Path Interdependence, Firm Innovation and Resilience:
A Complex Adaptive Systems Perspective
TRes: Summary of UK Team’s Qualitative Findings
Gillian Bristow, Julie Porter and Phil Cooke
Cardiff University
Introduction
The concept of resilience has become increasingly prominent in economic
geography and regional studies as regional economies and societies struggle to
respond and adapt to shocks and change. The concept is developing particular
traction within evolutionary economic geography (EEG) where it resonates strongly
with non-equilibrium and path-dependent notions of adaptive change (Martin, 2012).
Indeed much recent work within EEG views the economic landscape as a ‘complex
adaptive system’ (Martin and Sunley, 2006; p. 573) and asserts that major shocks
exert a formative influence over how this landscape evolves and changes over time
(Boschma and Martin, 2010; Simmie and Martin, 2010; Martin, 2012). This approach
to economic change rejects neo-classical inspired notions of adjustment
mechanisms towards any notion of equilibrium (Dawley et al, 2010). Instead in EEG,
resilience is defined as the adaptive capacity of a local or regional economy or ‘the
ability of the region’s industrial technological, labour force and institutional structures
to adapt to the changing competitive, technological and market pressures and
opportunities that confront its firms and workforce’ (Simmie and Martin, 2010; p. 30).
Much of the emerging debate within evolutionary economic geography around
resilience focuses upon the causal concepts of adaptation – the ability to respond to
an economic shock with a movement back towards a pre-conceived development
path, and adaptability – where a different kind of resilience emerges through
opportunities or a decision to leave a path that may have proven successful in the
past in favour of a new, related or alternative trajectory or niche (Dawley et al, 2010).
This perspective suggests that the adaptive capabilities of a region’s economy are
likely to depend upon the nature of the region’s pre-existing economy – in other
words, adaptation and adaptability are likely to be path-dependent processes shaped
by the region’s industrial legacy and the scope for re-orientating skills, resources and
technologies inherited from that legacy (Martin, 2012).
Path dependency helps us understand what shapes a region’s ability to respond to a
system shock but is arguably less well equipped to help us understand the process
of adaptability or what might cause a region’s endogenous functioning to renew or
atrophy, or how regional competencies and specialisms may change and thus how
‘lock-in’ may be avoided (Boschma and Frenken, 2009). Indeed, path dependence at
the regional level may explain stability but also system stagnation and inertia
(Cooke, 2011).
In seeking to understand the evolutionary trajectories of regions demonstrating
capacities to transition to ‘green’ economic development paradigms, Cooke (2010;
1
2011) has drawn attention to the significant role played by instances of knowledge
re-combination between firms. There is indeed a growing body of evidence indicating
that fruitful eco-innovation increasingly occurs at the interfaces between firms,
sectors and clusters where the cross-fertilisation of ideas may either produce new
unforeseen innovations, or result in the application of old knowledge in new ways to
tackle complex or wicked problems (e.g. automotive engineering to biofuels, or milk
coolers to wind turbines). Such unforeseen innovations typically emerge from
‘revealed related variety’ or the ex post relatedness of a region’s economic sectors
and their trajectories (Geels, 2007; Martin and Sunley, 2008). As such, this
represents a form of co-evolution of paths, or ‘path interdependence’ (Liu, 2009;
Cooke, 2011). Understanding path interdependence thus offers the potential to
understand how regional economic development trajectories change and mutate.
To date, however, there have been few empirical investigations into how these path
interdependencies emerge from innovation, spin-offs and the rise of market niches at
the micro or firm level. As such we have little knowledge as to how far they can
effectively change the course of an industrial or development path and subsequently
effect co-adaptation between firms, markets, technology, industry and institution (Liu,
2009). This is thus the principal focus for our research work which seeks to address
two key questions: firstly, what shapes the capacities for knowledge recombination
amongst particular firms, clusters and sectors in different contexts; and secondly,
how do these micro-interdependencies relate to or help facilitate macro-outcomes in
terms of regional resilience.
Since path interdependency is a co-evolutionary study and emphasises the
interactions between different entities and their environment, it fits well with
complexity thinking which sees the human world as complex, unpredictable and
dynamically linked to its environment on a range of temporal and spatial scales. We
have produced a detailed review of the relevant conceptual literature which we have
discussed previously (and which here we summarise only briefly). Here principally
we focus on our case studies and emerging empirical findings.
Path dependence and interdependence
Complexity theory thus highlights ‘the tension between exploitation of knowledge
gained (path dependence) and exploration of novel actions (path creation) and
illustrates how innovation processes characterised by ‘edge of chaos’ behaviour
balance these tensions, permitting adaptive functioning of technological-organisation
systems’ (Baum and Silverman, 2001; p. 198). As such, complex adaptive system
thinking also provides interesting insights into the nature and form of interactions that
can occur and their resulting innovations. The system’s fitness landscape has certain
constrained pathways which are known as ‘attractors’. These are the routine or
‘normal’ self-organised behaviours or interactions in the system between entities and
with the system and its environment (such as cyclical or neighbourhood effects).
