Clusters Of Firms Research Articles

The roles of intermediaries in upgrading of manufacturing clusters: Enhancing cluster absorptive capacity

Specialized clusters rely on common knowledge resources and extra-cluster linkages, but how such resources develop over time is unclear. A case in point is how extra-cluster linkages are integrated into intra-cluster networks and the role of different cluster actors in enhancing cluster absorptive capacity. The paper explores the role of cluster intermediaries in linking clusters to external knowledge sources and contributing to knowledge dissemination among cluster firms. This perspective is relevant as manufacturing firms are facing rapid changes in technology, such as those associated with ‘Industry 4.0’. Two manufacturing clusters in Norway are studied regarding cluster absorptive capacities and the role of cluster intermediaries. The authors derive two types of cluster intermediaries with different kinds of service provision well-adjusted to the firm structure. Cluster intermediaries in both cluster contexts can assist firms in tracking and adapting to rapid technological developments.

Modelling inter-firm competitive rivalry in a port logistics cluster: a case study of Melbourne, Australia

PurposeThe paper models the effect of spatial clustering on various dimensions of inter-firm competitive rivalry among port logistics firms using Porter's five forces model.Design/methodology/approachA survey-based quantitative approach is adopted to collect data from logistics firms, which are directly or indirectly dependent on the Port of Melbourne in Australia. A structural equation modelling (SEM) technique is used to examine the theorised relationships between various dimensions of inter-firm competitive rivalry and the tendency of spatial clustering of logistics firms in the vicinity of Port of Melbourne.FindingsThe results indicate that the inter-firm competitive rivalry increases significantly when logistics firms are spatially clustered. This effect is further augmented when they cluster around the port. Co-location of firms near the port tends to increase “bargaining power of buyers”, whilst indirectly affecting “competitive rivalry” via “threats of substitutes”. This indicates that co-location enhances the bargaining power of buyers through the greater availability of substitute services that in turn promotes competitive rivalry among firms. However, co-location has an insignificant effect on “barriers to entry” and “bargaining power of suppliers”. Low entry barrier thus favours high competitive rivalry among firms. Hence, this paper validates the Porter's cluster and five forces models that confirm the positive effect of port logistics clusters (PLCs) on bargaining power of buyers and indirect effect on competitive rivalry partially mediated through threats of substitutes.Practical implicationsThis study provides empirically grounded evidence for firms to evaluate co-location decision choices and help buyers and sellers to devise business strategies to enhance inter-firm competitive rivalry and bargaining power.Originality/valueThis is the first systematic attempt to empirically validate Porter's five forces model in the context of PLC. Furthermore, the conceptualisation of PLC concept both as spatial and functional constructs (i.e. dependency on port) is novel. This study thus has broadened the meaning of cluster from a geographic entity to a more useful functional construct to reflect inter-firm dependencies.

Communication management in industrial clusters: an attempt to capture its contribution to the cluster’s success

This study discusses internal communication within industrial clusters. The basic research question is whether there is a correspondence between the success of a cluster and the communication practices of its management. Our aim was to explore these practices both between the management organization of a cluster and the clustered firms and also among the cluster members themselves. After a thorough literature review of cluster communication, qualitative approach was applied using case studies and 28 interviews in three distinctive clusters in Southwest Hungary. Two of the three clusters consider themselves successful, whilst one cluster sees itself less effective. In the two successful ones, cluster managements are able to manage communication effectively and ensure that communication supports their goals and the implementation of their strategies. In these cases, communication management organization planned and established all dimensions of the communication consciously: channels, content, frequency, way and style of communication, all of which have an impact on trust. The research is linked to corporate communication theories, social identity theory, psychology and management. The paper fills a gap in the research of internal cluster communication. The findings also have useful implications regarding the practice of cluster management and communication.

Achieving Scale Collectively

Many firms in developing countries could be too small to adopt modern technology embodied in expensive production machines. This paper shows that rental market interactions allow these small firms to increase their effective scale and mechanize production. We conduct a survey of manufacturing firms in Uganda, which uncovers an active rental market for large machines between small firms in informal clusters. We then build an equilibrium model of firm behavior and estimate it with our data. We find that the rental market is quantitatively important for mechanization and productivity since it provides a workaround for other market imperfections that keep firms small. The rental market also shapes the effectiveness of development policies to foster mechanization, such as subsidies to purchase machines. Overall, our results point to the importance of taking into account firm‐to‐firm interactions within informal clusters to understand technology adoption in low income countries: focusing on the small scale of firms in isolation might be misleading.

