Strategy and process of value creation and appropriation in service clusters

Service-oriented networks and clusters of firms have increasingly become prevalent in recent decades. This new form of service clusters is different from the traditional industrial clusters in which the focus is primarily on costs, production, and channel distributions. We extend the research on service innovation, alliance networks, and industrial clusters to analyze the strategy and the process of value creation and appropriation in service clusters. Higher perceived customer value is created and delivered by a network of agglomerate firms dynamically engaged in value networking and service innovation. The proposed theoretical framework and innovation mechanism provide new insights for firms located in the service clusters to gain and sustain competitive advantages. It also offers a new perspective for policymakers to advance regional and global competitiveness.     

Factors shaping the international knowledge connectivity of industrial clusters: a comparative study of two Latin American cases

Abstract

Recent research has emphasized that success of industrial clusters is not only driven by intra-cluster knowledge sharing (‘local buzz’) but also by externally sourced knowledge (‘global knowledge pipelines’). This article examines the factors that determine the channels through which clusters connect with global knowledge pipelines depending on the structure of the global value chain within which they are inserted, their knowledge base and their stage of evolution. Building on a comparative case study of the salmon farming cluster in Chile and the software cluster in Costa Rica, we adopt an evolutionary perspective based on historical analysis to better understand how the configuration of clusters’ international knowledge linkages shifts over time. Our findings suggest that (i) the more hierarchical the global value chain structure, the less room for knowledge co-creation between local and foreign actors; (ii) clusters relying on analytical knowledge bases opt for more formal and coordinated links with high involvement of public actors, whereas in clusters relying on synthetic knowledge bases, international knowledge interaction is based on less formal links mainly between business actors; and (iii) as clusters evolve the channels through which they connect with foreign knowledge increase in number and new ‘hybrid’ varieties develop.     

Local clusters in global value chains: exploring dynamic linkages between Germany and Pakistan

Recent research has underlined the importance of external linkages for industrial clusters. Suppliers and buyers within a global value chain offer important external ties for cluster-based producers not only in terms of the distribution of physical goods, but also for knowledge flows and innovation. Globalization has intensified such value chain links, connecting geographically dispersed producers to global markets. Yet, there is limited research on how local clusters enter global chains or on ties between clusters in the developed and developing world. This study addresses this gap. It uses the case of the global surgical instrument industry to analyse connections and differences between the industry's leading production clusters in Germany and Pakistan. Global standards, low-cost competition, and advances in medical technology raise challenges for both clusters. The paper explores the responses to these challenges. It distinguishes between knowledge and production links to illustrate differentiation in each cluster, diverging trajectories and continuing ties.     

Networks and linkages among firms and organizations in the Ottawa-region technology cluster

This paper reports on a study of the networking and linkage practices of technology and non-technology firms within the Ottawa cluster. The work seeks to understand how and why particular patterns of networks and linkages evolve and it examines empirically the usage and value of networks and linkages. Previous work argues that technology firms need to be relatively more adept at developing external relationships in order to be successful than do non-technology based companies. This work, however, finds that technology firms exhibit fewer linkages than non-technology based companies do within the Ottawa cluster. The research suggests that the vitality of the Ottawa cluster could be further enhanced through the promotion of additional networking and linkages among regional firms. A key implication for management practice is that CEOs of technology-based firms should work towards establishing and maintaining additional valued relationships.     

The development of industrial clusters and public policy

This paper assesses the relationships between public policy and the development of industrial clusters. A conceptual model of the relationship between public policies and the development of industrial clusters is developed and tested using data from 43 European industrial clusters. The results indicate that most government policies have no significant impact on the growth of industrial clusters or for the development of co-operation within industrial clusters. There is limited evidence that packages of government policies that are specifically geared towards improving the local asset base are effective in overcoming obstacles to growth of industrial clusters. However, when age is used as a control variable the weak relationship between policy packages and growth of industrial clusters disappear. The results indicate that individual and packages of public policies are not strongly connected to either high levels of co-operation, or high growth in industrial clusters. Moreover, no clear evidence was found that high levels of co-operation were associated with growth in industrial districts. In the light of the failure to find clear-cut associations between public policies and the development of industrial clusters the paper outlines a research agenda to help to increase our understanding of these issues.     

