Linkage Lock-in and Regional Economic Development: The Case of the Øresund Medi-tech Plastics Industry

This paper examines the role of interfirm linkages in influencing the dynamics of regional economic development. Developing a conceptual framework, we claim that switching costs (real or perceived) can lock firms into existing linkages with the potential effect of impeding regional economic development. A main argument is that in dynamic and competitive environments a class of switching costs, learning opportunity costs, might arise out of the relative importance of learning and innovation. We apply our framework to understand what goes on in the Øresund medi-tech plastics industry, taking as a starting point the lack of cross-border linkage participation in this industry. Through a case study research design we obtain evidence about the characteristics and dynamics of linkage lock-in and switching costs in this particular context and explain that learning opportunity costs prevail and make increased linkage participation across Øresund tardy. Promising future research arising from the present study includes enquiry into dissimilar industries, the possible intermediating role of third parties and the complementarities of the Danish and Swedish areas with a focus on the potential of cross-border regional specialization. All this would potentially add to a more complete picture of the notion of switching costs.