Emergence of new business areas in regional economies through entrepreneurial discovery processes

Abstract

This chapter explores the notion of emergence by adopting a complexity approach to analyse how entrepreneurial discovery processes (EDP) transform regional economies and create new clusters. A distinction is made between two types of complex regional economic systems, static and dynamic. A complex and static regional economy is characterised by fragmentation between knowledge spaces created by a static division of labour and focus on exploitation of existing knowledge, rather than exploration. It is likely to close itself off. A complex and dynamic regional economy is open for new knowledge from outside and new combinations of existing forms of knowledge, for instance because a key enabling technology is integrated in existing domains. A successful micro-level discovery creates a bottom–up (or upward) causation: emergence of new business areas. The new business area reinforces micro-level patterns through mechanisms of downward causation such as knowledge spillovers, market entry of firms, and subsequent agglomeration. A new cluster is born. It can evolve through selection and memory. Dynamic complexity is necessary for EDP. It can be increased by upscaling a regional EDP into the context of transnational networks. Public sector organisations should destabilise the system and encourage exploration.