A Cultural Economic Geography of Production

Meric S Gertler. Handbook of Cultural Geography. Editor: Kay Anderson, Mona Domosh, Steve Pile, Nigel Thrift. Sage Publications. 2003.

Culture is now solidly on the agenda of economic geographers, and nowhere is this more evident than in their study of production processes and dynamics. There are few who would not regard this as a very good thing. After all, the classical intellectual foundations of economic geography, whether the minimalist industrial location calculus of Alfred Weber, the hydraulic engineering models of market equilibration devised by Léon Walras, or the input-output systems of Wassily Leontief, were all based on mechanical metaphors (Barnes, 1996). They were also thoroughly marginalist in their approach. If one held constant a variety of considerations, factors and processes known to be in more or less constant flux (such as product or process technologies, market demand, the number and strength of competitors, sources of supply for goods and services), one could designate the optimal location for a production facility or predict how a perturbation in one part of a regional or national production system (say, a rapid increase in demand for a particular product, or the creation of a major new production facility) would affect all other parts of the economy. Of course, these approaches either held constant or assumed away all of the most interesting and important aspects of economic life. Looking back, perhaps the most remarkable aspect of this era in the life of the ‘economic sciences’ was that so many claimed to find something of value in this work for so long (Thrift, 2000a).

The growing popularity of Marxian political economy in the 1970s and 1980s was in many ways a breath of fresh air. It brought a new appreciation of the role of power to economic geographers’ analyses of workplace change and the ‘inconstant geography’ of capitalist production systems (Storper and Walker, 1989). Ultimately, however, it too came to be regarded by many as too reductionist to capture the most beguiling and elusive features of economic dynamism. Its heavy reliance on the concept of class as the principal determinant of interests, identity and behaviour proved to be too limiting (Gibson-Graham, 1996). At a time when ‘the emancipatory politics of class struggle’ had largely been rejected in favour of ‘the representational politics of political, cultural and environmental recognition,’ political economic approaches within economic geography had clearly lost steam (Crang, 1997: 3).

Therefore, the move towards a cultural view of the geographical economy beginning sometime in the mid 1980s signalled a growing interest in fundamental questions pertaining to economic change which had not, until then, received their proper due. What are the social dimensions of technological change in production systems, and how are these situated in localities and regions? How do local production practices interact and intersect with the global economy, and must the process of globalization obliterate all differences and distinctive characteristics of regional and national production systems? How are economic processes structured and shaped by social institutions, and at what geographical scales do these institutions exert their influence?

These are undoubtedly important questions, and their centrality within economic geography in recent times has helped enliven the field considerably (Barnes and Gertler, 1999; Clark et al., 2000a; Lee and Wills, 1997; Sheppard and Barnes, 2000). It has also served to build valuable bridges to scholarship in other related fields, such as economic sociology, industrial economics and the study of material culture, where interesting things have been happening recently. However, the cultural turn in economic geographers’ study of production is already, in some ways, old news. The question now to be asked is: what has it delivered? The answer I would venture at this stage is: not as much as had been promised or hoped for originally. For every advance towards enlightenment there has been an equal measure of confusion. While the introduction of cultural arguments has greatly enriched and enlivened the study of production questions, it has also raised pressing new questions without answering them, and has left many important older questions unanswered or neglected. Because of this, some constructive criticism concerning this larger project and its progress thus far is appropriate.

In this chapter, my aim is to address these developments by taking a sceptical view of what has been achieved to this point. My purpose is not to belittle or denigrate the important and useful work that has been completed thus far, for I agree wholeheartedly with Thrift (2000a) that, thanks to the cultural turn, we can never again look at ‘the economic’ in quite the same way -nor should we. My goal is to challenge the sense of self-satisfaction that has, in my view, permeated the subdiscipline rather prematurely, by posing some unsettling questions. I begin by attempting to distil the recent ferment around the cultural and its relationship to the economic (at least in the realm of production) into three big ideas: the rediscovery of ‘the social’ in production systems, the rise of the learning paradigm and the idea of regional culture, and the evolutionary dynamics of local production systems. I then offer up a critical commentary on this newish cultural economic geography, focusing on several important areas of controversy. In particular, I argue that we have made surprisingly little progress in advancing a plausible theoretical understanding of one of the most central entities within capitalist production systems—the firm. As a consequence, our ability to provide useful answers to some very fundamental questions—like ‘When and why is the local important in production and innovation processes?’ or ‘Under what circumstances does production knowledge travel between places?’—remains very poorly developed. I conclude by enunciating some other important questions that have been neglected or left for dead, but which are still pressing and in need of our serious attention.

A Cultural Economic Geography of Production: Big Ideas

Just where did this renewed interest by economic geographers in the culture of production come from? Why is the cultural seen as being so important now? I think it is possible to answer this by singling out key debates and questions at several different scales of analysis. At the macro scale, the tremendous interest and attention given to the success of ‘Japan, Inc.’ during the 1980s (Oliver and Wilkinson, 1988) and Germany’s ‘Rhineland model’ of stakeholder capitalism in the 1990s (Hutton, 1995) has foregrounded what many have inferred to be the central role of national cultures in determining economic success (Sayer and Walker, 1992). After all, though it seems somewhat unlikely given the tenor of commentary in today’s mainstream business press, these two models were not all that long ago much admired by academics and business writers alike. Their successes were most commonly interpreted in terms of national business cultures, not only shared by all national firms, but also deeply engrained in the psyches and mentalities of workers and the general public. In retrospect, a lot of this writing strikes one now as more than a little crude and naive, for reasons I shall enumerate below.

