Generating Agglomeration Online. Creating Places Without Geographical Borders

Term Paper, 2015

23 Pages, Grade: 1,0


Table of Content

I. Introduction

II. The. Model _ of a .S_p_ace-_le_ss _ Online. Space

III. . Evaluation . of .Existing .Doubts
Allowing for Spontaneity, Diversity and Density
Communication of Tacit Knowledge
Facilitating Trust Between Strangers
Theories of Trust in Virtual Interactions
Empirical Studies of Trust in Virtual Interactions

IV. The. .Importance . of a .Platform .Culture p.f7
Facebook as an Example of an Online Culture
Creating an Online Culture
Existing Literature
Important Implications

V. .Concluding .Remarks

I. Introduction

From the perspective of geographic economics, location factors seem to be of major importance to explain existing (global) economical orderings which, when favorable, allow for agglomeration effects such as knowledge spillovers that are necessary for innovative processes.[1] To put it in the words of Krugman: “[concentration is] the most striking feature of the geography of economic activity”.[2] But since Krugman wrote those words in 1991 quite some time has passed allowing technological developments to occur which undoubtedly have changed the circumstances and the framework of the global economy of today. The worldwide spread of the internet and its implied potential to transmit information and communication to every connected corner of the planet might make information technology the “space-shrinking technology”[3] which ultimately renders spatial differences between places unimportant. Clearly distinguishing the idea of ‘space’ from the notion of ‘place’ which implies some form of “insiderness”,[4] Giovanneti et al. assess the question if cyberspace could nullify the importance of specific geographical locations by allowing for “distance-less communication”, making “geographic space placeless” and leaving the online world with places “replacing those in the geographic space”.[5] The authors point out that if such “places in cyberspace” exist, they would replace the ‘place’-defining element of geographical proximity with ‘insiderness’ based on “a common interest, affinity and language”.[6] This would follow the established idea that the needed factors of innovation, being the valuable outcome of agglomeration, are face-to-face (FtF) interaction, chance occurrence and a concentration of resources.[7] And while scholars agree that the internet offers global access to information, a majority disbelieves in its potential to challenge geographic advantages and thus disrupt the world’s economic ordering,[8] lacking the ability to adequately provide the density, diversity, spontaneity and effective communication of tacit knowledge needed for innovation.

Be it because I am young and full of hope - I do believe that the creation of a ‘space-less place’ with the aim to re-create agglomeration effects independent from geographic space by providing exactly those necessary factors, would be possible. I propose that such a place could be modeled in form of an internet platform, which I will describe in more detail in the following section. After illustrating the basic framework I will turn towards the reasons underlying the doubt that the internet could facilitate such a place. A review of existing literature showed that the major challenges seem to be to adequately a) allow for spontaneity, diversity and density,[9] b) communicate tacit, non-codeable knowledge[10] and c) (somewhat related to this) facilitate enough trust among strangers[11] to allow for meaningful conversations. I will explain why I believe that the first two concerns can be dismissed quite easily while acknowledging that the last point might indeed resemble a great challenge. The majority of this paper will thus be devoted to the examination of theories and research related to trust in virtual communication and their practical implications which allow me to eventually present a platform model that resists the raised concerns, being a place online at which space-less agglomeration can occur.

II. The Model of a space-less online place

As already mentioned does my proposal include an online platform which attempts to reduplicate ‘place’ in the internet and thus overturns the importance of geographical locations of industries or individuals by carrying the precious effects of agglomeration over into the cyberspace.

My idea is that individuals could upon registration with the platform create personal ‘profiles’ similar to those on Facebook in which different information can be given such as interests, field and position of work, country of residency, work-unrelated expertise or industry-related events recently visited. In the light of privacy concerns it might be desirable to leave given information invisible to the public until an individual either expressively discloses them or is ‘matched’ with another user who subsequently would be able to view the profile. Although individuals would register on their own behalf and thus represent themselves rather than their indicated employee, a link between them and represented companies could be made seeing that the main purpose of the virtual interactions is a business-related intent to stimulate work-relevant knowledge spillovers. Also marketing might therefore be directed directly towards companies instead of individual citizens, illustrating the platform’s potential to employers who subsequently incentivize their employees to engage in the online community. Greatly convinced employers might even be willing to grant their employees a specific share of their working time such as 15 minutes daily to foster their virtual relationships and generate greater benefits through these interactions on both a personal as well company-related level.

Virtual interactions, which are meant to emulate real-life agglomeration situations such as for example a conversation two employees might be having at the cafeteria of their work place, are arranged through a randomized process which matches two users for a 15 minute Skype-like video call. Once the end of the 15 minutes is reached the call will end automatically and users are given the option to indicate if they would like to be matched with the same person again in the following weeks to continue or deepen a certain conversation. If both parties indicate such a wish, an automatic date­finder will facilitate the two of them to find another time slot in the next 2 weeks during which both of them are available - on this day the computer will automatically match the two with one another instead of a random user of the platform. A bit like setting up a coffee date. I will explain the importance of such an option to return to a pre-selected person and the reason why I suggest that this option should nevertheless be limited to a restricted amount of times later in this paper.