These create normal path interactions that in economic systems we understand as
path dependence and which emerge from routine related variety (Cooke, 2012). One
variant of these interactions are ‘strange attractors’ where there is no a priori reason
why such paths might coalesce and where unexpected combinations of pathways
occur to produce innovative new pathways. As such strange attractors display
‘revealed relatedness’ rather than obvious relatedness. Furthermore, the more unlike
2
or strange they are, the more radical the innovation conceived by the interdependent
paths will be (Kauffman, 2008; Cooke, 2011).
Cooke and Eriksson (2011) depict the outcome of strange attractors visually (Figure
1). This demonstrates a rugged system landscape where there are multiple fitness
peaks or mountains (depicted by the triangles), and a range of paths between them.
The higher the connectivity the more rugged the system becomes i.e. a system that
has low connectivity will only have one peak. However, a system with high
connectivity will have many peaks which is the case here. The catalyst for the
intersection is the ‘blockage’. The blockage can represent different events such as
an external (e.g. recessionary) shock to the system. At the point where the path
runs into the blockage it can do four things: (1) end, (2) redirect temporarily and
return to its path over time, (3) go in another direction, or (4) intersect with another
path in the valley. The fourth scenario, where at least two paths intersect, results in
path interdependence. However, not all paths are destined to intersect.
Figure 1:
Source: Cooke & Eriksson, 2011
Preadaptation and the adjacent possible
There are two main types of innovation that can result from the meeting of strange
attractors: preadaptation and the adjacent possible. Preadaptation is rooted in
evolutionary biology and is a type of technology transfer where an innovation from
one industry setting is adapted for wholly different industry solutions in another.
The adjacent possible is an incremental innovation that is closely related to an
existing product and where a design effort must be effected to execute an innovative
improvement (Cooke, 2011). This simple innovation becomes radical when it is
recombined with existing resources (Kauffman, 2008). Complex adaptive systems
thinking suggests that both types of innovation are more conducive to a region with
3
related variety and connectedness as there is more potential technology transfer and
recombination than in a specialised region. Kauffman (2008; p. 151) asserts ‘the
more diverse the economic web, the easier is the creation of still further novelty’.
Research Questions
The application of complex adaptive systems thinking to regional economies and
regional innovation systems thinking in particular is still in its infancy and as a result,
there is a clear need for more detailed empirical work. This review of the existing
literature suggests a number of key research questions require further testing
through empirical research.
Firstly, there are a set of questions around what factors shape the capacities for and
likely success of knowledge recombination amongst particular firms, clusters and
sectors, or how do different vectors of activity successfully combine and co-evolve in
some places and contexts but not others? Do they, for instance, emerge in response
to institutional or market developments (such as economic shocks) or are they
largely endogenous self-organising processes (a product of individual
entrepreneurship and agency, or self-organised knowledge networks)? How
important is related variety – does greater variety in the number of entities (firms,
institutions and nodes for interaction) lead to greater potential for the creation of
further novelty? What forms of knowledge recombination are emerging in practice,
between what interfaces between sectors, and through what combination (or
interdependence) of paths? And how is knowledge recombined? What role is played
by preadaptation and/or the adjacent possible (i.e. how does innovation proceed –
what role is played by chance or other factors in prompting key interactions, and how
is preadaptation being exploited? What is the relative importance of endogenous
system topology, or a resilience effect (or shock)?
A second set of questions surround how these micro-interdependencies relate to or
help facilitate macro-outcomes in terms of adaptive capacities and resilience for
regions? How and in what ways do they help promote the renewal of regional
development trajectories?
Methodology
We have sought to address these questions through two UK based case studies.
The first case is the diversified cluster in the North Wales region of Denbighshire that
has high related variety with industries such as photonics, aerospace, solar energy
and fibre optics. The second case is the more specialised cluster in the East
England region of North Suffolk that has low related variety with the main industry of
telecommunications centred around British Telecommunications (BT) research and
development centre. We have focused on tracing specific innovations within or
connected to each cluster to understand the types of knowledge recombination
processes occurring and their evolution.
Using an innovation biography methodology, which focuses on identifying the
innovation first and working backwards to understand the actors involved in creating
the innovation, we have focused on a detailed review of six innovations. Three
innovations were based in the North Wales (NW) region, particularly the
4
Denbighshire and Flintshire local authority areas, and three innovations were based
in the East England (EE) region, particularly the Adastral Park site in the Suffolk local
authority. The innovations covered in the NW case include: a Heads-Up Display
(HUD), a photonics-based technology that is used by pilots who operate both
commercial and military aircrafts; energy efficient airplane wings, an aerospacebased technology that is used to make commercial airplanes more energy efficient;
and a solar steel coating, a photonics-based technology that is painted on steel
enabling buildings to be energy producers. The innovations covered in the EE case
include: customer service computer software, an ICT-based technology that instantly
updates itself to the customer’s location to provide up-to-date details; a 3D x-ray
machine, an ICT-based technology that combines existing x-ray machines with
innovative software enabling 3D, volume-view output; and plastic pipe detection
system, an ICT-based technology that combines existing metal detector technology
with smart phone technology and RFID technology to enable searches for pipes
underground. Semi-structured interviews were completed with a number of regional
organisations in each case study site which were largely achieved through referral.