The effect of local and global linkages on the innovativeness in ICT SMEs: does location-specific context matter?

Abstract

Countries differ significantly with regard to the location-specific contexts in which they are embedded. The aim of this paper is to extend the discussion on the effects of local and global innovation collaborations on the degree of novelty of innovation by considering this context. Our main question is: Does embeddedness in the developed or emerging country context affect the likelihood of benefiting from local or global linkages for innovations with higher novelty?

The paper is based on data gathered through a survey of firms in the ICT sector in an emerging economy (India) context and from two Scandinavian countries (Sweden and Norway). The findings of this study show that global linkages do indeed impact the degree of novelty of innovation. However, country context does have a moderating effect. While the effect of global linkages is highly positive on the innovativeness of Scandinavian firms, for the Indian SMEs, the linkages that give novel innovations are the regional ones.     

Industrial clusters,shared resources and firm performance

Drawing upon the resource-based view, this paper examines the relationships between various types of cluster-based shared resources and cluster firm performance in the Chinese context. Using survey data from a sample of 294 small- and medium-sized enterprises from industrial clusters in Zhejiang Province, we find evidence to support arguments that cluster firms in comparison with non-cluster firms demonstrate significantly higher perceptions of shared resources and that shared resources exclusively available to cluster firms link to better cluster firm performance. The findings of our research suggest that cluster policy needs to attend to the constituents of shared resources in order to enhance firm performance.     

The diffusion of exporting in Brazilian industrial clusters

The present research aimed at understanding the process by which firms in a cluster start to export based on systemic interactions, and the process of diffusion of exporting as a business strategy within the cluster. Diffusion was defined, following Rogers’ (1995: 5) seminal work, as ‘the process by which an innovation is communicated through certain channels over time among the members of a social system’. The research method used was industry case studies and the unit of analysis selected was the cluster. Two manufacturing industries were chosen to be investigated, and within each geographic area clusters were identified as the origin of dynamic export growth in the industry. Players in each industrial cluster, as well as other significant actors, were interviewed. Extensive secondary data research was done to study clusters’ historical development. Detailed analysis and a comparison of the experiences permitted the extraction of some general conclusions concerning the similarities and differences between the clusters in terms of the adoption and diffusion of exporting. Results showed that the diffusion of exporting in an industrial cluster is quite similar to the dissemination of technical innovation. Social ties were important to facilitate the diffusion of exporting in one of the clusters studied. Also, the role of domestically-owned flagship firms in leading the internationalization process proved to be important in only one of the clusters, while the role of external actors was fully supported in the two industries studied. Finally, a number of support institutions, private and public, interfered in different stages of the internationalization process. In both industries, the federal government had only a late and limited impact on export initiation and development.     

Improving SME competitiveness reinforcing interorganisational networks in industrial clusters

Drawing on a social network approach this paper proposes a methodology that helps with the empowerment and development of interorganisational networks in clusters. Paper emphasises the necessity of establishing relationships with other firms and external agents in order to empower the creation and diffusion of knowledge, through factors such as innovation. The aim of the proposed methodology is to know how required knowledge should be located and diffused to identify the opportunities motivating the creation of particular interorganisational networks. Similarly, it is also important to know how to determine which agents might to take advantage of these opportunities creating networks.     

Innovation in food firms: contribution of regional networks within the international business context

This paper explores the role of regional networks in processes of innovation within an international business context. It is hypothesized that firms participating in regional networks demonstrate a stronger innovation competence. Data are drawn from a survey among food firms in the region of Meetjesland, Belgium, and reflect the relation between the firm and a number of regional characteristics. After restructuring the data through factor analysis and cluster analysis, the important role of regional networking is revealed using discriminant analysis. The analysis marks out two factors having the strongest power to discriminate between the clusters: firms are classified as having a stronger innovation competence when networking within the region, and when orienting towards the international market. Results demonstrate that internationally operating firms benefit from regional networking. Further, it is argued that regional networking is not contradictory to an international market orientation, and that firms gain innovation competence by searching for external knowledge on different geographical scales. As these networks have the potential to enhance the innovation competence of firms, support to regional networking is promoted as a policy tool.     