Besides individual conversations, the platform could also facilitate open discussions similar to discussions in any other online forum in which all users can equally engage. If categorized into certain subject matters or related industries, users could personalize which of those colloquy they would like to see displayed upon logging into the their account. To emphasize the platform’s objective of mutual benefit for and cooperation among everyone involved and in order to protect the forum from being flooded with one-sided requests it might be an idea that discussions can only be created jointly by two users who were matched for a call together and would subsequently like to invite more users and opinions into the discussion they had during their virtual conversation.

In the light of the objective to connect people from all over the world together and allow them equal benefits from their virtual interaction, ‘language’ is a topic which can obviously not be ignored. Acknowledging English as the official world language it would be reasonable to argue to make it the default option for the online conversations. It is obvious that this might disadvantage certain parties and the example of Meridian 180, a global informal forum of scholars, policymakers and professionals with the objective to facilitate cooperation,[12] shows that a live-translations into various languages during a forum help to overcome language-barriers. While live-translation would obviously not be a feasible suggestion for individual calls, or at least not until current translation technology sees significant improvements, the availability of translations of the most popular public discussions streams into 4 dominantly represented user languages could be considered.

III. Evaluation of existing doubts

After having presented a general sketch of the proposed online platform which lies at the core of this paper I will now return to the above identified reasons mentioned in academic literature which give rise to a dominant doubt that virtual interaction would generally be unable to allow for agglomeration effects similar to those facilitated through geographical proximity. To recall, those concerns related to the necessity to a) allow for spontaneity, diversity and density, b) communicate tacit knowledge and c) facilitate trust among strangers. I think issue a) and b) can be rather quickly dismissed and I will first present my arguments for this claim before turning to the third and admittedly greater issue of the generation of trust in an online place.

A. Allowing for Spontaneity, Diversity and Density

The first argument against the possibility of virtual agglomeration effects concerns the importance of geographical proximity which allows for a density of diverse expertise and the chance of spontaneous interaction which eventually leads to agglomeration related knowledge spillovers.[13] However do I not see reasons to believe why users of an online platform with diverse backgrounds could not experience the same density in a virtual community while being thousands of geographical kilometers apart. In fact would such a global community in my opinion promise a much greater diversity than a community restricted to the containing fences of an industry park. Also the need for spontaneity could be solved or at least addressed by the provision of randomness. Although the time the individual users decide to log into their accounts and request to be paired up with a conversation partner might not be totally spontaneous, the virtual interaction following from this act will. In my opinion a randomized matching of users thus resembles a sufficient level of spontaneity and the fact that users deliberately choose when to allow such interactions to occur shows little difference to the decision when to go and get a fresh coffee from the company cafeteria.

B. Communication of Tacit Knowledge

The second argument raised by critics evolves around the possibility to sufficiently transmit knowledge. While it is unquestioned that the internet offers global access to information, a valid claim is raised when drawing a distinction between ‘information’ which can be easily transmitted to others and ‘knowledge’ which involves a personal understanding of “what to do with the information” and thus constitutes “a more complex, cognitive process”.[14] Knowledge and especially ‘tacit knowledge’, a term coined by Michael Polyani which in contrast to explicit knowledge is rather subconscious and unspoken, are much harder to communicate with the means of language and symbolic representations than simple information.[15] It may be said that tacit knowledge is a “basis input for firm’s activities” and is exclusively transferrable via face-to-face (FtF) interaction.[16] Identifying tacit knowledge as “non-codifiable”[17] and assuming that “the transfer of information through modern transmission devices requires its organization according to some pre-specified patterns, and only formal information can be codified in this way”[18] would indeed lead to the assumption that computer mediated communication may not be able to stimulate innovation which “rather than being the result of the efforts of an individual inventor, is most likely predicated on the orchestration of different and complementary streams of knowledge”.[19] However do I have the feeling that the debate should focus on the question if it is possible to transmit tacit knowledge in general instead of doubting that such a transmission would be particularly impossible via computer mediated means. Feldmann states that tacit innovation facilitating tacit knowledge is transmitted through the use of subtle clues such as “gestures, facial expressions, and tone of voice”.[20] I agree that FtF interactions might make the correct interpretations of the ‘complete picture’ of those presented cues easier and I also acknowledge that tacit knowledge might not be codifiable in the sense that it could be textually formulated and transmitted via simple e-mail services. But I again see no reason to believe that highly sophisticated communication technologies available today such as internet-based video calls could not allow for the same level of ‘tacit knowledge detection’ as a cafeteria-based FtF conversation. Considering the never-ending improvement of technology, one may even raise the question if electronically supported interactions might proof to hold an advantage in transmitting tacit knowledge in the future. Allowing for the incorporation of user-supporting ‘cue readers’ in form of electronic detectors of subtle body signals (e.g. measuring and interpreting the others responses in body heat or subconscious facial movements) technologically facilitated means of communication might thus soon allow users to know more about the other’s thoughts than the other knows himself - although going far beyond the scope of this paper the question would then turn into: Do we really want that?

