Does clustering of enterprises foster technological learning? Insights from the Bangalore machine tool cluster in South India

Abstract

Close proximity of large number of firms is believed to provide an environment which is conducive for improving technological capability resulting in higher productivity and competitiveness. The technological learning processes which contribute to building and strengthening technological capability of firms are seen as playing important roles in the long-term dynamism and growth of firms. This paper investigates the influence of learning variables, which have been identified through rigorous review of literature, on the acquisition of technological capability of firms in the Bangalore machine tool cluster in south India. The study reveals many similarities in the way firms, whether large or small are benefited by such collaborative arrangements. While vertical and external collaborations significantly influence technological capability, horizontal collaboration among peer firms is rather weak. This result offers interesting insights into the dynamics of this cluster, which has important implications for policy makers.