The interviews were conducted with SMEs, MNCs, knowledge network managers,
government representatives and university collaborators.
North Wales
Since its inception in the 1950s, the North Wales cluster has evolved significantly to
its current state. The original hub firm was Pilkington Glass which became
specialised in photonics in the 1970s. As a result, spinoffs were created but unlike
other areas that specialised in photonics, the spinoffs in North Wales retained their
linkages with the hub firm creating the specialised cluster base. The aerospace
sector was simultaneously growing in the region, having been embedded there since
post-WW2. In the late 80s, through government emphasis on growing the sector,
aerospace became a major economic contributor in North Wales (Cooke & Ehret,
2009). Around the same time, the Thales group acquired Pilkington Photonics, then
the hub firm in the photonics clusters and part of the larger Pilkington Group which
included Pilkington Glass. This acquisition led to increased linkages between
people, firms, and the larger labour market in the photonics cluster and the growing
aerospace agglomeration. The linkages were exacerbated by the Thales military
and technology emphasis to the point where collaborations were created. Several
years later, in the late-90s, Pilkington Group, along with Pilkington Photonics, which
belonged to Thales, was acquired by the global conglomerate Qioptiq. Through this
latest acquisition, the cluster formed more external linkages while also retaining the
intra-regional linkages with the aerospace sector. Given the socio-economic
transition that was experienced in the mid-2000s with an increased emphasis on a
post-hydrocarbon society, another path emerged, largely through regional University
involvement, specialising in solar energy.
East England
In comparison to the North Wales cluster, the East England cluster has evolved but
not in the same, highly diversified, way. The East England cluster can be attributed
to the 1960s relocation of the British Telecommunication research and commercial
headquarters from Dollis Hill, London to Ipswich. This is the major hub firm in the
region, the centre of the cluster and the attractor of other firms, both MNCs and
5
SMEs, to the region. Over time, little has changed on the site in terms of what the
focus of the innovation is: telecommunications. Due to this, the cluster is highly
specialised in telecommunications. Nonetheless, this cluster has recovered from
shocks such as privatisation of the industry (ie. sector specific), competitiveness, and
previous recessions (ie. large external shocks) and has, despite the contradictions in
the literature, still managed to flourish.
Findings from the Qualitative Research
There are five major findings, derived from this qualitative research, which will be
discussed in this section.
1.) Knowledge recombination is occurring as a result of a number of regional
conditions.
Innovations that were recombinations of existing technology were found in both case
study regions. These findings highlight the conditions that supported the
recombination of knowledge to create the individual innovations. However, despite
the number of examples that were based on knowledge recombination in the study,
the conditions for the knowledge recombination to occur in each case study region,
and with each firm, varied. As a result, this section will review what conditions
mattered in creating the knowledge recombination for each firm that produced a
recombinant innovation.
Example 1: 3D X-Ray Software
The main conditions that influenced the creation of this technology were the firm’s
access to high skilled human capital and the co-location of the firm. The firm
affiliated with this technology, Disect, throughout its tumultuous existence, has relied
heavily on the high skilled human capital that is available in the wider Adastral Park
site. Without the expertise of the surrounding labour market, particularly through
retired BT employees, the firm would not have been able to create the technology or
to adapt it over time. While other firms in the region will attest to the high-skilled
human capital that is University-based, this firm, in creating this recombinant
innovation, solely used on-site expertise that were largely BT-trained. Due to this
condition of accessing the high-skilled human capital on the Adastral Park site, the
firm’s co-location in the smaller IM cluster is of the utmost importance in both
creating the innovation and refining it. In addition, the co-location of the original
innovation creators, one at BT and one in healthcare, highlights the importance of
industry co-location as well as the role of chance in creating a recombinant
innovation.
Example 2: Plastic Pipe Detection System
The main conditions that influenced the creation of this technology were the firm’s
ability to identify a realistic target market at the outset of product development,
access to high skilled human capital and the co-location of the firm. Even prior to the
OXEMS firm commercialising this technology, the researchers considered the target
market for this technology to be utilities companies. It was only after the researchers
entered the commercialisation stage, with the establishment of the OXEMS firm, that
they narrowed down the first type of utilities company that they would approach with
their technology which was water. The access to high skilled human capital has also
been a prevalent factor throughout all of the pre- and post-commercialisation activity.
6
In the pre-commercialisation activity, the research project was awarded to Oxford
University researchers due to their significant strides within the field. In the postcommercialisation activity, the decision to locate the firm in the Suffolk region was
based on its proximity to Cambridge University as well as the plethora of potential
freelancers that would be a supply of casual labour at Adastral Park. The co-location
of the firm on the Adastral Park site is partially due to the access of the high skilled
labour market but also due to the IM telecommunications cluster and incubator which
provides free space for new firms.
Example 3: Solar Painted Steel
The main conditions that influenced the creation of this technology were the firms’ –
Tata Steel & Dyesol- access to high skilled human capital, the co-location of the firm
and the historic embeddedness of the cluster. The firm, Dyesol, was interested in
opening a branch of their multi-national firm in the NW region predominantly due to
the potential collaboration between Dyesol and Tata Steel. By locating in the
regional photonics cluster which is near the regional steel cluster, the firm was in a
prime position to access the high-skilled human capital that focuses on innovative
PV design and the high-skilled human capital that focusses on innovative steel
solutions.
