Do spinoffdynamics or agglomeration externalities drive industry clustering? A reappraisal of Steven Klepper's work

Abstract

Steven Klepper's theory of industry clustering based on organizational reproduction and inheritance through spinoffs challenged the Marshallian view on industry clustering. This article provides an assessment of Klepper's theoretical and empirical work on industry clustering. We explore how "new" his spinofftheory on industry clustering was, and we investigate the impact of Klepper's theory on the economic geography community. Klepper's work has inspired especially recent literature on regional branching that argues that new industries grow out of and recombine capabilities from local related industries. Finally, the article discusses what questions on industry location are still left open or in need of more evidence in the context of Klepper's theory.