At the micro scale of the individual firm, the concept of ‘corporate culture’ came into vogue in the 1990s as a central variable capable of explaining both spectacular successes—such as the rise of Dell and Microsoft—and colossal failures—the chastening of Xerox, DEC or Lockheed in the world of big business (Schoenberger, 1997; 2000). More recently, the idea has also been invoked to understand the problems emerging in the wake of highly publicized mergers between corporate giants (for example, the fundamental incompatibilities between Daimler and Chrysler, or between BMW and Rover, only a few years after their much celebrated unions). The prevailing narratives have laid virtually all the blame upon incommensurate corporate (and/or national) cultures that have produced worldviews and behaviours so fundamentally divergent that they cannot be overcome.

Big Idea Number One: The Rediscovery of the Social in Production

However, from the perspective of economic geography, it is a set of meso-scale developments that have probably held the greatest significance. Beginning in the mid 1980s, economic geographers and other social scientists began to discern some important changes in the nature of capitalist competition and production systems. One line of thought emphasized the transition from mass production and competition based on lowering average costs and prices, toward batch or customized production and competition based on quality, performance and distinctiveness (Piore and Sabel, 1984; Scott, 1988). In response to the macro-economic stagnation of the 1970s, which had caused the aggregate purchasing power of national economies to stop rising or actually decline, firms appeared to be seeking new ways to gain market share based on the identification and servicing of smaller, qualitatively distinctive market ‘niches.’ In order to succeed at this game, they required new skills and production practices, both private and social.

Inside the firm, the transition from producing large runs of more or less standardized goods to small-batch or custom (one-off) production required firms to implement new, more flexible process technologies and practices—versatile, computerized machines, multiskilled and multi-tasked workers, and novel approaches to workplace organization that enabled quality improvements to be identified and implemented on a continuous basis. Closely related to these internal changes was a restructuring in the wider social division of labour between firms. Most important here was a process of vertical disintegration. Under an older mode of organization, vertically integrated firms had performed a long sequence of production operations themselves, sometimes extending from the processing of raw material inputs to the production and distribution of finished goods. As firms reorganized production, they chose to perform fewer functions for themselves, turning instead to external specialist suppliers of goods and services. Hence, discrete elements of the production process that were once provided within the bounds of the legal entity known as the firm were now being acquired through a market transaction between the firm and its suppliers. The same principles of specialization and division of labour operating inside the firm were now being exploited at a social scale of organization between firms.

The principal virtue of this new social organization of production was that it too enhanced the overall flexibility of producers, both individually and collectively. As each firm’s production needs changed (according to rapidly changing and increasingly fickle market demand), so too would its input needs. Under such conditions, it proved to be faster and/or more efficient to draw upon the specialized offerings of external suppliers—mixing, matching and changing inputs (and suppliers) at will and on short notice. As production systems transformed themselves toward this increasingly social basis of organization, so the story goes, the importance of proximity—i.e. geography—was also greatly enhanced. Given that the market exchanges or transactions amongst this multitude of now vertically disintegrated firms would necessarily become more frequent, less predictable and rapidly changing, there were real cost advantages arising from spatial concentration. The closer they were to one another, the lower the transaction costs—that is, all costs associated with achieving successful market exchange of goods and services. However, there is a second and more fundamental advantage produced by spatial proximity, related more to the growing importance of innovation, learning and culture in production systems. As we shall see below, it is these aspects of the new mode of production organization that embody the truly social nature of socially organized production systems, since they implicate forms of interaction between firms that go far beyond simple market transactions.

Big Idea Number Two: Learning and Regional Culture

In order to meet or anticipate the demands of rapidly shifting markets, and in a competitive environment in which product life cycles had become dramatically shorter, the onus on firms to achieve successful innovations in products and processes had become paramount. In some accounts, couched more in the language of long waves, these conditions were seen to stem from an epochal transition of capitalist societies towards a new ‘techno-economic paradigm’ based on microelectronic and information technologies (Freeman and Perez, 1988). The early stages of such a transition are typically characterized by rampant ‘creative destruction’ as products and processes based on the new paradigm are generated to replace old ones. Hence, an alternative approach views this heightened importance of innovation as being driven less by market conditions, and more by fundamental changes on the supply side of the economy.

Whatever the driving force, as production processes had become increasingly socialized, so too had the process of innovating. In place of an old ‘linear’ model of innovation, in which new ideas were developed in the isolation of research and development labs, then ‘pushed’ onto the market by firms, the new model of innovation was interactive and recursive. It was said to depend on close, repeated interaction between firms (technology producers) and their customers (technology users) over extended periods of time (Lundvall, 1988). This interaction was underpinned by the frequent sharing of proprietary technical and market information and—here’s where cultural processes finally enter the picture—it became clear that this kind of knowledge flow (or inter-firm learning) was best supported bycloseness (Gertler, 1995).

Why? To begin with, much of the knowledge passing between innovation partners is said to be highly confidential and crucial to the competitive advantage of the firms involved. In such cases, it has been argued, repeated interaction over long periods of time—as well as cultural commonality and personal relationships—serve to build up trust or ‘social capital’ between transacting parties (Putnam, 1993), discouraging opportunistic use of the knowledge exchanged and thereby facilitating its flow. Second, because this knowledge is frequently finely nuanced, tacit and context-specific, this form of learning is said to be most effective when the partners achieve the deeper understanding that is only possible when they share a basic linguistic and cultural commonality. In Storper’s (1997) characterization, the central idea is that the interrelationships or dependencies that develop between firms through the market exchange of goods and services come to be supplemented—if not eclipsed—by extra-market bonds, linkages and commonalities: what he and others have called untraded interdependencies.

