration vary across the industry life cycle. Data from Ontario’s winery industry from 1865 to 1974 demonstrates a dynamic model of geographic concentration: agglomeration attracts more new entry in the growth stage only, whereas it contributes to firm survival in the mature stage only. The results not only establish the importance of understanding the temporal dynamics underlying agglomeration externalities, but also provide a possible explanation for the mixed empirical results found in previous studies.

Keywords: agglomeration, industry cluster, cluster dynamics, geographic concentration, industry life cycle

Suggested Citation

Wang, Liang and Madhok, Anoop and Li, Stan X., Agglomeration and Clustering Over the Industry Life Cycle: Toward a Dynamic Model of Geographic Concentration (April 20, 2013). Strategic Management Journal, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2439061

Liang Wang (Contact Author)

University of San Francisco ( email )

San Francisco, CA 94117
United States
9253612896 (Phone)

HOME PAGE: http://www.usfca.edu/Faculty/Management/Liang_Wang/

Anoop Madhok

York University - Schulich School of Business ( email )

470 Keele Street
Toronto, ON M3J 1P3
Canada
416-736-2100 x20578 (Phone)

HOME PAGE: http://research.schulich.yorku.ca/faculty-profile-details.jsp?id=87&tab=0

Stan X. Li

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

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