2.) Collaborative activity across sectors is largely due to micro-level actors engaging
with each other through formal and informal knowledge networks
Firm-level collaboration has been enabled by formal knowledge networks primarily in
the North Wakes case study region. This is largely due to the established clusters in
the region, particularly in photonics and aerospace, that are historic drivers of
economic growth. Using Welsh Government funding, the regional knowledge
networks support these clusters in two very different ways: (1) as a regional
development agency and (2) as a government liaison.
The knowledge network as an RDA pertains to the Welsh Optoelectronics Forum
(WOF). The closure of the Welsh Development Agency (WDA) was, according to
some sources, a shock to the photonics cluster in North Wales due to the funding
and collaboration events the RDA organised in the region. However, over time, the
WOF has evolved and has taken up the reigns of a traditional RDA through
advertising funding, advertising contributions of the cluster to the region and
encouraging both intra- and inter- regional collaboration. The WOF encourages
inter- and intra- regional collaboration which is evidenced by its commitment to
connecting the photonics firms in South Wales with the photonics firms in North
Wales. More importantly, it encourage inter- and intra- industry collaboration where
new and exciting technologies can be developed. In some cases, this inter-industry
collaboration is intra-regional while in other cases it is inter-regional. The best
example of the latter is the inter-industry, inter-regional collaboration described in the
previous slides between a solar energy firm in Denbighshire and a steel firm in
Flintshire.
The knowledge network also recognises the strengths and weaknesses of the
regional photonics cluster. As a major weakness, there is the level of clearance
needed to work with many of the defence-emphasised MNCs in the photonics
cluster. As a major strength, the WOF recognises the ability of photonics technology
7
to be a platform technology as it is literally in almost everything which could mean
widescale future applications arising from this region. This latter point regarding the
widespread use of photonics ties in with the WOF’s ability to encourage collaboration
through networking and matchmaking events at the intra- regional and inter-sectoral
levels.
In contrast, there is also an alternative knowledge network type (that of ‘government
liaison’) pertains to the Welsh Aerospace Forum (WAF). Several interviews
mentioned that the WAF should really be referred to as the ‘Welsh Airbus Forum’
because it solely helps Airbus to thrive in the region. The WG recognises that Airbus
is the anchor firm that attracts investment, other aerospace-related firms to the
region and is a major regional employer. This is interesting given Airbus’ highly
specialised product manufacturing and lack of innovation and technological
development in the region. Nonetheless, despite the seemingly independent role of
the WAF, with its wide membership that spans into other industries, its main goal is
to support Airbus as a major employer in the region.
3.) Explanation of successful co-evolution of paths.
Through the findings, the variety of ways the co-evolution of paths occurs has been
identified. These findings, predominantly relate to the evolution of the clusters in the
NW region. In regards to defence industry entry to the NW photonics cluster in the
1950s, it was through a partnership with Pilkington Optronics and a US firm. The
defence focus of the aerospace cluster in Flintshire prior to that time did not have an
impact on the photonics cluster nor was it a catalyst for the photonics cluster to
specialise in developing photonics-for-defence technology. Rather, the original
interest in defence by the photonics cluster came from the US DOD contracts. The
result was a recombination of technology taking the photonics technology developed
in NW and combining it with the basic dashboard technology found in the cockpits of
military aircrafts in the US. At this point, the photonics cluster in NW shifted their
efforts to specialise mainly in photonics for defence. The path evolution emerged
initially through the managers’ interest in working with a larger firm in the US but
continued largely as a result of the existing firms’ engineers and researchers
applying for government grants to continue to produce this technology.
The more recent co-evolution is a firm-level dependence forming between a branch
of the photonics path, the solar energy agglomeration, and a branch of the steel
path, the energy efficient coatings firms. This co-evolution has been facilitated by
both individual entrepreneurship and knowledge networks. The photonics path has
branched due to the regional University interest in PV but also because photonics is
a platform technology and networking was low in the region due to the classified
nature of the HUD. In contrast, the energy efficient coatings technology predates
TATA’s acquisition of the steel site as it was developed by Corus as ‘Corus Colours’.
Tata only sought to utilise this technology when confronted with climate change
legislation and their consideration of creating buildings as energy producers instead
of energy consumers. The resulting technology of this co-evolution, albeit at the firm
level, is the solar steel coating discussed extensively throughout this report.
From the examples used in this study, individual firms may be involved in crosssectoral collaboration; however, this micro-level interaction has not changed the
activity of the larger clusters that these firms are a part of. The exception to this is
when looking at the evolution of the photonics cluster over time. The photonics
8
cluster has managed to co-evolve with defence in the NW region over decades.
More recently, given the increasing emphasis on renewable energy and the closed
nature of the major photonics firms that have classified projects from the Ministry of
Defence, many of the smaller photonics firms are starting to focus on solar energy
development in addition to their traditional, photonics base.