The ideas of Putnam, Storper and others owe more than a little debt to the much earlier work of Karl Polanyi (1944), who demonstrated the extent to which economic processes and activities are always shaped by, or ‘embedded’ within, a social or cultural context. According to Polanyi, and to Veblen (1919), this context inheres in the formal and informal institutions that produce and reproduce norms, conventions, customs and habits, shared by a group of economic actors, which define the grooves along which economic behaviour runs (see also Granovetter, 1985, who has been most responsible for the resurgence of interest in the concept of embeddedness). This is where the notion of ‘regional culture’ enters the picture. The idea put forth in the literature is that the shared social attributes (conventions, routines, habits, customs and understandings) facilitating the kind of inter-firm learning and embeddedness described above are regionally defined. That is, economic behaviour is embedded in regional cultures.

Moreover, these cultures will vary substantially from region to region, and not always in a happy way. In fact, within the literature on industrial districts and learning regions the world came to be divided into a handful of essentially ideal-typical regional formations. There was the ‘Holy Trinity’ of charmed places that were blessed with favourable regional cultures: the industrial districts of central Italy, where direct inter-firm collaboration of all types was said to be rampant and deeply ingrained in the regional culture (Piore and Sabel, 1984); the machinery and automotive districts of Baden-Württemberg in south-western Germany, where the institutions of the state government encouraged and accommodated indirect horizontal cooperation (between competitors) but direct vertical collaboration (between buyers and suppliers) (Herrigel, 1996); and Silicon Valley, the grand-daddy of them all, where a common regional culture was produced (and inter-firm learning supported) by a prodigious ability to spin off new firms from old, as well as astounding rates of labour market promiscuity (serial employment relations?) by which key information circulated rapidly throughout the region (Saxenian, 1994).

There were also the hard-luck cases: once-successful places where local cultures fostered ties so strong, structures so rigid, and attitudes so unbending that newcomers and new ways of doing things encountered insurmountable barriers to entry—think Germany’s Ruhr Valley (Grabher, 1993), Massachusetts’ Route 128 (Saxenian, 1994) or the Swiss Jura (Glasmeier, 2001).

Then there were the reclamation projects: places like South Wales or the Basque country, diagnosed as suffering from too little (rather than too much) embeddedness and a weakly developed collaboration culture, that nevertheless sought to mend their errant ways through a variety of locally orchestrated, concerted actions aimed at matchmaking or social engineering of inter-firm relations (Cooke and Morgan, 1998).

Big Idea Number Three: The Evolutionary Dynamics of Local Production Systems

To complete the trilogy of big ideas, we turn to one imported from the recently emerging field of evolutionary economics. Barely 20 years old, it remains very much on the fringe of the mainstream, since it concerns itself with the epi-phenomena of capitalist economies: trivial things such as real industries, history, institutions and places. A few key concepts have been especially influential to economic geographers’ study of production systems (Barnes, 1997). First, economic systems change over time, but they do so in ways that are to some extent shaped and constrained by past decisions, random events and accidents of history. Current decisions and events are not determined by past ones, but they are conditioned by them. As a result of past events and choices, certain choices today are easier to pursue, others less so. This is the key idea of path dependency. Walker captures the idea succinctly:

One of the most exciting ideas in contemporary economic geography is that industrial history is literally embodied in the present. That is, choices made in the past—technologies embodied in machinery and product design, firm assets gained as patents or specific competencies, or labor skills acquired through learning -influence subsequent choices of methods, designs, and practices. (2000: 126)

The past may be embodied within material objects such as machinery, buildings and physical infrastructure, or through the experiences of individuals (alone or in groups). Part of this past is also embodied in institutions—social structures that shape the attitudes, norms, expectations and practices of individuals and firms through formal or informal means of regulation -meaning that path dependency has a strong social dimension. In essence then, what we have already described above as ‘regional culture’ or ‘embeddedness’ can be thought of as a real and significant component of ‘industrial history … literally embodied in the present.’ Culture becomes a part of the historical baggage (sometimes useful, sometimes a liability) associated with particular regions.

There is another potent idea within the evolutionary approach, closely associated with the path dependency notion—increasing returns -which has actually been appropriated from the much earlier work of economists on the fringe of the discipline (Myrdal, 1957; Young, 1928). It refers to the process in which, once a particular economic change occurs, it becomes self-reinforcing. A particular technological design, once adopted by a critical mass of early users, becomes a standard. After this happens, the market for this design will expand even further. Initial growth begets further growth. Moreover, even though a particular technology has become a standard in its field, this will not necessarily indicate that it is unequivocally superior to available alternatives. Its dominance may instead be based on the fact that it was the first viable technology in the marketplace, that many supplying businesses, complementary technologies and institutions, plus a large community of developers and users, have been created to support its use. Once this unfolds to the point where perfectly viable—if not superior—alternatives cannot easily be adopted, a situation of ‘lock-in’ is said to have been reached (Arthur, 1989; David, 1985).

The twin concepts of path dependency and increasing returns have obvious relevance in understanding the historical paths taken by production regions. Once a region establishes itself as an early success in a particular set of production activities, its chances for continued growth are very good indeed. While this may be to some extent reducible to the success of dominant ‘lead’ firms in the region (e.g. Microsoft in Seattle), the really interesting aspects of this process have more to do with the collective processes and forces at work: local social and economic institutions and, yes, culture. By the same token, as cases such as the Ruhr or Route 128 suggest, ailing places may also be difficult to turn around for the same reasons. Once a path-dependent trajectory of decline becomes firmly established, institutional and cultural lock-in will make deviation from this path a serious challenge.

