Anchors Away!
The evolution of an ICT cluster
after the sinking of its flagship company
4th Global Conference in Economic Geography
Oxford, UK, April 19-24, 2015
Dieter F Kogler
University College Dublin
Gregory M Spencer
University of Toronto
The spectacular rise and fall of Nortel Networks
200
On January
14, 2009
Nortel files for
bankruptcy in
multiple
jurisdictions
and by 2010
has fewer
than 2,000
employees
Nortel Share Price (USD)
$900
$800
$700
$600
$500
$400
$300
At its peak in 2000 Nortel
accounted for over one third
of the total value of the TSX
and employed nearly 100,000
people worldwide
$200
160
140
120
100
80
60
40
20
$100
$0
1975
180
0
1980
1985
1990
1995
2000
2005
2010
Millions of share traded
$1,000
Local impact not as severe as expected
Ottawa-Gatinuea Index (1987 = 100)
200
175
150
125
100
75
50
1992
1987
2002
1997
2007
Year
GDP
Employment
MFG Employment
GOV Employment
2012
Nortel had a highly inventive history
600
500
400
In June 2011 over 6,000 of Nortel’s
patents were sold to a consortium of
companies (Apple, EMC, Ericsson,
Microsoft, RIM, and Sony) for over $4
billion
300
200
100
0
Nortel Patents by Grant Year
Research Questions
How resilient was the Ottawa-Gatineau ICT cluster in response to
the collapse of Nortel?
What happened to Nortel’s inventive capacity?
• Did it remain? Leave? Dissipate?
What were the main sources of the ICT cluster’s resiliency?
• Creative destruction/entrepreneurship?
• New entries (from elsewhere)
• Existing firms
Literature
• Building on the University of Ottawa study (Calof et al 2014) that investigated
why Nortel collapsed this paper looks at the impact of the collapse (and why it
wasn’t as severe as may have been expected)
• Three related literatures
• Clusters & local ecosystems
• Evolutionary economic geography
• Local/regional resiliency
• Systems approach to
understanding
adaptive cycles
• “panarchy” as a way
of understanding
adaptive systems
across multiple scales
(Holling et al 2002)
Source: resilience.org
Approach and Methods
• A case study approach using patent data in order to describe the
evolution of the inventive capacity of the Ottawa-Gatineau ICT
cluster through various stages
• Using Kogler’s patent database for Canada (from USPTO) to track
inventors who had at some point filed a patent for Nortel or one
of its units/subsidiaries
• Identify where former Nortel inventors went during and after the
company’s collapse (i.e. new firms; existing firms; local/nonlocal)
• Classify assignees into categories (i.e. direct competitors, existing
firms, startups)
Ottawa - Gatineau (Nortel)
Ottawa - Gatineau (Other)
2012
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
1975
2012
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2011
Non-CAN co-inventors
2011
2010
2009
2008
2007
2006
2005
CAN - rural inventors
2004
2003
2002
2001
2000
1999
1998
1997
1996
CAN - metropolitain inventors
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
Ottawa - Gatineau
1983
1982
1981
1980
1979
1978
1977
1976
1975
Ottawa-Gatineau Inventor Population
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Nortel patents over time
700
600
500
400
300
200
100
0
Ottawa - Gatineau
Canada (excl. Ottawa)
United States
Outside North America
Change in Nortel tech over time
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
370
455
379
370
455
379
709
398
375
385
361
709
398
375
385
361
257
714
174
704
439
327
Multiplex communications
Telecommunications
Telephonic communications
Electrical computers and digital processing systems: multicomputer data transferring
Optical communications
Pulse or digital communications
Optical waveguides
Electricity: electrical systems and devices
707
OTHER
Nortel
Other
Research In Motion
Apple Inc.
Alcatel Lucent
Ciena Corp.
Univ. of British Columbia
Alcatel Lucent
350
300
250
200
150
100
50
0
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
1975
2012
LogicVision, Inc.
2012
Apple Inc.
2011
Research In Motion
2011
Other
2010
Avaya Inc.
2010
Ciena Corp.
2009
Nortel
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
1975
Nortel Inventors – Overall & Ottawa
450
400
350
300
250
200
150
100
50
0
Avaya Inc.
Identify local key competitors
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
0%
Nortel
Direct Competitors
Other
Direct Competitors include:
Alcatel Lucent
MOSAID Technologies
Research In Motion
International Business Machines
Ciba
MagSil
Mitel Networks
Apple
Cisco Technology
Blackberry
Ericsson
Altera
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Lack of new firms
100
90
80
70
60
50
40
30
20
10
0
First-time Assignee
Preliminary findings
• Nortel’s collapse does not seem to have had a long-term negative
impact on the inventive capacity of the Ottawa-Gatineau ICT
cluster
• A large majority of former Nortel inventors who continued
inventing in Ottawa-Gatineau did so for existing large companies
in similar technologies
• We have found relatively few examples of successful attempts at
start-ups from former Nortel inventors, particularly in similar
technologies
Discussion and conclusions
• The resiliency of the Ottawa-Gatineau ICT cluster appears to be
the combination of a diverse set of local competitors as well as a
highly talented workforce
•
•
Ottawa-Gatineau also ranks highly of quality of life measures
Nortel’s competitors bought many of their patents but also acquired much of the
talent – in some cases through acquisitions of Nortel’s business units mitigating
much of the disruption
• Little evidence of entrepreneurship as a source of resiliency
• Technology is capital intensive which may limit entrepreneurial
possibilities
• Role of policy & government as a stabilizing factor (TBD)
• Next steps…examining the impact on inventor relationships
Thank you!
Dieter Kogler – dieter.kogler@ucd.ie
Greg Spencer – greg.spencer@rotman.utoronto.ca