UCL School of Management is delighted to welcome Min Jung Kim, University of Minnesota, to host a research seminar discussing, ‘Cluster Temporal Dynamics, Boundary-Crossing Resource Mobility, and the Nature of Firms Technological Innovation’

Abstract

A large body of strategy literature on industry clusters and firms’ technological innovation generally has focused on the effects of cluster size in and of itself. In this study, I contribute to this literature by studying an underexplored phenomenon of the temporal dynamics of industry clusters—namely, the patterns of sustained growth or decline in geographical concentration levels of industry activity. I hypothesize that firms in clusters experiencing a period of sustained growth will be more likely to generate innovation that disrupts existing streams of technology and establishes new streams relative to firms in clusters of comparable size that are experiencing stable or declining periods. This is because sustained growth implies that employees are increasingly coming in from elsewhere, which constitutes inflows of knowledge from different geographies or industries. The periods of sustained growth also imply that relevant organizations in the local ecosystem are increasingly helpful in allowing local firms to understand and apply such boundary-crossing knowledge. I test my arguments in the context of the U.S. medical device industry from 1974 to 2016. Controlling for cluster size, I find that firms in clusters experiencing sustained growth are more likely to generate novel innovation. This change in the nature of innovation is found to be driven more by cross-industry employee mobility than by cross-geography mobility. I also show that the relationship between cluster dynamics and novel innovation differs from the relationship between cluster size and novel innovation.