The mechanisms of regional branching: An investigation of the emerging fuel cell industry

The growth of evolutionary thinking in economic geography has brought about the proposition that new industries are place dependent and tend to develop in regions where the pre-existing industry is technologically related to the knowledge base of the new industry, a phenomena that is termed ?regional branching?.

What is still lacking, however, is a more thorough understanding of the mechanisms through which regional branching operates: firm diversification, spinoffs, labor mobility, and social networking. This paper analyzes which mechanisms dominate the current regional branching process of the emerging fuel cell (FC) industry and the degree to which the underlying logic of these mechanisms is technologically related.

It is concluded that the actors currently dominating the emerging FC industry are either large incumbent multinational enterprises (MNEs) or smaller dedicated FC system developers. Large chemical MNEs diversify downstream building to a high degree on in-house competences that are technologically related to the knowledge base of the FC technology.

Large MNEs that integrate FC systems into application diversify vertically upstream. However, they build less on technology competences that are related to the core scientific principle of the FC. Hence, the findings only partly corroborate the thesis of technological relatedness as an underlying logic for regional branching in the case of an emerging industry, suggesting the need to look further into how agency and supportive organizations such as universities and network organizations play a role in the creation of new knowledge-intensive industrial paths in regions.