Abstract :
Resource-based theory of competitive advantage suggests that knowledge creates increased performance opportunities for those firms able to identify, access, utilize and disseminate relevant knowledge effectively [1]. The Flanders Language Valley (FLV) initiative, which met the Pouders and St. John [2] definition of a ??hot spot??, was established to create a global center of competence in speech and language technologies. However, this clustering of innovation occurred in an isolated location within a small European country and was reliant, not on inherent strength of knowledge within that country or region but on tradable technological interdependencies, with codifiable knowledge sold through licensing. Given these issues, FLV fell into bankruptcy and disarray early, due to fraud within Lernout and Hauspie (L&H), the fraud being brought out ?? much before Enron, Andersen, WorldCom and others ?? because of `spontaneous?? investigative journalism subsequent to the decision to acquire Dictaphone. This decision overreached the underlying political and economical-financial capacity to protect and preserve a parochial-based pseudo hot spot against major national security interests of a superpower. This paper discusses the decline and fall of FLV, based on historical record, and provides some insights into what may curtail hot spot knowledge development.