Edited by Ron Boschma and Ron Martin
Chapter 19: Path Dependence and Path Plasticity: The Co-evolution of Institutions and Innovation – the German Customized Business Software Industry
Simone Strambach 1. Introduction Path dependence and the co-evolution of technology and institutions are key concepts in understanding the dynamics of structural change at the level of firms, sectors and multilevel spatial scales. On the research agenda of evolutionary economic geography, path dependence appears as one of the core components, although there are unresolved issues by its application in economic geography (Martin and Sunley, 2006, and Chapters 3 and 4 in this book; see also Boschma and Martin, 2007, and Boschma and Frenken, Chapter 5 in this book). Institutional change and institutional dynamics within path-dependent developments is one of the under-explored areas. The chapter argues that for an evolutionary approach in economic geography there is a need to recognize and conceptualize institutional arrangements and institutional change in greater depth. Especially for the understanding of long-term dynamics of economies in space and time, it is necessary to make them an integral part of the analysis and to explain how institutions play a role in dynamic developments of evolutionary paths. The concept of path dependency is used in economic geography to explain the economic specialization and longstanding success, as well as the crises and economically unfavourable development of regions. The contribution of institutions, ‘institutional thickness’ and the place-specific institutional settings are made responsible for positive lock-in effects and the ability of regions to adapt continually to a changing economic environment. On the other hand, the place-specific institutional endowment and institutional inertia are also utilized to explain why some regions are victims of...
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