Culture Controversies

I am certain I have done a disservice to the literature on the cultural economic geography of production by reducing the hefty weight of its intellectual output to three big ideas. But if you were to sit me down and force me to enunciate what is/was new, different, distinctive and most significant in this work—reduced to its bare essence—this is pretty much the list I would produce. Nevertheless, the danger of engaging in such a summary exercise is that it creates the mistaken impression of consensus and completion where none actually exists. In fact, there is plenty of disagreement and lack of convergence, as well as much unfinished business. Perhaps surprisingly, one of the most troublesome areas concerns the economic-geographical theory of the firm—a theory that ought to be able to provide answers to fundamental questions like: why do firms in particular places adopt particular production and innovation practices, and not others? What forces and processes determine what a firm ‘knows,’ and how easy is it to transfer this knowledge from one place to another? Or to use the language of the previous section, must learning by firms really conform to the geographies of local cultures?

The Knowledge Foundations of Regional Cultures of Production and Innovation

As outlined in the previous section, the new cultural economic geography of production asserts a clear role for the local—a generally counterintuitive result in the supposed age of the global information economy. This idea has become something of a badge of honour amongst economic geographers, who now regularly delight in disabusing their spatially challenged colleagues in other disciplines of simplistic ideas about ‘the end of geography’ (O’Brien, 1992), ‘the death of distance’ (Cairncross, 1997) or ‘the end of the city as we knew it’ (Mitchell, 1995). Besides the satisfaction of scoring points with one’s economist friends, it is comforting to be reassured that ‘geography matters.’ Moreover, the political possibilities associated with this position defy the stifling determinism of the ‘global economy’ view of the world, in that local politics are at least open to contestation by local stakeholders. And yet, just when it appears that all is right with the world, along comes some unsettling little complications. It turns out that the conceptual foundations for arguments promoting the primacy of the local—particularly as they concern the knowledge and behaviour of the firm, arguably the principal actor within capitalist production systems—may not be as solid or clearly articulated as they should be.

The problems begin with the concept of tacit knowledge and its relationship to the local. In much of the recent literature on regional cultures of production, the distinction between tacit (‘know how’) and codified (‘know that’) knowledge emerges as central. The touchstone for this distinction is Michael Polanyi’s oft-quoted phrase that ‘we can know more than we can tell’ (1966: 4)—alluding to a form of knowledge that is ‘imperfectly accessible to conscious thought’ (Nelson and Winter, 1982: 79). Underlying this is a deeper distinction between forms of knowledge (explicit or codified) that can be effectively expressed and shared using symbolic forms of representation and other forms of knowledge (tacit) that defy such representation. Hence, the tacit component of the knowledge required for successful performance of a skill defies codification or articulation either because the performer herself is not fully conscious of all the ‘secrets’ of successful performance, or because the codes of language are not well enough developed or sufficiently universal to permit explication and translation.

To show why the concept of tacit knowledge is so important to the question of local cultures of production requires a bit of a digression into the theory of the firm. Recently fashionable theories of the firm draw their inspiration from the pioneering (and long-neglected) work of Edith Penrose (1959). This approach has been labelled the competence- or resource-based theory of the firm because it emphasizes the importance of the competences, capabilities or resources of individual workers and managers within the firm, as well as the larger collectivity of customs, procedures, routines and practices that define the firm. It is the collective or social aspect of this capability which is most interesting, but also the most difficult to grasp fully when trying to understand why firms behave the way they do. According to this view, individuals bring to the firm a set of attributes and competences based on their formal education and broader socio-economic background, as well as their prior work experiences. But the firm’s capabilities are constituted by more than the simple sum of its individual employees’ capabilities. Every firm has a unique set of organizational structures, relationships, rules and routines (explicit and implicit) that help coordinate the actions of individuals inside the firm in order to achieve purposive goals—both the day-to-day objectives entailed in successful production and the longer-term goals set forth in a firm’s broader strategy (Kay, 1993).

These features, together with the common learning experiences of workers within the firm, also serve as a means for enabling the social production and sharing of knowledge, through the creation of a distinctive ‘knowledge context’ or framework. As Howells puts it, ‘What individuals within the firm know and can achieve depends in part on the nature and characteristics of the firm’s context’ (2000: 55). Common codes of communication are essential to this process, since one of the principal challenges confronting the firm is how to absorb, share and transform both codified and tacit knowledge throughout the organization. In the absence of shared codes of communication, the transmission of this knowledge—that is, learning processes within the firm—will be impeded. Once again quoting from Howells, who acknowledges the work of Metcalfe and De Liso (1998):

The tacitness of much knowledge, its indivisibility in use, the uncertainty of its values in different contexts, its proprietary nature, and the fact that much of what is known is jointly produced by the firm’s activities … means that the firm provides a central contextual role in harnessing knowledge to produce new innovative capabilities. (2000: 56)

Hence we can now see that, according to the resource- or competence-based view, the firm’s primary purpose is to absorb, share and transform (that is, process) knowledge, thereby leading to new or better products and processes. Moreover, the firm’s competitive edge is defined by its success in producing distinctive competences through the management of its knowledge (Thrift, 2000b). And the emphasis on knowledge processing fits well with the greater attention recently given to the ‘knowledge-based’ economy (OECD, 1996). But notice as well that the principal emphasis here is very much on the firm itselfand its ability to define its own context for knowledge production and sharing. This is the point where the argument veers into highly contested terrain.