In contrast, in the SMEs in EE, the firms are combining knowledge with unlike
collaborators at the micro-level but this practice is not being adopted at the macrolevel. This is attributed to the larger site that these SMEs are located on. Adastral
Park is a science park that predominantly serves BT making the co-evolution of the
cluster, beyond the firm-level, difficult if not impossible.
4.) The role of related variety in contributing to potential firm-level innovation varies
based on industry.
In regards to photonics, steel, and solar energy, related variety has been
instrumental in establishing collaborative links and recombinant innovation. This is
demonstrated widely in this research through examples such as the Tata
Steel/Dyesol connection as well as the co-evolution of, originally, the photonics and
defence paths and more recently the co-evolution of the solar energy and photonics
paths. Alternatively, the aerospace cluster does not benefit from the related variety
in the region. The aerospace cluster, which is Airbus surrounded by its supply chain,
is autonomous due to the highly specialised nature of its wing production and it being
a part of an MNC with R&D outposts elsewhere. To highlight this disconnect
between aerospace and the other clusters and agglomerations in the region, when
interviewing Airbus a question was raised regarding their location which is proximate
to Qioptiq and other major photonics suppliers. The representative had never heard
of Qioptiq and said that any connection to Airbus avionics would be facilitated by
their Toulouse branch which is the Airbus Centre for Excellence in Avionics.
From the findings, greater variety in the number of entities can lead to the creation of
further novelty but it can also lead to over diversification. For the former, the entry of
solar energy firms in the NW regions has increased the innovations between steel
and solar energy as well as solar energy and photonics. However, through further
diversification of the photonics cluster, it was emphasised in the interview with the
WOF that they are starting to see the signs of over diversification of the cluster.
From the WOF point of view, this is problematic because of government funding.
According to the WOF, the WG sees automotive firms, solar energy firms, and
photonics firms co-located in one site; rather than seeing photonics firms diversifying
their market reach. Due to this, the WG offers the cluster less funding opportunities.
From the point of view of the firms in the photonics cluster, they have had to diversify
their products and collaborate with unlikely sources due to less funding as a result of
the recession.
5.) Firms are continuously adapting but the recession still had an impact.
In reviewing the findings from this report, at the micro-level, it could be posited that
the firms are adapting their technology on a regular basis making them more
resistant to external shocks; nonetheless, the shock of the recent recession did have
an impact on them. The exceptions to this are the OXEMS firm with their Plastic
Pipe Detection technology which, due to the protected utilities market, was
9
‘recession-proof’ and Airbus due to the production timeline which insulated the firm
from the impact of the recession. Where applicable, this section will discuss the prerecession adaptation as well as how the firms adapted to the recessionary shock.
Example 1: Customer Service Software
Despite the funding setback from 2006-2009, NVP continued to provide support to
RTC noticing the potential market for the product, particularly after the firm signed
blue chip clients such as: Nationwide Building Society and Manchester United.
However, when RTC finally spun out from BT officially leaving NVP and becoming a
limited entity, there were no funding opportunities available. Due to the challenges in
the market at the time RTC struggled to raise funds and in the end, the company,
although it had been very successful, was not sustainable. The existing investors
could not put any more funding into it so they reduced the firm but the current CTO
kept the business going on his own through a technology licensing deal to keep it
running for some of the existing customers. One of the existing customers, in the
United States, was using the service and they had phenomenal results: receiving an
80% increase in sales directly from using RTC. As a result, they looked at it in 2010
and said, ‘well actually there are a couple of things here: firstly this company is core
to our business because it’s making us successful and also we think it will be really
valuable to our customer base.’ The user, as a business-to-business organisation
selling to other businesses, they felt their customer base would benefit from it. RTC
licensed out the technology from BT and NVP and then eventually bought the
business. At that point, RTC became a subsidiary of their US parent which is
Randall-Reilly and as part of that they then started to grow the team in the UK for
development and operations and grow the team in the US for sales.
Based on this, the major impact of the recession on RTC was the lack of funding
available to keep the business going forward. The venture capitalists who could
provide the firm with investments expected to see a high return and, even though the
business was doing well, the returns on the investment were not high enough for the
VCs to remain interested. To adapt to this lack of funding, the RTC directors sought
alternative forms of investment through making contact with their larger supplier
firms. As a result, the supplier firms acquired RTC with part of the business
operations being carried out in the US and other operations being carried out in the
UK, at the Adastral Park site.
Example 2: 3D X-Ray Technology
The way in which Disect operates was impacted by the recession. However, as the
brief overview of the company history and the technology history above mentioned,
the company, through a lack of market testing, was constantly adapting prior to the
recession. As a result of these prior problems, the recession was the turning point
for the firm in that, if it could survive, the remaining employees would stay with the
company.
