INTERNALIZING KNOWLEDGE IN THE INNOVATIVE BRITISH VIDEO GAME INDUSTRY

Abstract

This paper analyses the development in the video game industry in Britain, one of the powerhouses of the global industry and a sizeable market in its own right. It focuses on the growth of local and global firms using P. J. Buckley and M. Casson’s internalization theory. In particular, the paper highlights the difficulties of organizing markets in knowledge flow between 1978 and 2021. It is argued that this encourages participants to combine ownership and control of interdependent activities subsequently shaping the boundaries between firms within the industry. Discussion of this phenomenon highlights the interest of examining the parallel evolutions of technology and the market. The paper provides new and rich empirical evidence of how knowledge and innovation co-evolve with the changing industrial context. Proceeding chronologically and identifying three discrete periods in the British video game industry’s development,  the paper explores how knowledge interacts with industrial dynamics as innovative firms adapt to new environments.