As noted above, a key argument emerging from this competence-based perspective holds that the success of the firm has become increasingly dependent on its ability to gain access to tacit knowledge. As Maskell and Malmberg have recently put it, when all firms have unimpeded access to explicit/codified knowledge, the creation of unique capabilities and products depends on the production and use of tacit knowledge:

Though often overlooked, a logical and interesting consequence of the present development towards a global economy is that the more easily codifiable (tradable) knowledge can be accessed, the more crucial does tacit knowledge become for sustaining or enhancing the competitive position of the firm. (1999: 172)

And recalling from our earlier discussion of learning, culture and the context-specific nature of tacit knowledge, it is the growing importance of this form of knowledge to the firm that has, according to the now widely accepted argument, been responsible for asserting the resurgence of the local in an era of the globalizing economy. In other words, tacit knowledge is most easily shared locally, while knowledge must be codified in order for it to ‘travel’ globally. This is because (1) local proximity enables and promotes the direct, face-to-face interaction necessary to support tacit knowledge transmission, and (2) common local origins also generate the shared understandings (equals local culture) necessary to support the easy translation of tacit ideas between two interacting economic agents.

Recently, this tendency to link the tacit with the local scale and the codified with the global scale has been subjected to critical scrutiny, exposing an interesting new twist in economic geography’s cultural turn (Allen, 2000; French, 2000). While this critique of the localist approach has helped focus our attention on some critical issues and weaknesses in the (now) mainstream cultural economic geography of production, it ultimately disappoints as well by failing to offer up a conceptually robust alternative.

For example, Allen represents this tacit/local, codified/global dualism as something more akin to the learning region literature’s big lie rather than its big idea: ‘largely a flawed, if not spurious, exercise’ (2000: 30). He blames the propagation of this oversimplified dualism on what might be described as an unfortunate family reunion, featuring the Polanyi brothers. He complains that Michael Polanyi’s (1958; 1966) essential insights into the context-specific nature of tacit knowledge have been combined with, and corrupted by, brother Karl’s (Polanyi, 1944) seminal ideas on the social and institutional embeddedness of economic action—a kind of conceptual sleight-of-hand attributed to a ‘powerful set of discourses’ with a disturbing ‘inability to keep apart the ideas of the two Polanyi brothers,’ resulting in this ‘conflation’ (Allen, 2000: 27).

Allen openly challenges the idea that tacit knowledge is ‘solely the creation of territorially specific actions and assets’ (2000: 27), or that ‘face-to-face presence and proximity are paramount’ (2000: 28). Instead, he offers up alternative assertions about the importance of ‘distanciated contacts … [and] “thick” relationships [that] may span organizational and industry boundaries,’ realized through ‘people moving to and through “local” contexts, to which they bring their own blend of tacit and codified knowledges.’ He continues:

What matters in such situations is not the fact of local embeddedness, but the existence of relationships in which people are able to internalize shared understandings or are able to translate particular performances on the basis of their own tacit and codified understandings. (2000: 28)

Communities of Practice: Is all Knowledge Local?

In highlighting distanciated, thick relationships, Allen implies that tacit knowledge is not the prisoner of local culture, but can in fact flow across long distances so long as the relationships between actors involved in this flow are strong enough. In making this claim, Allen situates himself implicitly within the recent literature on ‘communities of practice’ emerging from organizational studies (Amin, 2000; Wenger, 1998), which emphasizes the possibilities for non-local learning crossing geographical, organizational and cultural divides. Received wisdom is always worth interrogating, and Allen’s unsettling analysis draws our attention to some very fundamental questions. Can we be so sure that tacit knowledge really is embedded in local culture to the extent that is widely implied or assumed in the new cultural economic geography literature? Are proximity and face-to-face contact really so important? Isn’t this what the information technology revolution was supposed to address?

Good questions all, and the message of Allen, Amin and others is that we should not presume to know the answers simply because of the ‘accepted canon’ within the new church. Fair enough. But before we wax too enthusiastic about the possibilities of theological revolution, we need to address two weaknesses in the critique of the localist position. First, we need to re-examine the conceptual foundations underlying the localist argument. While Allen is undoubtedly correct in placing the emphasis on ‘thick relationships’ and ‘shared understandings,’ pleasantly enigmatic terms like ‘distanciated’ may scan well, but offer us little more than fleeting insight since they are so open to retranslation and interpretation themselves. Allen’s critique of the now standard take on tacit knowledge exposes the fact that its conceptual foundations are indeed far from solid. Yet, even with this critique, we still have no clear idea of the forces and processes stimulating the emergence of thick relationships and shared understandings between firms.

Second, it is hard to see how merely asserting that ‘the local does not really matter’ advances the state of our understanding in any appreciable way, so long as statements such as this remain unsubstantiated empirically. Instead, we need to get beyond bald assertions to consider the evidence at hand—something, alas, for which neither the proponents nor the critics have shown overwhelming concern, up to this point. In other words, we need to engage in more ‘learning by doing’ ourselves since there is apparently still much hard work to be done, both conceptually and empirically, to unravel these processes and relationships more carefully.

Two recent studies by economic geographers -in sectors as diverse as motor sport engineering and life insurance—begin to illustrate the true complexities of knowledge formation and translation over space. Both of these cases, in their own way, deepen our understanding of the precise mechanisms by which local and non-local processes of knowledge formation intersect at particular sites of production. In the case of life insurance, key ‘learning intermediaries’—each with their own distinct operative scales—interact and combine to produce knowledge locally (French, 2000: 110). When it comes to producing and applying knowledge in the motor sport industry, the longitudinal study of top designers’ work histories reveals a great deal about the geographical structure and channels of knowledge flows (Henry and Pinch, 2000). At the same time, spatial propinquity is undeniably important in creating a discursive dynamics of innovation as performed through ‘gossip, rumour and observation’ (2000: 136).

