The Evolution of Industrial Clusters and Regional Dynamic Capability:

A Case Study of the Chemical Industry in Teesside, UK

Abstract

Loss of industrial competitiveness has led to the stagnation of local economies in many industrial regions. Many of the old industrial regions have found it difficult to change or to adapt due to their institutions. A strong regional economy is a resilient region, which means that the region can adapt to post-crisis changes. However, it is less clear what exactly is meant regional adaptive capacity. The research aimed to elucidate regional adaptive capacity through the process of transformation of industry agglomeration and its causes by adopting the concept of dynamic capability framework. This study analyzed the adaptive capacity of the Teesside chemical cluster, UK, using Teece’s dynamic capability framework, whose elements are sensing, seizing, and transforming. For industrial clusters to respond to change, the three elements of sensing, seizing and transforming needed to be linked and developed in three, production, innovation and governance systems. This adaptive capacity laid in individual, agency, and inter-organizational ones. The result is a multi-layered and multiple elements view of industrial clusters and an enhancement of the concept of regional dynamic capability, which could suggest a new perspective in the debate on cluster evolution or regional economic resilience.