Linkage lock-in and regional economic development

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Linkage lock-in and regional economic development

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Title: Linkage lock-in and regional economic development
the case of the Øresund medi-tech plastic industry
Author: Sornn-Friese, Henrik; Simoni Sørensen, Janne
Abstract: This paper investigates barriers to the process of regional economic development from a linkage perspective. It develops the concepts of linkage lock-in and switching costs as fundamental factors explaining some of the social dynamics of the process. The overall claim of the paper is that different types of costs and their determinants may lock firms in to existing linkages, creating a probable barrier to successful regional economic development. The paper defines linkage lock-in as the difficulty in switching to alternative linkage partners, even if this is desirable. Switching costs are the costs involved in terminating and forming linkages. The extent of transaction costs, dynamic transaction costs and opportunity costs delineate switching costs in interfirm linkages. The paper further elaborates on the concept of opportunity costs; it states that in dynamically competitive environments a class of opportunity costs, namely learning opportunity costs might arise as a result of the relative importance of learning and innovation. Learning opportunity costs are defined as the costs of missing key possibilities to learn in dynamically competitive environments. They are furthermore seen as being constituted by cognitive costs, which in turn are influenced by the existence of information costs. The theoretical argument is illustrated by a case study of the medical part of the Øresund medi-tech plastic industry. Key words: Regional economic development; interfirm linkages and switching costs; lock-in and learning; cross-border business; medi-tech plastic industry. JEL classifications: D83, L14, L22, L68, R58
URI: http://hdl.handle.net/10398/7240
Date: 2003-11-28

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