Another helpful source of insight is the new literature on ‘knowledge management’ emerging from the business schools and international consulting community. To be sure, this literature is filled with the typical puffery about ‘harnessing the organization’s knowledge assets’ to ‘unlock the firm’s innovative potential.’ But when one strips away all of the marketing hyperbole, one is confronted with a striking realization: while large corporations recognize the economic value of tacit knowledge in producing distinctive competitive advantages, they also know how difficult it is to transpose and translate it from one local context to another. Even the ‘success stories’ in this literature (von Krogh et al., 2000) are not very convincing, and betray a troubling lack of sophistication in their understanding of how ‘shared understandings’ develop, or how tacit knowledge and local cultures are produced (Gertler, 2001b).

Far more enlightening is the recent work of Brown and Duguid whose intriguing book The Social Life of Information (2000) tackles these issues head-on. Brown and Duguid situate their work very much within the ‘communities of practice’ approach. However, in contrast to Wenger and others, they make a key distinction between this construct and the related idea of ‘networks of practice’—for example, the 25,000 service reps working worldwide for Xerox Corporation. Their detailed research of knowledge flows in large organizations leads them to the following conclusion:

Networks of this sort are notable for their reach—a reach now extended and fortified by information technology. Information can travel across vast networks with great speed and to large numbers but nonetheless be assimilated in much the same way by whomever receives it. By contrast, there is relatively little reciprocity across such networks: that is, network members don’t interact with one another directly to any significant degree. When reach dominates reciprocity like this, it produces very loosely coupled systems. Collectively, such social systems don’t take action and produce little knowledge. (2000: 142, emphasis added)

In contrast to this, Brown and Duguid see communities of practice as ‘relatively tight-knit groups of people who know each other and work together directly … face-to-face communities’ in which reach is limited but ‘reciprocity is strong’ (2000: 143). It is only these small groups that ‘allow for highly productive and creative work to develop collaboratively.’

So perhaps, after having considered some recent empirical evidence on the matter, the nonlocal flow of tacit knowledge is (still) more difficult to achieve than the sceptics might think. Thus, we appear to have come full circle, back to the starting argument that local culture matters. But before we buy in, what about the global reach of large, wealthy and powerful corporations? Aren’t their resources, organizational structures, standardized practices and corporate cultures sufficiently well developed to overcome the simple friction of distance or the stickiness of local and regional cultures? Surely corporate culture and practice have the ability to trump physical and cultural divides, bringing about a convergence of practices across national and regional boundaries, right? Certainly, one implication of the competence-based theory of the firm reviewed above is that firms can be ‘masters of their own destiny’ rather than ‘slaves to geography.’ Recall that this approach argued that the manner in which firms absorb, share and transform (or process) knowledge is determined by each firm’s unique knowledge context or framework, which is constituted as a set of firm-specific structures, relationships and routines. In other words, in this view the characteristic practices of firms are shaped or determined by a socially constructed process internal to the firm itself—something very much akin to the idea of corporate culture.

Corporate Culture

Although this concept continues to be frequently invoked without due regard to its specific meaning, more careful analysts have sought to define it in a variety of ways. Howells, for example, defines it as ‘shared routines and patterns of working … common decision-making procedures … a common organisational information and routine base … a firm’s distinctive set of decision rules or routines … [which] in turn help shape a tradition of practice within the firm’ (2000: 55). McDowell writes of organizational culture as ‘explicit and implicit rules of conduct’ responsible for ‘inculcating the desirable embodied attributes of workers, as well as establishing the values and norms of organisational practices’ (1997: 121). Hudson takes a slightly different tack by observing that ‘Firms, governments and other organizations have a collective memory beyond that of any individual or group of individuals’ (2001: 32). Glasmeier emphasizes the role of collective identity and belonging in culture; she singles out ‘shared understandings … the prevailing belief system’ as well as ‘the rules and practices, identities and aspirations at the most intimate level’ which make possible ‘collective and purposeful action’ (2001: 58).

Taking perhaps the broadest view of all (and one embraced by Glasmeier), Schoenberger argues that: culture is inherently and deeply implicated in what we do and under what social and historical circumstances, in how we think about or understand what we do, and how we think about ourselves in that context. It embraces material practices, social relations, and ways of thinking. Culture both produces these things and is a product of them in a complicated and highly contested historical process. (1997: 120)

She adds that culture and human action are reflexively related: ‘humans, through their actions and social relations, produce culture at the same time that culture produces them’ (1997: 121). Concerning corporate culture specifically, Schoenberger makes two further key points: first, that it is ultimately about power, and hence it is appropriate to speak of a ‘dominant’ corporate culture (1997: 121), produced by top management; and second, that the most fundamental form of this is ‘the power to define a very particular social order—the firm—and its relationship to its environment’ (1997: 122), in essence, the very identity of the firm itself.

Thus, a closer reading of the meaning and origins of corporate culture reveals it to be as much a product of its social-cultural-institutional environment as it is a reflection of the firm’s own volition (or the vanity of its senior managers). In other words, while corporate culture certainly cannot be ‘read off from the larger institutional environment around it, it will surely be shaped, influenced and constrained by this broader framework.