Clusters of social impact firms: A complex network approach

With increasing interest around social impact investments, there is a pressing need to properly define the universe of social impact targets. This paper aims to identify communities of social impact firms (SIFs) ranked in terms of their compliance with the OECD criteria for impact investing. We include in the analysis the network dimension of the firms. Specifically, we assume that SIFs represent the nodes of a weighted complex network, whose weights grow when the linked nodes show similar behaviors in pursuing social impact targets. To empirically validate our model, we used a novel hand-collected dataset of SIFs across multiple countries. Our results highlight that the economic sector and country of origin do not act as a distinguishing factor among SIF communities. However, firm size seems to matter as firms which are more compliant with the social impact criteria tend to be smaller.

The Walls Have Ears: Local Information Environments and Corporate Fraud

AbstractThis paper shows that a firm's likelihood of committing corporate fraud is affected by the local information environment. We use the density of local bank branch networks as a proxy for the local information environment. We show that denser bank branch networks increase the likelihood of fraud detection, accelerate the detection of fraud, and decrease the fraud propensity of local firms. Our results cannot be explained by the clustering of firms in urban areas, geographic proximity to regulators, or other location effects. Overall, our study identifies a spatial dimension in the detection and prevention of corporate fraud.

Identifying and decomposing peer effects on decision-making using a randomized controlled trial

Utilizing a randomized controlled trial (RCT) in traditional clusters of apparel and textile firms in Vietnam, this paper investigates peer effects on firm managers’ decisions to participate in seminars on export promotion. We invited 131 randomly selected firm representatives to three one-day seminars on export promotion. We use the number of randomly invited peers to identify peer effects. We further decompose the invited peers into peers invited to the same seminar, those invited to the earlier seminars, and those invited to the later seminars. We find that the former has a positive effect on firms' participation, whereas the latter two have no significant effect. These results imply that peer effects on participation primarily arise from the benefits of face-to-face interactions. The presence of positive peer effects suggests that multiple equilibria in terms of the share of participants within each village of firms may emerge, which is also consistent with our observations.

Coupling or lock-in? Co-evolution of cultural embeddness and cluster innovation-exploratory case study of Shaoxing textile cluster

Based on an exploratory case study of the development of Shaoxing textile cluster for more than 30 years, through the cross-level and multi-dimensional deconstruction of cultural embeddednesss(CE), this article dynamically analyzes the co-evolution relationship and results of its effect on the innovation capabilities of the cluster. The case study results show that CE affects the network structure and network behavior of cluster firms, which leads to the differences of innovation capabilities between cluster firms and the overall clusters. There exists a co-evolution relationship between CE and cluster innovation capabilities, and the result will lead to co-evolution coupling or lock-in. Co-evolution coupling appears in the early stage of cluster development; while co-evolution lock-in appears in the later stage of cluster development. So the embeddedness of same regional cultures may have completely different roles at different stages of cluster development. The root cause is that the network structure and behavior influenced by CE cannot dynamically match the demands for innovation in different stages of cluster's development, and the path dependence of CE evolution leads to change difficultly.

Geographic clustering of institutional investors

The U.S. money management industry is geographically concentrated and diverges from the geographic clustering of public firms. We find that firms located in states with strong institutional investor presence have high valuation. These firms invest more and their investments are less dependent on internal cash flow. They are more likely to issue equity than debt for financing needs, and local institutions hold more of the newly issued equity. The results show the geographic dislocation between institutional investors and firms contributes to financial market frictions, and a strong institutional investor presence alleviates the funding friction of local firms, leading to high valuation.

ICT resources and use: examining differences in pathways to improved small firm performance

PurposeThe paper shows how small firms perceive the pathways through which access to and adoption of superfast broadband-enabled resources strengthen business performance. Improvements to broadband infrastructure do not automatically lead to adoption of opportunities made available through the broadband resource. Then, interventions can be used to alert small firms to new opportunities. However, the quality of interventions in terms of education and digital audits can be better targeted with information available on how small firms perceive the benefits from broadband access and whether these perceptions are reflected in business performance outcomes.Design/methodology/approachData are used from the Digital Maturity Survey from Wales. The study uses principal component analysis and a dual stage cluster approach to show how SMEs believe they are benefitting from broadband access. These belief-based perceptions of broadband inferred business benefits are tested against business performance variables.FindingsThe analysis shows variation in SME perceptions of the benefits of broadband-enabled services. This study reveals a cluster of firms which perceived routes to business value in terms of variables linked to security and risk management, and then more commonly held notions linked to communication, competition enhancement and productivity.Originality/valueWhile the research literature points to Information and Communication Technology (ICT) resources (ICT investment and skills) and use (digital applications), leading to new to business value improvements, this study suggests less work has sought to identify the critical themes identified by business owners in explaining how ICT resources and use tie to observed business performance. The study identifies these critical themes. The analysis suggests that these critical themes in terms of business value benefits as perceived by business owners can be summarised in terms of communication and competition benefits, and security and risk related benefits. The findings have a series of implications for interventions in the space.

