Entry by Spinoff in a High-tech Cluster

Recently empirical studies have focused on how capabilities of new entering firms are important for the evolution of industries over time. The performance of new entrants appears to be significantly influenced by their pre-entry background. The general impression of the literature is that firms founded by former employees of successful incumbents have shown larger propensities to survive than other categories of new entrants. In the present paper, we use this approach to study the emergence and growth over the past three decades of a wireless telecommunications cluster around Aalborg in North Jutland, Denmark (NorCOM). The aim is to analyse the dominating forces behind the growth of NorCOM using detailed information about the founding events and organizational background of the individual entrants in the cluster. We show that the technological successes of firms in the region have powered a spinoff process, which can account for the majority of the growth in number of firms and employment in the cluster.