Hot spots are fast-growing geographic clusters of competing firms.Drawing on several literature streams, we develop an evolutionary model that contrasts hot spot and non-hot spot competitors within the same industry.Initially, economies of agglomeration, institutional forces, and managers' mental models create an innovative environment within the hot spot.Over time those same forces create a homogeneous macroculture that suppresses innovation, making hot spot competitors more susceptible than non-hot spot competitors to environmental jolts.
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Pouder et al. (1996) studied this question.
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