Identifying board of director network influence for firm characteristics

We utilize multiplex network analysis to evaluate the relationship between firms’ characteristics and board of director networks. Studying a sample of 384 board members of 20 largest US energy and utility firms, 10 from each sector, the firms are differentiated by a clustering analysis on their firm-level characteristics. The firms’ board member connections are represented in a multiplex network consisting of two layers, one for the board members’ direct connections and another for their indirect connections. Four additional sub-layers are identified for each major layer of the multiplex network to represent corporate, non-profit organization, education and government/military connections between the board members. Weights assigned to each layer of the multiplex network allow combining their effect in the resulting single layered directors’ network. The weights of the multiplex directors’ network are learned by optimally relating firms’ director network characteristics with firm clusters’ characteristics. We observe that director network displays significant connectivity at all multiplex network layers and firms belonging to the same cluster display similar director network characteristics, specifically enhanced by appropriate weighting of director network layers. The optimal value of network sub-layer weights indicate that, while corporate board member connections play the most significant role, the non-profit and military & government connections are also important, where non-profit connections lead to inferior firm outcomes.

Micro-Geographies of Information and Communication Technology Firms in a Shrinking Medium-Sized Industrial City of Ostrava (Czechia)

We aimed to explain the spatial distribution of information and communication technology (ICT) firms in the city of Ostrava as an example of a medium-sized, shrinking, polycentric industrial city. The primary research question was to what extent micro-geographic location factors affect the current spatial clustering of ICT firms in polycentric cities characteristic by relatively weak urbanization economies and mostly routine character of ICT activities. We analyse and test the effects of the urban form at the level of urban blocks and individual buildings (considering their height, technical condition, age and dominant function) on the clustering of ICT firms of various sizes and ownership statuses. The inquiry was based on a detailed field mapping (using ArcGIS Collector) of ICT firms and physical/functional characteristics of the buildings and their immediate surroundings. ICT firms are significantly spatially concentrated in the historic city centre and inner city. Spatial patterns of ICT firms focused on less knowledge-intensive, routine and/or lower value-added functions do not differ fundamentally from innovative firms developing new products. Preference of denser, walkable, mixed-use neighbourhoods in urban cores/inner cities can be found in the group of firms focusing on routine functions: rather for larger than for smaller firms and domestic than foreign-owned firms.

The effects of cluster collaboration and the utilization of big data on business performance: A research based on the expansion of open innovation and social capital

This study examines the influence of firm cluster collaboration and the utilization of big data on the expansion of open innovation. We also investigate the effect of open innovation on business performance and test the moderating effect of social capital. We surveyed 409 global firms (193 large enterprises and 216 medium enterprises) located in Asia, Europe, North America, and Africa over a one-month period. We limited the scope of the survey to employees working at the level of team leader (or executive) or above in the R&D department. This study used SmartPLS (Version 3.3.3) to perform the statistical analysis. Our results indicated that, first, corporate cluster collaboration had a positive effect on the expansion of open innovation. Second, firm use of big data had a positive effect on the expansion of open innovation. Third, firm expansion of open innovation had a positive effect on business performance (market and financial performance). Fourth, in the relationship between cluster collaboration and open innovation expansion, social capital had a negative moderating effect. This research proved that cluster collaboration and big data could accelerate open innovation, ultimately improving business performance. However, there are limitations regarding SEM analysis.

E-PLATFORMS FOR UNIVERSITY-BASED ENTREPRENEURIAL ECOSYSTEMS DEVELOPMENT

As economic co-ordination becomes increasingly globalized the key interactions among firms in specific industry clusters become regionalized. University-based entrepreneurial ecosystems are believed to be a compromise to foster entrepreneurship and economic development in a regional context. The modern university-based entrepreneurial ecosystems are mainly based on informational flows and e-platforms. However, the process of how the ecosystems come into being, how university-based ecosystems can be nurtured has not been researched enough at present. This article contributes to the field by recommending a framework enabling this process through the development of e-platforms as a regional development model. The network theory perspective is used as an analytical approach to determine how the mechanism works in the entrepreneurial ecosystem and how it contributes to regional competitive advantage through knowledge transfer and innovation. An in-depth interview method with a semi-structured questionnaire, a literature review, and a statistical analysis are used as research methods. The study context is the Vitebsk region, which is located in the northern part of Belarus.