Disect adapted to the shock of the recession in two ways: (1) they changed their
business model and (2) they spun off another business. The first way Disect
adapted to the recession was through changing their business model, namely the
way the product was sold to consumers. Similar to the ‘iTunes model’, with the new
business model, Disect would give away the viewer for free and sell the scans
produced by the viewer. With the new model, Disect holds the rights to the scans
produced from these viewers and can catalogue them for further distribution as
10
needed. The aim is to target both the informal education market such as biology
students as well as more speciality markets such as anglers or bird enthusiasts. To
proliferate the potential market for these scans further, Disect is already talking to
Encyclopaedia Britannica about being the information provider that sits alongside the
scan. Likening this again to iTunes, this agreement with Encyclopaedia Britannica
would be similar to a record label deal where every time someone downloads a
single by an artist, she gets a percentage of that download fee and the record label
gets a percentage with royalties extended indefinitely.
The second way that Disect adapted to the shock is through creating a spinoff firm,
iDisect, to attract future investments. This decision was largely based on the number
of ‘employees’ that the company had over time that they were unable to pay. In lieu
of payment, these ‘employees’ were offered equity in the Disect company. As a
result of this form of payment, through giving away equity, the business was not
investable because there were approximately thirty shareholders all with small
stakes in the business. To make the business more attractive to investors, the Disect
executives have diluted some people out of the equity frame and Disect Systems
itself, those people own shares in Disect Systems and Disect Systems now own a
substantial part of iDisect. The one shareholder for this spinoff is Disect Systems.
The original Disect firm still owns the professional viewer which Disect occasionally
get requests for but they’ve created two separate business lines for iDisect. First,
they started to tap into grant funding with success in receiving a marketing and
research grant from the Technology Strategy Board (TSB). The grant is to develop a
completely new type of technology for doing CT scans. The problem that the
research is trying to address is that with CT scans, patients and radiologists alike
have to be very limited with their exposure as there is significant danger caused by
the radiation. As a result of the grant, the researchers in the spinoff thought of a way
of doing CT scans using different frequencies that are non-tissue damaging. The
idea was conceived prior to this research being conducted but technology has
moved on in a number of ways and so, based on the research grant and the
research that they have several different universities, they now have another grant to
go ahead and do the market study to see whether there really is a demand for this
product. In doing this market research, the iDisect managers have clearly learned
from the early mistakes made by the Disect co-founders.
The long-term goal of iDisect at this point is to have their CT technology in every GP
office in Britain so if you had a broken arm and wanted to know if it was broken, the
doctor, with this technology, would be able to do the scan in the office foregoing any
of the biohazard issues traditionally identified with radiation-based technology.
Example 3: Heads Up Display Technology
Focusing on Qioptiq, the recession was one of many shocks to impact the firm. Prior
to Qioptiq locating to the region in 2005, there was a noticeable ‘buzz’ within the
photonics cluster that was supported by intra-regional collaborative projects as well
as continued research on technologies traced back to the inception of Pilkington
Optronics. Within the cluster at the current time (2012), there is considerable
emphasis on this period as a time of innovation as a result of this buzz which is now
lacking.
Through recovering from the downturn of the telecommunications industry in the
11
early 2000s, the photonics cluster was operating smoothly when Qioptiq entered in
2005 through its takeover of Thales. Similar to the other takeovers prior to Thales,
the remaining strengths in defence and military apparatus continued with Qioptiq.
However, potentially due to the positive economic results, or potentially due to other
factors, the buzz within the cluster faded from approximately 2008 onward with little
networking or collaboration both with Qioptiq and other regional entities as well as
amongst the firms within the wider cluster. None of the representatives interviewed
attributed this change solely to the recession. Rather, this change of cluster dynamic
was attributed, in part, to three other shocks including: the low funding received due
to the Welsh Development Agency (WDA) closure in 2000, the end of the military
missions to Iraq and Afghanistan, and the problems associated with too much
product diversity.
With the closure of the WDA, the immediate impact was the lack of major networking
events. The more long term effect of the WDA closure in the region is that the
funding that was available for risky investments in the region was gone. According
to those interviewed, the WDA funding stream would normally support innovation for
the photonics cluster to adapt to a shock. As a result of this lack of funding during
the most recent recession, the same participants were convinced that recovery from
the shock would occur, but at a much slower rate. The effect of the WDA closure in
the region was discussed earlier regarding the new, emerging role of the WOF.
The second shock, that is pertinent particularly to Qioptiq, is the end of the military
missions to Iraq and Afghanistan which equates to no funding for military
development. With the majority of the technology that Qioptiq’s NW base produces
being for the military, the closed door nature of Qioptiq in that location until this point
may change considerably with more collaboration and networking as a result of the
end of the military missions. The problems associated with Qioptiq’s defence- base
were discussed above in relation to the emerging solar energy agglomeration that is
photonics-based but not specialised in defence.
The third shock, which pertains to the cluster as a whole, is the very high level of
unrelated variety in the cluster making it difficult to see areas of related interest to
collaborate on. For example, the main firm in the photonics cluster is solely
focusing on defence with little collaborative efforts or strategies amongst other
photonics firms in the region or at the cross-sectoral level. The other photonicsbased firms are mainly focusing on fibre-optic technology and specialised glass
manipulation with significant, supply chain connections to UK universities. The solar
energy firms in the region are a part of the wider photonics cluster rely on photonics
but do not have any knowledge transfer with the photonics-for-defence firms.
