Social Networks in Emerging Industries: Evidence from Nascent Wine Clusters

Abstract

Nascent firms have long relied on networks, clusters, and alliances to acquire knowledge and increase performance (McEvily & Marcus, 2005; Bruderl & Preisendorfer, 1998, Zheng, Singh & Mitchell, 2015). Much of the recent networks literature focuses on innovative, high-technology companies, showing that innovation depends on a firm’s network position (McDermott, Corredoira & Kruse, 2009). What about less innovative products and markets? We look at emergent winery clusters in non-traditional US wine-producing areas such as Michigan, Missouri, New York, and Vermont. These firms generally produce lower-quality, less expensive products that are consumed locally, rather than high-quality products for export. Consistent with previous research, we find that network embeddedness matters for performance. Unlike previous work, however, we find that the main determinant of a winery’s performance is its relationship with industry associations, which performs the critical role of network anchor.