Linda Stihl

This paper provides micro-level evidence of how and why functional lock-ins persist, despite clear articulations of cognitive un-locking at firm, cluster and regional levels. Theoretically, we draw on literature on regional clusters and vertical value chains to consider how incumbent firms’ efforts to diversify are conditioned by regional lock-ins as well as value chain governance. To investigate the interaction between cognitive and functional unlocking, we employ an extended case study and trace the diversification strategies of 12 incumbent supplier firms in the automotive industry in Olofström (Sweden) from 2000 to 2022, based on annual reports and a set of 25 interviews. Our findings show that regional cognitive unlocking triggered by the 2008 crisis resulted in an increase in diversification strategies by supplier firms, but after 15 years, their dependency on the automotive industry remains high, as does the persistence of functional lock-in, as a product of vertical value chain dynamics.