Example 4: Solar Painted Steel
The solar energy firms in NW are trying to increase their collaborative efforts as a
result of the recession due to shrinking funding opportunities. An output of these
collaborative endeavours is the Solar Photovoltaic Academic Research Consortium
(SPARC) project. The project is a collaboration between regional industry,
University and government with the goal of advancing solar energy, particularly dye
sensitised solar cells, thin film PV technology and smart meter systems. The
partners for this project include: Bangor & Swansea Universities, Tata Colours,
Dulas, International Rectifiers, Dyesol, Optek Systems, BASF, Pilkington and Pure
12
Water. In addition to this on-going project, Dyesol also applies for TSB funding,
and FP7 funding. The ability to apply for particular funding streams that may only be
available to firms in convergence regions reinforces the firms’ original reason to
locate in the NW region. Furthermore, Dyesol considers Wales to be a major outlet
for PV research due to the extensive engagement between institutions, government
and firms that they have not found in other parts of the UK.
13
Bibliography
Ablowitz, R. 1939. ‘The Theory of Emergence’, Philosophy of Science. 16, pps. 1-16.
Adger, N. 2000. ‘Social and ecological resilience: are they related?’. Progress in
Human Geography 24, pp. 347- 64.
Arthur, B., Durlauf, S. And Lane, D. (2005) The Economy as an Evolving Complex
System II. Reading, MA: Addison-Wesley.
Ashby, J., Cox, D., McInroy, N. and Southworth, D. 2009. An International
Perspective of Local Government as Steward of Local Economic Resilience. Report
by the Centre for Local Economic Strategies: Manchester.
Baum, J. & Silverman, B. 2001. ‘Complexity, Attractors and Path Dependence and
Creation in Technological Evolution’, in Garud, R. & Karnoe, P (eds.) Path
Dependence and Creation, New Jersey: Lawrence Erlbaum Associates.
Beinhocker, E. D. (2007) The Origin of Wealth: Evolution, Complexity and the
Radical Remaking of Economics. Random House: London.
Boschma, R. & Iammarino, S. 2009. "Related Variety, Trade Linkages, and Regional
Growth in Italy," Economic Geography, Clark University, vol. 85(3), pages 289-311, 07
Boschma, R. & Frenken, A. 2006. ‘Why is evolutionary economic geography not an
exact science?’ Journal of Economic Geography. 6, pps.273-302.
Boschma, R. and Frenken, K. (2009) ‘Some notes on institutions in evolutionary
economic geography’, Economic Geography, 85 (2), pp. 151-158.
Boschma, R. & Martin, R. 2010. ‘The Aims and Scope of Evolutionary Economic
Geography’, in R. Boschma & R. Martin (eds.) The Handbook of Evolutionary
Economic Geography, Cheltenham: Edward Elgar.
Centre for Local Economic Strategies 2010. Productive Local Economies: Creating
Resilient Places. CLES: Manchester; December 2010.
Christopherson, S., Michie, J. & Tyler, P. 2010. ‘Regional Resilience: Theoretical and
empirical perspectives’. Cambridge Journal of Regions, Economy and Society, 3(3),
pps.3-10.
Clark, J., Huang, H.I. and Walsh, J.P. 2010. ‘A typology of ‘innovation districts’: what
it means for regional resilience’. Cambridge Journal of Regions, Economy and
Society, 3 (1), pp. 121 – 137.
Cooke, P. 2012. Complex Adaptive Innovation Systems: Relatedness and
transversality in the evolving region. Cheltenham, Edward Elgar.
Cooke, P. 2011, ‘Transition Regions: Regional-national eco-innovation systems and
strategies’. Progress in Planning, 76(3), pps. 106-134.
14
Cooke, P. 2010. ‘Transversality and Transition: Branching to new regional path
dependence’. Prepared for the New Path Creation workshop at Trinity College,
Oxford, September 5-7, 2010.
Cooke, P. & Ehret, O. 2009. ‘Proximity and Procurement: A study of agglomeration
in the Welsh aerospace industry’. European Planning Studies, 17 (4) pps. 549-567.
Cooke, P. & Eriksson, A. forthcoming. ‘Resilience, Innovative ‘White Spaces’ &
Cluster-Platforms as a Response to Globalisation Shocks’ in P. Cooke & D. Parrilli
Innovation, Global Change and Territorial Resilience.
Cooke, P. & Eriksson, A. 2011. White Spaces Innovation in Sweden: Innovation
Policy for Exploring the Adjacent Possible. Sweden: VINNOVA.
Dawley, S. Pike, A. & Tomaney, J. 2010. ‘Towards the Resilient Region?’. Local
Economy, 25(8) pp. 650-667.
Duit A, Galaz V, Eckerberg K and Ebbeson J. 2010. ‘Introduction: governance,
complexity, and resilience’, Global Environmental Change 20, 363-368.
Fornahl, D., Henn, S. And Menzel, M. (eds) (2010) Emerging Clusters. Cheltenham:
Edward Elgar.
Foster, J. (1997) ‘The analytical foundations of evolutionary economics: from
biological analogy to economic self-organisation’, Structural Change and Economic
Dynamics, vol 8, pp. 427 – 451.