C. Facilitating Trust Between Strangers

While arguments against the ability to create agglomeration effects in the virtual space based on needed spontaneity, diversity, density or the communication of tacit knowledge might be refuted quite quickly, the challenge to create enough mutual trust between strangers to facilitate effective communication and cooperation in an exclusively virtual interaction seems to remain a much greater problem.

Following the idea that “trust needs touch”[21] and “only trust can prevent the geographical (...) distance (...) from becoming psychological distance”[22] the effective functionality of virtual teams without any face-to-face (FtF) interaction may be doubted.

Considering factors of trust facilitation put forward by academic literature such as shared social norms, repeated interaction, shared experiences[23] or anticipated future association[24] virtual teams defined as “a temporary, culturally diverse, geographically dispersed, electronically communicating working group”[25] seem to be disadvantaged in the creation of mutual trust compared to geographically concentrated teams. Acknowledging that “physical proximity reinforces social


[1] Feldman, M.P. (2002). “The Internet Revolution and the Geography of Innovation.” International

[2] Giovannetti, E.; Neuhoff, K.; Spagnlolo, G. (2003). “Agglomeration in the Internet: Does Space Still Matter? The MIX -IXP Case” Online Proceedings of the Cambridge Economics for the Future Conference, p 1.

[3] Jansson, J. (2008). ’’Inside the Internet Industry: the importance of Proximity in Accessing Knowledge in the Agglomeration of the Internet Firms in Stockholm” European Planning Studies, 16 (2): 211-228, p.12.

[4] Giovannetti, E.; Neuhoff, K.; Spagnlolo, G. (2003), p.4.

[5] Ibid., p.4.

[6] Ibid., p.4.

[7] Feldman, M.P. (2002).

[8] See for example Feldman, M.P. (2002) & Giovannetti, E.; Neuhoff, K.; Spagnlolo, G. (2003) & Guillèn, M. F. (2005). “Explaining the Global Digital Divide: Economic, Political and Sociological Drivers of Cross-National Internet Use” Social Forces, 84 (2): 681-708. & Leamer, E. E.; Storper, M. (2001). ”The Economic Geography of the Internet Age” Journal of International Business Studies, Palgrave Macmillan Journals, 32(4): 641-665.

[9] See Feldman, M.P. (2002).

[10] See Giovannetti, E.; Neuhoff, K.; Spagnlolo, G. (2003). & Jansson, J. (2008) & Gabe, T.; Abel, J.R. (2011). “Agglomeration of Knowledge” Urban Studies, 48 (7): 1353-1371.

[11] See Leamer, E. E.; Storper, M. (2001). & Walther, J. B. (1997). “Group and interpersonal Effects in International Computer-Mediated Collaboration” Human Communication Research, 23 (3): 342-369. & Jarvenpaa, S. L.; Leidner, D. E. (1998). “Communication and Trust in Global Virtual Teams” Journal of Computer-Mediated Communication, 3(4).

[12] Riles, A. (2014). “From Comparison to Collaboration: Experiments with a New Scholarly and Political Form” Law and Contemporary Problems, 77, Forthcoming; Cornell Legal Studies Research Paper No. 14-35.

[13] Giovannetti, E.; Neuhoff, K.; Spagnlolo, G. (2003). Feldman, M.P. (2002), p.6.

[15] Jansson, J. (2008), p 214.

[16] Giovannetti, E.; Neuhoff, K.; Spagnlolo, G. (2003), p.3.

[17] Ibid., p 3.

[18] Fujita, M.; Thisse, J. F. (2002). Economics of Agglomeration: Cities, Industrial Location, and Regional Growth. Cambridge University Press,

[19] Feldman, M.P. (2002), p 8.

[20] Ibid., p6.

[21] Handy, C. (1995). “Trust and the virtual organization”. Harvard Business Review, 73(3), 40-50.: p.46.

[22] Jarvenpaa, S. L.; Leidner, D. E. (1998).

[23] Ibid.

[24] Powell, W. W. (1990). “Neither market nor hierarchy: Network forms of organization” Research in Organizational Behavior, 12, 295-336.

[25] Kristof, A.L., Brown, K. G, Sims Jr., H. P., & Smith, K. A. (1995). “The virtual team: A case study and inductive model”. In M. M.Beyerlein, D.A.Johnson and S. T.Beyerlein, (Eds.), Advances in interdisciplinary studies of work teams: Knowledge work in teams, 2: 229-253. Greenwich , CT : JAI Press.

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Generating Agglomeration Online. Creating Places Without Geographical Borders
National University of Singapore
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Agglomeration, Online Agglomeration, Economic Geography, Economic Ordering, Internet Communication, Space-less Places, Virtual Interaction, Online Platfrom Culture, Innovation, Knowlegde Spillover, Cyberspace, Effective Communication
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Pauline Kuss (Author), 2015, Generating Agglomeration Online. Creating Places Without Geographical Borders, Munich, GRIN Verlag,


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