Innovation and diversity in the digital cultural and creative industries.

The cultural and creative industries (CCIs) are increasingly being recognised in South Africa, as in other countries, as wealth-creating, given appropriate investment, rather than primarily a non-market subsidized sector. However, national innovation policy is still predominantly focused on STEM (science, technology, engineering and mathematics) skillsets and related product markets. This paper analyses how the CCIs in the Cape Town cluster innovate by combining digital technology, creative inputs, and workforce diversity. Based on a similar study conducted in Brighton, UK, a cluster of innovative CCI firms was identified that are to varying degrees “fused”, defined as combining digital technology and creative design in production. Fused firms have higher levels of innovation in business processes, goods and services. Fused firms were also more likely to employ demographically diverse people, adding insights from the South African mix to the UK studies on disciplinary diversity. While fused creative-digital firms employ greater diversity, a qualitative analysis of SA gaming and animation firms nevertheless demonstrates the challenges for improving diversity in a developing country context.

Corporate performance patterns of Canadian listed firms: Balancing financial and corporate social responsibility outcomes

AbstractBased on stakeholder theory and considering the conflicting performance interests of a wide range of stakeholders, this research investigates corporate performance patterns using a cluster analysis of financial, social, and environmental performance dimensions. An analysis of a Canadian sample of 771 company‐year observations for the period 2014–2018 reveals three types of corporate performance: financially focused performance, balanced performance, and corporate social responsibility (CSR)‐focused performance. Firms in the largest cluster, financially focused performance, deliver poor sustainable performance and prioritize financial performance over social and environmental performance. The CSR‐focused performance cluster scores low for financial performance and high for environmental and social performance. The balanced‐performance cluster also has higher levels of sustainable performance but is the smallest cluster, accounting for a quarter of the sample. Overall, this study presents a portrait of corporate performance balancing financial and CSR objectives and the evolution of this activity over the research period.

The Effects of Foreign Multinationals on Workers and Firms in the United States

AbstractGovernments go to great lengths to attract foreign multinationals because they are thought to raise the wages paid to their employees (direct effects) and to improve outcomes at local domestic firms (indirect effects). We construct the first U.S. employer-employee data set with foreign ownership information from tax records to measure these direct and indirect effects. We find the average direct effect of a foreign multinational firm on its U.S. workers is a 7% increase in wages. This premium is larger for higher-skilled workers and for the employees of firms from high GDP per capita countries. We find evidence that it is membership in a multinational production network—instead of foreignness—that generates the foreign-firm premium. We leverage the past spatial clustering of foreign-owned firms by country of ownership to identify the indirect effects. An expansion in the foreign-multinational share of commuting-zone employment substantially increases the employment, value added, and—for higher-earning workers—wages at local domestic-owned firms. Per job created by a foreign multinational, our estimates suggest annual gains of US$13,400 to the aggregate wages of local incumbents, two-thirds of which are from indirect effects. Our estimates suggest that—via mega-deals for subsidies from local governments—foreign multinationals are able to extract a sizable fraction of the local surplus they generate.

Two-Factor DEA Modeling and Clustering of Homogeneous Firms

Two-Factor DEA Modeling and Clustering of Homogeneous Firms

Urban geography vs company geography. An analysis of location determinants in three European cities

ABSTRACT Small and Medium Enterprises (SMEs) in urban areas are increasingly relevant, with a consistent impact on various territories. This research explores the re-territorialization processes, contextualized by the post-Fordism era, in urban areas. The objective of this work is to verify a hypothesis assumed at the base of the research relating to the presence of a uniformity of orientation regarding the settlement determinants of companies that are co-located in specific areas of the cities. This hypothesis is tested in relation to various industrial sectors. The availability of these survey elements constitutes a useful driver of awareness to be then translated into specific actions in urban planning in terms of policies, services and infrastructures to be dedicated to these urban spaces characterized by clusters of firms. From a methodological point of view, the followed approach is based on two aspects relating both to a cartographic comparison and both to a statistical comparison between the answers provided by the service companies of different sectors of some European cities selected for the sample survey.

Explaining technological innovation of the clustered firms: Internal and relational factors

ABSTRACT The objective of this research is to investigate the combinations of internal and external factors that lead cluster companies to innovate. The study follows a complex causality approach using Qualitative Comparative Analysis (QCA) with a sample of 166 companies that belong to the Spanish ceramic tile cluster, differentiating between end product firms and specialized industrial firms. The results show how the two groups benefit from different factors when it comes to technological innovations. End product-focused firms benefit from vertical relationships with suppliers and the interaction with supporting organizations like universities, among others. Specialized industrial firms benefit, above all, from a high R&D investment.