What drives the effectiveness of industrial clusters? Exploring the impact of contextual,structural and functioning determinants

This study examines how contextual, structural and functioning characteristics of industrial clusters influence their effectiveness. We develop a conceptual framework that identifies potential influencing factors, validate the factors statistically, and estimate the factors’ impact on cluster effectiveness. Our results show that among the important determinants of cluster effectiveness are long-term planning security and procedural trust among the cooperating firms (contextual conditions), formalized rules and sustainable structures (structural elements), and clear goals and tasks (functioning characteristics). However, the results also reveal that some determinants assessed as important in the literature do not seem to have a positive impact on effectiveness. Our results not only modify general assumptions in cluster research concerning the drivers of cluster effectiveness, but also assist firms and policy-makers in conceptualizing successful new clusters.     

On the spatial scale of industrial agglomerations

Standard approaches to studying industrial agglomeration have been in terms of scalar measures of agglomeration within each industry. But such measures often fail to distinguish spatial scales of agglomeration. In a previous paper, Mori and Smith (2014) proposed a pair of quantitative measures for distinguishing both the scale and degree of industrial agglomeration based on an explicit method for detecting spatial clusters. The first, designated as the global extent of industrial clusters, measures the spatial spread of these clusters in terms of the areal size of their essential containment, defined to be the (convex-solid) region containing the most significant subset of these clusters. The second, designated as the local density of industrial clusters, measures the spatial extent of individual clusters within their essential containment in terms of the areal share of that containment occupied by clusters. The present paper applies this pair of measures to manufacturing industries in Japan, and the results obtained are systematically compared to those of the most prominent scalar measures currently in use. Finally, these measures are shown to support certain predictions of new economic geography models concerning the relationship between shipment distances and spatial scales of agglomeration for individual industries.     

Synergistic effects and the co-existence of networks in clusters

Abstract

Network systems like clusters are characterized by the coexistence of relational architectures with ties and nodes of different nature. While recent research has analysed how a set of structural features shape the dynamics and effects of one cluster network, the outstanding question is to what extent such features and outcomes are influenced by the concomitance of distinct content-related linkages. This paper integrates both network and evolutionary economic geography perspectives to develop and test a model that links innovation performance with the benefits that stem from technical and business relations. Data collected in a biotech cluster in the Valencia region (Spain) demonstrate the changing effect of brokerage and overlapping ties on innovation as a function of knowledge shared. Findings extend the theoretical understanding of how knowledge diffuses in clusters and provide valuable insights for both practitioners and policy makers.     

Cooperation patterns of incubator firms and the impact of incubator specialization: Empirical evidence from Germany

The article examines cooperation patterns of 150 firms located in German business incubators (BIs). More specifically, this study distinguishes between networking within the tenant portfolio and the academic–industry linkages of the tenant firms. We further contribute to the relevant literature by explicitly considering differences in cooperation patterns between firms located on diversified and specialized incubator facilities. Empirical results do not support the common assumption that specialized incubation strategies increase the effectiveness of incubator-internal networking compared to diversified BIs. Also, incubator specialization is not superior to diversified incubators with respect to the promotion of linkages of their tenants with academic institutions. For academic linkages, industry effects matter more than incubator characteristics.     

Networking strategy of boards: implications for small and medium-sized enterprises

Development of linkages with the external environment, e.g. interlocks, is a mechanism to access scarce resources. Creating and maintaining these linkages may be an organizational capability that creates a competitive advantage for small and medium-sized enterprises (SMEs). A partial model of networking strategy is proposed, which includes measures of board composition, interlocks, entrepreneurial orientation and environmental hostility. Analysis of 70 community bank Chief Executive Officer (CEO) responses (58% response rate) lends support to the proposition that firms with a networking strategy performed better (higher return on assets (ROA) and higher return on expenditure (ROE)) than those firms that did not actively pursue the development of networks.     