Foster, K. A. 2007. A case study approach to understanding regional resilience.
Working Paper 2007-08, Institution of Urban and Regional Development, Berkeley.
Frenken, K. And Boschma, R. 2007. ‘A theoretical framework for economic
geography: industrial dynamics and urban growth as a branching process’ Journal of
Economic Geography, 7, pp. 635 – 649.
Geels, F. 2007. ‘Analysing the breakthrough of rock ‘n’ roll (1930-1970): Multi-regime
interaction and reconfiguration in the multi-level perspective’ Technological
Forecasting & Social Change, 74, pps. 1141-1431.
Gunderson, L. & Holding, C.S. 2002. Panarchy: Understanding Transformations in
Human and Natural Systems. Washington: Island Press.
Hill, E., Wial, H. & Wolman, H. 2008. ‘Exploring Regional Economic Resilience’,
Working Paper for the Institute of Urban and Regional Development, University of
California, Berkeley.
Holling, C.S. 1973. ‘Resilience and stability of ecological systems’. Annual Review of
Ecology and Systematics 4, pp. 390 – 405.
15
Hopkins, R. 2008. The Transition Handbook: From Oil Dependency to Local
Resilience. Chelsea: Green Books.
Hudson, R. 2010. ‘Resilient regions in an uncertain world: wishful thinking or a
practical reality?’ Cambridge Journal of Regions. Economy and Society, 3(1), pp. 11
– 25.
Kauffman, S. 1995. At Home in the Universe. Oxford: Oxford University Press.
Kauffman, S. 2008. Reinventing the Sacred. New York: Basic Books.
Kechidi M., Talbot D. 2010. ‘Institutions and coordination: what is the contribution of
a proximity-based analysis? The case of Airbus and its relations with the
subcontracting network’, International Journal of Technology Management, 50(3/4),
pp. 285-299.
Lang, T. 2010. ‘Urban resilience and new institutional theory – a happy couple for
urban and regional studies?’ in Muller, B. (ed) German Annual of Spatial Research
and Policy 2010, Springer: Berlin (pp. 15 – 22).
Larkin, K. and Cooper, M. 2009. Into Recession: Vulnerability and Resilience in
Leeds, Brighton and Bristol. Centre for Cities: London. January 2009.
Levin et al 1998. ‘Resilience in natural and socioeconomic systems’, Environment
and Development Economics, 3, pp. 222 – 234.
Lui, Z. (2009) ‘Bringing History into Evolutionary Economic Geography for a Better
Understanding of Evolution’, Papers in Evolutionary Economic Geography,09/01,
Utrecht University (http://econ.geo.uu.nl/peeg/peeg0901.pdf - accessed May 2012).
Martin, R. 2012. ‘Regional economic resilience, hysteresis and recessionary shocks’,
Journal of Economic Geography, 12 (1), pp. 1 – 32.
Martin, R. & Sunley, P. forthcoming. ‘Forms of Emergence and the Evolution of
Economic Landscapes’. Journal of Economics of Business and Organisation,
submitted and forthcoming.
Martin, R. & Sunley, P. 2008. ‘The Place of Path Dependence in an Evolutionary
Perspective on the Economic Landscape’. In R. Boschma & R. Martin (eds.)
Handbook of Evolutionary Economic Geography. Cheltenham: Edward Elgar.
Martin, R. & Sunley, P. 2007. ‘Complexity Thinking and Evolutionary Economic
Geography’, Journal of Economic Geography. 7, pps. 573-602.
Martin, R. & Sunley, P. 2006. ‘Path Dependence and Regional Economic Evolution’,
Journal of Economic Geography. 7, pps. 573-602.
Muller, B. 2010. ‘Urban and Regional Resilience – A new catchword or a consistent
concept for research and practice? In Muller, B,. (ed) German Annual of Spatial
16
Research and Policy 2010: Urban Regional Resilience: How do Cities and Regions
Deal with Change? Springer: Berlin.
Newman, P., Beatley, T. And Boyer, H. 2009. Resilient Cities. Responding to Peak
Oil and Climate Change. Washington DC: Island Press.
Pendall, R., Foster, K. & Cowell, M. 2008. Resilience and Regions: Building
understanding of the metaphor. Working Paper.
Resilience Alliance 2007. Research Prospectus: A Resilience Alliance Initiative for
Transitioning Urban Systems towards Sustainable Futures. Retrieved from:
http://resalliance.org/files
Rose, A. and Liao, S-Y, 2005. ‘Modelling regional economic resilience to disasters: a
computable general equilibrium model of water service disruptions’. Journal of
Regional Science, 45, pp. 75 – 112.
Setterfield, M. 2010. Hysteresis, Working Paper 10-04, Department of Economics,
Trinity College, Hartford, Connecticut.
Simmie, J. & Martin, R. 2010. ‘The economic resilience of regions: towards an
evolutionary approach’. The Cambridge Journal of Regions, Economy & Society,3(3)
pps. 27-43.
Suire R., Vicente J. 2009. ‘Why Do Some Places Succeed When Others Decline? A
Social Interaction Model of Cluster Viability’, Journal of Economic Geography, 9(3):
381-404
17