Schoenberger’s fascinating case studies of the frailties and myopia of large American companies such as Xerox, DEC and Lockheed underscore the limits to the reach and potency of corporate culture in the face of significant international and interregional institutional discontinuities, shortcomings that amount to a ‘cultural crisis of the firm.’ Her approach resonates strongly with the important findings of two other recent literatures from outside geography: the work on national business systems and ‘varieties of capitalism’ (Berger and Dore, 1996; Boyer and Hollingsworth, 1999; Soskice, 1999; Whitley, 1999) and a closely related literature on corporate practices, governance and national origins (Doremus et al., 1998; O’Sullivan, 2000; Yeung, 2000). Based on both conceptual argument and empirical evidence, this work demonstrates how the strategies and practices of even large firms are shaped by (and embedded within) the various divergent national institutional frameworks in which they operate.

How do these insights help us navigate our way through the recent debate on the role of the local and the ability of knowledge to ‘travel’? According to this view, institutional context -and not geographical proximity per se or the availability of information technology—acts to define the conditions under which knowledge can actually be translated and transferred from one locale to another. In other words, physical proximity is not the real source of ‘thickness’ in relationships, nor can this strength be guaranteed by the availability of information technologies designed to substitute for actual collocation. Instead, the bedrock preconditions on which strong relationships and shared understandings develop is institutional affinity or similarity.

When firms (or individual workers) operate according to a common set of norms, routines, conventions and assumptions about the way the economic world works (what we might call a common culture), they are more likely to share those understandings that promote knowledge flow effectively between them, no matter what the intervening physical distance. But these very routines, norms, conventions and assumptions are themselves strongly influenced by the institutional structures that delimit how labour and financial markets operate, how corporate governance, employment relations and work are organized, and how competition and inter-firm relations develop. In other words, a more complete theory of the firm and the role of regional culture needs to be set within a wider matrix of institutional forces and processes that influence (but do not fully determine) their actions. In my view, neither the new cultural economic geography literature nor its critics have grasped the significance of this basic insight. For this reason, the debate remains pitched at a distressingly superficial level of analysis.

Life after Culture: What Comes Next?

The preceding discussion has, I believe, demonstrated that economic geographers live in interesting times, even if they can’t quite reach consensus on some of the most fundamental questions confronting them today. On questions like ‘When is proximity important, and why?,’ ‘How easily does tacit knowledge flow between places, and how is it produced in the first place?,’ a culturally informed analysis has taken us into some interesting new terrain, even as it raises many unanswered questions. We now understand production to be imbued with cultural processes and forces emanating from the region, the nation-state and the firm.

One may well ask, however, whether the gains achieved from taking this turn have fulfilled the promise expected. In particular, the interest in cultural aspects of production in the economy may have diverted attention away from some of the older, but still pressing, ‘core questions’ within the economic realm. While it may be true, as Thrift has argued, that earlier work on these topics ‘had lost any sparkle of innovation’ (2000a: 692), others contend that there remain ‘immensely real substantive issues and purposive human practices that have always been and still are fundamentally at stake’ (Scott, 2000: 34). Where do we go from here? In this concluding section, I comment on the continuing relevance of some of these ‘real issues’ and suggest some possibly fruitful ways forward.

Cooperation or Conflict?

To begin with, the overriding interest in innovation, knowledge and learning in today’s cultural economic geography is undoubtedly well justified, for reasons that are evident in the preceding discussion. However, we seem to have introduced some topical blinders and biases in the process, leaving behind some questions of immense importance that once occupied us all quite a bit. For instance, within the field of innovation studies itself, we have probably all been guilty of overemphasizing cooperation and collaboration between firms, and downplaying older themes like competition and conflict. In a recent paper, Malmberg and Maskell (2002) point out that the true essence distinguishing many local and regional clusters may not in fact be cooperation and culturally grounded harmony but, rather, intense rivalry, competition, observation, spying and other forms of anti-social behaviour. Their point is that this kind of activity is also fostered by spatial concentration, and is capable of conferring real benefits on the firms involved.

This point may be more profound than it appears at first blush. Consider the case of one of the world’s paradigmatic clusters—Silicon Valley. In her landmark study, Saxenian (1994) was at pains to challenge the then-prevailing representation of the Valley as the creation of gifted and daring entrepreneurs working more or less in isolation from one another. Her take was different: that the rise (and especially the early 1990s recovery) of the Valley was really a story about a finely articulated local social division of labour, social cooperation, and a widely shared regional culture of openness and mobility that promoted the free flow of knowledge. This does not mean that it remained closed to outsiders: indeed, to the contrary, it attracted large numbers of workers and entrepreneurs from other regions and countries (Saxenian, 1999). Nor does she exclude competition from her analysis. Nevertheless, according to Saxenian, the Valley owes much of its continuing success to a regional culture of cooperation and trust, and its ability to integrate talented newcomers into its socially organized production system.

However, this view has recently been contested by Cohen and Fields (1999) who interpret Silicon Valley’s success in rather different terms. They emphasize competition and secrecy to a much greater extent than Saxenian did. Moreover, they argue that the kind of trust prevalent in the Valley is based far less on deep knowledge acquired through direct, close interaction over time, and far more on the circulation of information—through indirect contact—concerning the performance-based reputation of potential suppliers or customers. While they too emphasize the importance of a highly articulated social division of labour (which has produced, among other things, a well-developed array of specialized legal and other professional services), their characterization of the region’s economic organization seems much closer to the traditional urban economist’s notion of agglomeration economies realized through market exchange.

