Industrial districts prosper through tacit local atmosphere that cannot be replicated remotely

Evidence

If we briefly summarize the historical antecedents of cluster thinking, we should start with Alfred Marshall (1949, first published in 1890), who argued that specialized labour and inputs, local demand conditions, availability of related and supporting industries, information spillovers, and the ease of comparison and the resulting savings in terms of time and search costs on the customers’ part are among the prime reasons why specific industries tend to be geographically concentrated. Marshall (1949) writes about the particular ‘atmosphere’ that characterizes such districts and believes that the mystery of such concentration is hidden in the very nature of this atmosphere. If, for instance, a clustering of economic activity like Hollywood is characterized by such an atmosphere as defined by Marshall (1949), it follows that if one wants to be in-the-know s/he might prefer ‘to be there’ since the advantages associated with it are difficult to tap into from a distance. Besides, it is very hard, if not impossible, to imitate the same ‘system’ in another locale, which in turn reinforces the likelihood of sustainability for the cluster (Öz, 2004). — Georg Schreyögg and Jörg Sydow, The Hidden Dynamics of Path Dependence, 808

Categorization

• SEED: Essay angle: why remote work cannot dissolve innovation clusters — Marshall’s ‘atmosphere’ as the un-telecommutable asset.
• DEFINE: Explains Marshall’s term ‘atmosphere’ as the diffuse, hard-to-imitate advantage binding firms to a district.