London in the efficiency trap? Potential lock-in processes, negative network externalities and path dependency in the property finance sector

The proposed study intends to document and analyse the importance of network governance for effiency of economic clusters related to the economic and institutional development of the property investment sector in Great Britain. The trend of the branch is very strongly shaped by path dependencies that are genuinely different from those in other European counterparts. British enterprises characteristically have a relatively high market knowledge of their respective part of the sector. Since this knowledge is bound and purposefully accumulated by certain mobile persons, a central characteristics of the British property development industry are expert networks. This high interconnectedness at the personnel level is complemented with strong crosslinks between competitive enterprises indicating their common interests in standard-setting and lobbying. These strong interrelations are reflected in a specific spatial clustering of the industry in London. Financing is the central bottleneck in the value chain of “property development”. The number and quality of cross-links with institutional investors and financial service enterprises are therefore crucial resources both for property development and individual professional careers. The project intend to analyse the core thesis that the already very well-established and highly efficient network necessarily exhibits locking-in tendencies with negative consequences that limit the innovative capacity of the professional knowledge base in London.