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From community of innovation to community of inertia : the rise and fall of the Akron tire cluster

Author: Donald N Sull; Harvard Business School.
Publisher: [Boston] : Division of Research, Harvard Business School, ©2001.
Series: Working paper (Harvard University. Graduate School of Business Administration. Division of Research), 01-025.
Edition/Format:   Book : English
Database:WorldCat
Summary:
Strategy scholars argue that industrial clusters foster innovation, citing examples such as Silicon Valley and Hollywood. Leading firmsembedded in once-innovative clusters, such as Detroit's automobile manufacturers and Switzerland's watchmakers, have failed to adapt to competitive changes and been accused of organizational inertia. This paradox raises two related questions: how do industrial clusters contribute to  Read more...
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Document Type: Book
All Authors / Contributors: Donald N Sull; Harvard Business School.
OCLC Number: 46714179
Description: 30, [19] pages : illustrations ; 28 cm.
Series Title: Working paper (Harvard University. Graduate School of Business Administration. Division of Research), 01-025.
Responsibility: Donald N. Sull.

Abstract:

Strategy scholars argue that industrial clusters foster innovation, citing examples such as Silicon Valley and Hollywood. Leading firmsembedded in once-innovative clusters, such as Detroit's automobile manufacturers and Switzerland's watchmakers, have failed to adapt to competitive changes and been accused of organizational inertia. This paradox raises two related questions: how do industrial clusters contribute to inertia as well as innovation and how might industrial clusters evolve to promote inertia rather than innovation. This paper presents findings from a historical analysis of the American tire industry concentrated in Akron, Ohio from its inception in 1900 to its demise in the late 1980s. The tire industry was among the most innovative sectors in the U.S.economy between 1900 and 1935, providing dramatic improvements in both product performance and manufacturing process efficiency, and Akron-based firmsaccounted for most of this innovation. Faced with the introduction of radical tire technology pioneered by French tire maker Michelin, however, the Akron tire companies faltered in the 1970s and 1980s, and in the span of eighteen months, three of the four Akron tire manufacturers ceased to exist as independent corporations. This paper presents a framework grounded in the historical data, that suggests that geographic co-location facilitates knowledge spillovers, but the value of these spillovers decrease as the technology matures. The cost of geographic co-location increases, however, as the cluster's shared cognitive models and organizational routines assume a taken-for-granted quality. The institutionalization of cognitive models and organizational routines leaves the cluster vunerable to environmental jolts.

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