Is collective efficiency in subsistence clusters a growth strategy? The case of the wood industry in Oberá, Argentina

Abstract

Purpose – Small and medium enterprises (SMEs), which main objective is to satisfy the basic needs of the entrepreneur, when geographically concentrated make up subsistence clusters. The purpose of this paper is to analyze collective efficiency in subsistence clusters as growth strategy and how is the process through which the relational capital and territorial proximity altogether improve performance of firms. Design/methodology/approach – The research uses partial least squares techniques applied to a sample of 113 SMEs of wood industry in Oberá, Argentina. Findings – SMEs in subsistence clusters can use relational capital and territory as resources to generate competitive advantages. These competitive advantages foster performance. In consequence, collective efficiency appears as growth strategy in subsistence SMEs. Research limitations/implications – Data are cross-sectional and in a conjuncture of economy expansion, future research should monitor the sample of firms using panel data to assess the development of relations. Sample is in a particular region and sector and generalizations should be done carefully. Practical implications – SMEs probably should integrate and share industrial and business structures to develop systemic competitive advantages with a collective character. SMEs should leverage their spatial interaction to build trust and establish networks of cooperation that will be the source of their collective efficiency. These collaboration networks should base in the local knowledge. Social implications – Subsistence SMEs have strong impact on the most disadvantaged areas in developing countries. Growth strategies to professionalize these SMEs will have a major impact on the endogenous development of those territories. Originality/value – The research provides a mechanism through which collective efficiency leads to better performance for subsistence SMEs.