Identifying the impact of geographical proximity on spillover effect of FDI: The evidence from Indian local firms’ performance gains

This paper investigates the role of geographical proximity on FDI spillovers from foreign to Indian local firms. We use data set of the manufacturing firms between 1988 and 2018 in India, estimating the productivity based on Cobb–Douglas production function. For measuring geographical proximity, the coordinates of each firm, represented to as ‘latitude and longitude’, provided by Google maps geocoding API is used. To conduct spatial analysis, we adopted the revised ‘SINM’ (Spatial Industrial Network Model)’ with GMM estimator, and used firm based point spatial unit. The analysis, in particular, reveals that within 30 km–70 km distance the presence of FDI creates significant positive backward and negative horizontal spillovers, but gradually decaying as threshold increases. Meanwhile, the negative horizontal spillovers to Indian local firms located within industrial clusters turned to positive, and the positive backward spillovers more magnifies compared to non-clustered firms. Based on these findings, we suggested the several policy implications regarding the development of industrial cluster, FDI promotion policy, and location decision for foreign investors.     

Participatory management and industrial relations climate: a study of Chinese,Japanese and US firms in Taiwan

This study examines the relationship between industrial relations climate and the employee attitudes towards participatory management in Chinese-, Japanese- and US-invested electronics firms in Taiwan. Among the findings, Chinese firms tended to have a higher level of participatory management and more effective participatory management than US-invested firms in Taiwan. It was also confirmed that the harmony and openness aspects of industrial relations climate had a positive and significant correlation with the effectiveness of participatory management, including the personnel, operational and social matters. It was concluded that multinational corporations (MNCs) which need centralized control of their overseas operations will be less willing to encourage participatory management in their local operations. Finally, it was revealed that the effectiveness rather than the level of participatory management could better predict industrial relations climate.     

Job hopping, earnings dynamics, and industrial agglomeration in the software publishing industry

This paper investigates the implications of industrial clustering for labor mobility and earnings dynamics in one large and increasingly important high-technology sector. Taking advantage of longitudinal employee-employer matched data, I exploit establishment-level variation in agglomeration to explore how clustering in the software publishing industry affects labor market outcomes. The results show that clustering makes it easier for workers to job hop within the sector. Higher earnings levels in more agglomerated areas are partly attributable to sorting across locations among workers and firms in the industry on the basis of observable and unobservable characteristics. Controlling for this heterogeneity, workers in clusters have relatively steep earnings-tenure profiles, accepting lower wages early in their careers in exchange for stronger earnings growth and higher wages later. These findings are consistent with theoretical models in which agglomeration improves labor market coordination and facilitates greater learning and human capital formation.     

Job hopping,earnings dynamics,and industrial agglomeration in the software publishing industry

This paper investigates the implications of industrial clustering for labor mobility and earnings dynamics in one large and increasingly important high-technology sector. Taking advantage of longitudinal employee-employer matched data, I exploit establishment-level variation in agglomeration to explore how clustering in the software publishing industry affects labor market outcomes. The results show that clustering makes it easier for workers to job hop within the sector. Higher earnings levels in more agglomerated areas are partly attributable to sorting across locations among workers and firms in the industry on the basis of observable and unobservable characteristics. Controlling for this heterogeneity, workers in clusters have relatively steep earnings-tenure profiles, accepting lower wages early in their careers in exchange for stronger earnings growth and higher wages later. These findings are consistent with theoretical models in which agglomeration improves labor market coordination and facilitates greater learning and human capital formation.     

The competitive advantage of cluster firms: the priority of regional network position over extra-regional networks – a study of a French high-tech cluster

This paper extends research on industry clusters by unbundling network from cluster effects and by analysing how network effects drive the performance of cluster firms. The results show that a firm's connectedness in a regional network is positively associated with firm performance. However, we found that for cluster firms, it is even more important to build strong network positions by developing rather exclusive alliance networks. In addition, a weak position within a cluster cannot be compensated for by strong extra-regional networking activities. From this perspective, cluster-specific advantages are firm-specific and the basis for competitive advantage. Regional competitiveness is therefore a non-substitutable pre-condition for the overall performance of cluster firms.