Enterprises and entrepreneurial dynamics The Combinatory Systems View

Abstract

I propose an interpretation of business dynamics in terms of the spatial co-localization of firms in a circumscribed area in order to form clusters of various types.  I interpret clustering by adopting the methodology of combinatory systems: that is, systems formed by collectivities of agents that, by combining their micro behaviour, give rise to a macro behaviour and a macro effect that refers to the collectivity considered as a whole. Due to the presence of an internal feedback the macro behaviours direct or condition the subsequent micro behaviours, even though they derive from these.

There are two business dynamics that lead to the formation of clusters: the exogenous dynamics, where the outside entrepreneurs locate their firms in a given area, and the endogenous dynamics, where there are new entrepreneurs generated from within a preexisting cluster.

The firm is considered as an intelligent cognitive system that evaluates its own fitness on the basis of a system of performance indicators; it estimates the effective or potential fitness for various possible areas of intervention and on the basis of the fitness levels assigns an index of attractiveness to the area.

We maintain that if an area has advantages in terms of fitness, then clusters will form there as a result of the co-localizations of firms that assign these areas a high attractiveness index.

If the attractiveness landscapes appears flat, because no element stands out from the other areas to favor fitness, then if by chance an initial core of firms co-localize in the area, and their presence produces economic advantages in terms of economic efficiency or profitability with respect to other areas, these acquire the force of attraction and a combinatory system forms that by necessity increases the cluster.  This process lasts as long as recombining factors maintain or increase the perceived advantages.

We also present the idea that if a cluster has fitness advantages for new firms, then usually new entrepreneurs are formed within it and the cluster widens due to the endogenous genesis of new firms.