Cumulative causation in regional industrial path development – A conceptual framework and case study in the videogame industry of Hamburg and Shanghai

While broad evidence has been generated on the forces leading to divergent regional industrial path development, we still do not fully understand how initial structural differences between regions are dynamically attenuated in industrial path development processes. In other words, the cumulative causation processes instigating such differences are not well explored. In this paper, a process model is developed, which conceptualizes industrial path development as an iterative build-up of innovation system resources, which is conditioned by firm- and system-level agency. We argue that the specific configuration of system resource stocks, as well as firm- and system-level agency jointly condition the further evolution of a path each time a regional industry reaches a “critical moment”. Unpacking the cumulative system building process across development phases allows exploring how positive or negative cumulative causation patterns emerge in the path development process and how early interventions in the system building process may have knock-on effects at later stages.