Where do Industrial Districts Come From? A Cellular Automata Model of Competition, Cooperation and the Dynamics of Industrial Clusters

Despite the widespread emergence of geographical centers of entrepreneurship, or “hot spots,” and their important impact on the economy, relatively little research has been conducted on the forces that influence their development. To address this gap, this paper focuses on the relationship between localized decision making and the dynamics of competition and performance. Advocating an autogenetic perspective of organizations that views entrepreneurship as an emergent social process, we build a computational model of how competitive behavior by individual new ventures evolves into aggregate geographic clusters with complex collective properties. Using a computer simulation methodology to simulate the model under a variety of evolutionary conditions, we explore the effects of entrepreneurs’ decision making orientation and their range of local interaction on the evolution of geographical centers of entrepreneurship.

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