HOT-SPOTS AND BLIND SPOTS - GEOGRAPHICAL CLUSTERS OF FIRMS AND INNOVATION

Hot spots are fast-growing geographic clusters of competing firms. Dra wing on several literature streams, we develop an evolutionary model t hat contrasts hot spot and non-hot spot competitors within the same in dustry. Initially, economies of agglomeration institutional forces, an d managers' mental models create an innovative environment within the hot spot. Over time, those same forces create a homogeneous macrocultu re that suppresses innovation, making hot spot competitors more suscep tible than non-hot spot competitors to environmental jolts.