Localized Learning and Industrial Competitiveness

LocalizedLearningandIndustrialCompetitivenessPeterMaskellandAndersMalmbergBRIEWorkingPaper80October1995PaperpresentedattheRegionalStudiesAssociationEuropeanConferenceonRegionalFuturesGothenburg,6.-9.May1995PeterMaskell,CopenhagenBusinessSchool,DanishResearchUnitforIndustrialDynamics(DRUID/2),Nansensgade19,2,DK-1399CopenhagenK,Denmark,([phone],Fax:[phone],E-Mail:MASKELL/[e-mail],UppsalaUniversity,DepartmentofSocialandEconomicGeography,Norbyvägen18B,S-75236Uppsala,Sweden,([phone],Fax:[phone],E-mail:[e-mail]hbytheauthorsaspartoftheprojectRegionalProductionSystemsintheNordicCountriessupportedbytheNordicInstituteforRegionalResearch(NordREFO).2AbstractThispaperattemptstoplaceregionaldevelopmentwithinthecontextofmodernresourcebasetheory.Firmsdonotlocateorrelocateinordertomakeuseofubiquities,buttoutiliseappropriatedifferencesinregionalcapabilities,andthepaperdiscussesthenatureofsuchcapabili-tiesinenhancingorabatingthecompetitivenessoffirms,emphasisingthecrucialroleofcollectivelearningandtacitknowledgeoffirmsandmarkets.Learningprocessesareinherentlyinteractiveinnatureandgenerallycharacterisedbyuncertainty.Mostnewknowledgeisrelatedtoproblem-solving,oftenonatrial-and-errorbasis,andassuchitisnormallyarrivedatincrementally.Theinteractiveprocessesofsolvingproblems,wheretheneedsofonepartybecomesthedrivingforceforactionofanother,containbothcodifiedandtacitelements.Indeed,wearguethatinanerawhencodifiedknowledgeisgloballydisseminatedfasterthaneverbefore,tacit,andspatiallymuchlessmobile,formsofknowledgearebecomingmoreimportantasabasisforsustainingcompetitiveadvantage.Regionalcapabilitiescanbeseenasthecombinationofthehumanandphysicalresourcesavailable,thestructuresestablishedintheregionthroughtime,andtheregionsspecificinstitutionalendowmentasitisshapedbytheprevoiusroundsofknowledgecreation.Byembodyingknowledgeusefulforparticularclassesofactivitiestheinstitutionalendowmentreinforcetheparth-dependentnatureofregionaleconomicdevelopment.Overtime,regionalcapabilitieschangeasresourcesareexhausted,asstructuresdecayandasinstitutionsdegenerateorbecomeoutdatedleadingtoadeteriorationofregionalcompetitiveness.Othersmightevenimitatesomeoftheregionscapabilitiestherebyturningthemintoubiquities.Sustainableregionalcompetitivenessimplythattheprocessofasseterosionmustbecompensatedbytheformationofnewcapabilitiesthroughthereplacementofdecrepitresources,therebuildingofobsoletestructuresortherenewalofoutdatedinstitutions.Thepaperarguesthattheabilityofregionstoadjustthereinstitutionalendowmenttomeetcontemporarydemandsofthefirmsincreasinglyrequireun-learning.Theprocessofunlearningnecessitatethedisintegrationandremovalofformerlyimportantinstitutionswhichnowactsasahindrancetofurtherdevelopment.Thismightjeopardisetheinterestofsomeindividualsorlargergroupswiththepowertopreventorimpedetheprocess,thusleadingtoregionallock-ins.Itisfinallyclaimed,thatintheongoingmovementtowardsaknowledgebasedeconomytheadaptnessofregionstounlearnareofgrowingsignificanceforaregion'sperpetualabilitytoparticipateinsustainingthecompetitivenessofanalreadyestablishedindustry,ortobuildcompetitivenessafreshbydevelopingnewindustries.31.Introduction:Towardstheknowledge-basedeconomyRecently,thesocialandinstitutionalembeddednessofeconomicactivityhasbecomeanareaofgrowinginterestineconomicgeography.Whatissometimestermed'socioeconomics'hasbroughtgeographyclosertodisciplinessuchasevolutionaryandinstitutionaleconomics,industrialeconomicsandorganisation,industrialsociology,businessadministrationandpoliticalscience(AminandThrift,1994).Keyconceptsarelearning,innovation,competenceandinstitutionsinthisevolvingresearchagenda.Thisre-orientationofresearchreflectsongoingchangesinproductionsystems,andarecognitionthatsuchsystemsarenotjustfixedflowsofgoodsandservices-conductedbyfirmsthatarelittlemorethanstereotypeconvertersofstandardinputsintostandardoutputs-butratherdynamicarrangementsbasedonknowledgecreation(Patchell,1993).Itistheabilityoffirms-aswellasregionsandcountries-tolearn,changeandadaptratherthantheirallocativeefficiencywhichdeterminetheirlong-runperformance.Changesintheinternationaleconomyhasgraduallyshiftedthebasisofafirm'scompetitiveedgefromstaticpricecompetitiontowardsdynamicimprovementsandarefavouringfirmsthatareabletocreateknowledgealittlefasterthantheircompetitors(Porter,1990).Asknowledgehasbecomeacrucialassetinmodernproductionsystems,theongoingcreationofnewknowledgehasbecomeakeyprocesswhentryingtosustainorincreasecompetitiveness.Thecompetitivenessofanincreasingnumberoffirmsisnolongerprimarilyobtainedbycost-reduction,forinstanceinlabourwages,butmainlybygeneratingentrepreneurialrents(Spender,1994)throughinnovationsintheproductionprocess,byaccessingnew,distinctivemarketsinnewandunconventionalwaysorbyproducingnew,improvedorredesignedcommoditiesorservicieswithasignificantcontributiontotheperceivedcustomerbenefitoftheendproduct(Pralahad&Hamel,1990).SometimestheprocessofknowledgecreationtakesSchumpeterianproportions,