ABSTRACT. This paper examines the role of institutions in
explaining the differences in performance with respect to
entrepreneurship and growth in two industry clusters in two
countries: the biomedical/biotechnology and polymer-based
industry clusters in Sweden and Ohio. Both clusters are about
twice as large in Ohio as in Sweden, even though the indus-
trial history and the composition of industrial output in general
are quite similar in the two regions, and even though the Ohio
economy is only about 25% larger than that of Sweden.
Four types of institutional factors are examined: The
science base and mechanisms of technology transfer; the
density of networks and the role of business support services
and companies in related industries; the entrepreneurial
climate, especially the availability of finance; and the policy
environment and other infrastructure.
Major findings are that the science base plays a different
role in the two clusters and that the regions differ in the
absorption of new technology, partly due to the differences
in the size and structure of firms, that bridging institutions
have contributed significantly to connectivity of networks in
Ohio, and that the greater availability of venture capital and
entrepreneurial management skills makes the Ohio environ-
ment for entrepreneurship more supportive than that in
What are the linkages between institutions, entre-
preneurship, and growth? The purpose of the
present paper is to examine the role of institutions
in explaining the differences in performance with
respect to entrepreneurship and growth in two
industry clusters in two countries.
In a series of papers, my colleagues and I have
studied the biomedical and polymer clusters in
Ohio and Sweden.
The reasons for studying these
particular clusters and regions are provided in our
In the present paper, the aim is to
examine the institutional differences that have
contributed to the differences in economic per-
formance. Even though the industrial history and
the composition of industrial output in general are
quite similar in the two regions, and even though
the Ohio economy is only about 25% larger than
that of Sweden, both of these clusters are about
twice as large in Ohio as in Sweden. Why have
these particular clusters grown faster and become
larger in Ohio?
The paper is organized as follows. We begin
with a discussion of the rationale for looking at
clusters and why certain economic activities tend
to cluster. This is followed by an overview of the
biomedical/biotechnology and polymer clusters in
Ohio and Sweden and their development in the
1990s. Next, we examine the institutional factors
which we have identified in our previous work
as important in understanding the differences
in industry structure and performance. The con-
cluding section formulates the policy issues to
which the analysis gives rise.
2. Clustering of economic activity
In recent years there have been numerous studies
of clustering of economic activity, particularly in
“high technology” sectors such as biotechnology
and electronics. Clusters may refer to concentra-
tions of activity either geographically or in related
sectors and industries, and sometimes both.
of the main advantages of studying clusters of
economic activity is that it emphasizes the context,
both institutional and otherwise, in which the
activity takes place.
and Growth: Biomedicine and
Polymers in Sweden and Ohio
Small Business Economics 19: 105–121, 2002.
2002 Kluwer Academic Publishers. Printed in the Netherlands.
Final version accepted on May 1, 2001
Case Western Reserve University
Weatherhead School of Management
Department of Economics
Cleveland, OH 44106-7206, U.S.A.