Power and (Work) Place

Going farther afield, one is struck by how infrequently questions of power—in the workplace, in inter-firm relations or in communities—appear in today’s cultural economic geography of production literature. It is as if the infatuation with innovation and ‘the new’ in much of this literature has diverted attention away from questions concerning ‘social relations of production’ in the older (less sparkly) sense of the phrase. These two fields of enquiry need not be seen as mutually exclusive. For example, inside the firm these social relations still play a major part in determining workers’ roles in implementing new technologies and modes of workplace organization (Kochan and Osterman, 1994; Kumar and Holmes, 1997), and in producing and transmitting tacit knowledge for the firm to exploit for commercial advantage. Social relations and the distribution of power between workers and managers are also implicated in the manner in which the spoils from innovation are distributed, which may in turn influence the commitment of workers to the firm’s corporate strategy and culture. In turn, these workplace social relations do not develop in a vacuum, but are influenced and enabled by the regulatory climate (state/provincial, national and even supranational) in which the firm is situated (Gertler, 1997; 2001a; Peck, 1996; Rutherford and Gertler, 2001; Wills, 2000).

Interestingly, an alternative view of social relations of production has begun to emerge in recent work on the ‘new economy,’ in which the firm has receded into the background and the worker has come to the fore. Of course, we are not talking about just any old workers here. This is a literature that has become enraptured with what Richard Florida (2001) and others refer to as ‘talent’—highly skilled, much sought-after new economy workers. Strongly implicit in this work is the argument that the central relationship within the capitalist knowledge economy is no longer the employment relation between worker and manager/owner. Instead, in a seller’s market in which talented labour is in short supply and able to choose between employers (and communities), the principal relationship is now between workers and local labour markets. Talented labour chooses where to live and work based on the local density of employment opportunities as well as broader social and quality-of-life characteristics of local communities. These include a range of ‘soft’ cultural attributes such as social variety, openness to difference, tolerance and low barriers to entry by newcomers—in addition to the normal list of desirable place attributes (cultural and entertainment amenities, appealing natural environment and built form, and so forth). Under such conditions, occupational groupings and affinities constitute the principal source of social interaction providing labour market information and security (Markusen, 2001). Clearly, this kind of ‘fast company’ scenario applies only to a special class of worker and perhaps only under certain phases of the business cycle when demand for such labour is especially strong (Thrift, 2000b). It remains to be seen just how lasting and widespread this transition away from the firm and the employment relation and toward the community turns out to be. With recent evidence indicating that even the ‘new’ economy cannot escape the vagaries of the business cycle, I would venture that at best the jury is still out.

In other instances where power relations are implicit in the work of economic geographers, the treatment is still quite unsophisticated. I refer here to the work on multinational corporations and the global economy, where most of us still labour under ridiculously simple-minded assumptions about the ease and power with which these corporate behemoths can transfer their products and practices from their home turf to new markets and production spaces, erasing local cultures of consumption and production (and national borders) along the way. I have already reviewed the arguments to the contrary, coming out of the institutionalist literature on national business systems and varieties of capitalism. However, it is possible to read too much into this critique. A recently fashionable view pursues an equally extreme alternative, by claiming that the global corporation has become re-embedded in local clusters of knowledge production, wherever these may be, thereby freeing themselves from the geographical legacies of their local and national origins. Appealing as this vision may be to some, the accumulated evidence thus far suggests that there remains a substantial gap between the rhetoric of local embedding and the reality of corporate spatial organization and practices (Doremus et al., 1998; Gertler et al., 2000). If embedding takes place anywhere, this is still largely in one’s original home market.

Continuing this theme, the power of local, regional and national communities to shape the contours of production systems represents another somewhat neglected issue in today’s economic geography. A culturally inflected approach to this question has emphasized the importance of public investments in education and scientific research. The state has also been called upon to help modify the behaviour of economic agents by inculcating cultures of individual enterprise and entrepreneurship, and especially cultures of cooperation, where none existed before—what Jessop (2000: 76) refers to as a fundamental shift from government to governance and meta-governance. Taking the longer view, the presence of the public sphere in the realm of production has historically been considerably larger than this, suggesting that we need to resist the urge to reduce its role to that of educator, coach and matchmaker.

Through its control of key economic and social institutions, the state’s continuing role in shaping the behaviour and practices of firms, and in imposing order on an otherwise unruly world of markets, remains vital to our understanding of how production works and how production cultures are themselves produced at a variety of spatial scales. This role for the state as a producer and regulator of the ‘soft infrastructure’ of the economy is as old as capitalism itself (Polanyi, 1944). Of course these institutions, while durable, also evolve through time and are themselves shaped by local, national and international politics and power struggles (Clark et al., 2000b). It is here that we need to reconsider explicitly the third big idea from the cultural economic geography of production—path dependency. Whether at the national or the regional scale, the influence of human action can and does bring about change within institutional structures. Our present level of understanding of the evolutionary dynamics of lock-in versus change still remains woefully underdeveloped, with seemingly little or no room for local or national politics.

In summing up, there is little doubt that a cultural economic geography of production has opened up new conceptual and empirical terrain previously considered off-limits to economic geographers, and the field is richer for it. Certain truisms—once unthinkable—have now become widely accepted. Culture and economy are now accepted as two sides of the same coin. Seemingly natural structures such as markets are now understood to be deeply embedded. One simply cannot understand how economies in particular places work (or how production processes unfold) without considering the broader social matrix within which they are situated. While this has always been true, our awareness of this relationship, and of the importance of local cultures of production, has been heightened by the growing importance of two major phenomena: the social division of labour in production systems and the role of knowledge production and sharing (learning). All the same, with these basic insights now effectively assimilated within the canon of economic-geographical thought, it is now time to take our analysis to another level of sophistication. In the heady early days of economic geography’s cultural turn, the choice posed by many—to which I alluded at the beginning of this chapter—was between cultural economy and political economy. As we enter a more mature phase, perhaps we shall see greater value in reworking earlier themes and questions concerning the geography of production. How about a cultural political economy of geography?