Thriving innovation amidst manufacturing decline: The Detroit auto cluster and the stickiness of local knowledge

Research Seminars
Academic Areas Strategy
Ram Mudambi, Professor and Perelman Senior Research Fellow, Fox School of Business, Temple University
July 17, 2014 | 11:31 AM - 12:32 PM | Thursday
AC 2 MLT (Mini Lecture Theater), Hyderabad, India
Open to Public
Abstract: This paper uses a comprehensive dataset of 35 years of patenting activity in the U.S. to analyze the evolution of innovative activity in the Detroit auto cluster and its degree of connectivity to global innovation networks. We use this empirical setting to explore the evolution of innovative activity in an industrial cluster as it suffers structural change associated with a long-term decline in the manufacturing activity. In this study of the Detroit auto cluster, we contribute to prior literature in at least three aspects. First, our analysis confirms that knowledge is “sticky” and that innovation in clusters can be resilient in a context of industrial decline. Second, we map the global connectivity of local innovation networks and suggest that this connectivity may one of the pillars that sustain local innovation. Finally, we disentangle the drivers of this connectivity and distinguish between the geographic proximity to neighboring clusters and the “knowledge proximity” to faraway locations. While our conclusions are obtained in the context of the Detroit auto cluster, we suggest that they provide insights that can be generalized to other industrial clusters undergoing major structural changes.