Clusters Of Firms Research Articles

The Impact of Clustering on Firm Innovation

Are firms in clusters more innovative and productive than firms operating in more isolated areas? This article combines two rich firm-level data sets to analyze the effect of a dense geographical concentration of industries on the innovativeness and productivity of firms. The results show that increased concentration of employment in the same industry (localization) is associated with higher innovation output and higher productivity. At the same time, however, a higher number of firms in the same industry are associated with lower innovation output and lower productivity. These two findings are visible within a distance of 500 m away from the respective firms, but then vanish for longer distances. Furthermore, the article finds no evidence that increased concentration of employment in other industries (urbanization) is positively related to higher innovation output. In contrast, increased concentration of employment in other industries is strongly related to higher productivity, whereby this effect extends to large distances of up to 10 km. The results of the article thus suggest that those agglomeration externalities operating over longer distances, such as labor market pooling, work mostly across industries, while the comparatively more local knowledge spillovers tend to work mostly within industries. (JEL codes: O33, R3)

Exploring the relationships among paid search budget, social media presence and online performance: An examination of the US e-commerce industry

Digital and social media marketing activities are vital to fostering consumer engagement, nurturing consumer–brand relationships and generating market intelligence. Yet the relationships among firms’ digital marketing investments (eg paid search budget), social media presence and online firm performance are not well understood. This study focuses on the US e-commerce industry, identifying segments of the top 500 US e-commerce firms based on their paid search budget, social media presence and e-commerce performance measures, such as their web traffic, web sales, conversion rates and average ticket sizes. It then explores the relative impact of paid search budget and social media presence on e-commerce performance. Results show that there are two clusters of e-commerce firms: high spenders with high presence and low spenders with low presence. While the former constitute only 5 per cent of the industry, they have 27 per cent more repeat customers, three times higher return on investment, and make half of the industry’s web sales. Results also show that compared with social media presence, paid search budget is three to four times more effective in driving web traffic and eight times more effective in driving web sales. The results provide important strategic implications for marketing and brand managers for their digital marketing investments and social media presence.

Personal and business networks within Chilean biotech

Agglomerations and proximities between firms are positively related to the creation of knowledge networks and the innovation performance of firms. Despite the long history of the study of proximities, only recently have interactions between multiple proximities and multiple networks been studied with respect to the economic performance of clustered firms. The role of personal relations in the creation of business relations between firms needs to be studied further. This study proposes a framework for the creation of business relations that combines the proximity framework, the strategic alliances literature, and multiplexity of social networks. The study uses a novel dataset on the ego-networks of personal relationships between owners or managers and the ego-networks of business relations of biotech firms in Chile. It is shown that the existence of previous personal relations between individuals from two organisations positively affects the probability of creating a business relationship between them.

Building resilient clusters through HRM systems: a multiple mediator model

PurposeThere is a growing research interest in the relationships between networks and the firm’s assets and between networks and innovation. Studies have shown the complexity and idiosyncrasies of these relationships for firms in clusters. The way firms in clusters build certain organizational resources and capabilities, however, remains underexplored. Based on the assumption that most of these organizational assets rely on human resources, the purpose of this paper is to shed light on the mechanisms through which a set of managerial practices (the human resource management (HRM) system) enhances innovation.Design/methodology/approachMicro-level data were collected for 139 firms located in three Spanish industrial clusters. Next, the main constructs were developed. A multiple mediator model was then used to examine how HRM systems influence innovation through strategic vision, embeddedness in local networks, the implementation of enterprise systems, and cluster characteristics.FindingsThe effect of HRM systems on innovation performance was indirect rather than direct. All four mediating variables included in the model were found to be relevant mechanisms through which HRM systems affect innovation performance. The statistical significance of these variables, however, varied depending on the type of innovation (product, process, organizational, or marketing).Practical implicationsGreater attention should be paid to the structure and sophistication of HRM systems. Top-level managers should be aware of the linkages between HRM systems and mediators. Greater human resource orientation in strategic planning, enterprise system design, and networking practices reinforces the association between HRM systems and innovation.Originality/valueThis study advances our understanding of the mechanisms underlying the relationship between HRM systems and innovation. From an academic perspective, this study enriches the cluster literature by better integrating human resources with innovation processes. Furthermore, this study creates research opportunities by disentangling the role of different managerial practices and refining the operationalization of the mediating variables. The findings can also help managers develop human resources and innovation strategies.

How Business Idea Fit Affects Sustainability and Creates Opportunities for Value Co-Creation in Nascent Firms

A well-defined business idea is essential for nascent business sustainability in the future. The business idea must fit firm knowledge and resources to a profitable business opportunity. This work adopts the framework of value co-creation, strongly related to the service-dominant logic paradigm. We ask how does business idea fit affect new venture sustainability and create opportunities for value co-creation. We propose that a business idea that lacks fit is less sustainable, but it could create opportunities for value co-creation. This study develops and validates an empirically grounded taxonomy of business idea fit based on 729 Australian nascent firms using quantitative data generated from the results of a large study called CAUSEE (Comprehensive Australian Study of Entrepreneurial Emergence). A cluster analysis is used to identify distinct patterns of business idea fit. The empirical taxonomy developed in this study found four distinct clusters of firms, which were distinguished by the fit of their new business idea to knowledge, resources and market profitability: very good fit, low knowledge fit, low profit fit and low fit. Results show how these different patterns of fit create opportunities for value co-creation to create business future sustainability.

Two way Panel Causality Analysis for Degree of Trade Openness and Size of City

The relationship between trade openness and economic size of city has long been a subject of much interest in international literature of trade. Trade Openness might increases the economic size of city by increasing the significance of transportation modes which are mostly present in urban areas and raising the demand for marketing, financing and communication. In contrast some literature argue that protectionism generates large cities as firms cluster in an urban area to minimize its unit cost via sharing of intermediate goods, labour pool and knowledge spill-over. Thus, there exist an important causal connection between the economic size of the city and its contribution in international trade. This paper is designed to explore these causal connections using panel causality analysis. The panel consists of fourteen major cities of Pakistan and 14 years commence from 1999-00 till 2012-13. The result affirms a positive two-way causal relationship between a cities' economic size and its degree of trade openness.

Upgrading of Developing Countries Industrial Clusters Firms: Conceptual-Theoretical Framework

Industrial clusters in developing countries exhibit the properties of labour intensive, low-tech and low-cost manufacturing hubs in the global production networks. This research argues that institutional architecture of global production networks provides an opportunity to these industrial clusters of developing countries to create value through 'knowledge links' between the firms and non-firms actors of global production networks and innovation systems (ISs) in which the clustered firms are embedded. The research develops a hypothesis for a potential upgrading of industrial cluster firms through the support of knowledge institutes embedded in the network structures of regional innovation systems, national innovation systems and global production networks. The conceptual-theoretical framework is designed by connecting the cluster theory, innovation system framework and global production networks theory for an assessment of the upgrading of developing countries industrial clusters within global production networks. From an institutional perspective, this research classifies the knowledge links as 'technological-knowledge' and 'organisational-knowledge' links between the firm and non-firms actors of global production networks and innovation systems. A further future research can empirically test this designed framework through data of the industrial clusters firms, participating in the global production networks.

How Do African Firms Respond to Unreliable Power? Exploring Firm Heterogeneity Using K-Means Clustering

In this paper, we apply a novel analytical technique—k-means clustering—to understand the relationship between the growth of firms and the availability of power in sub-Saharan Africa. We develop a classification of firms and show how firm clusters are distributed across industries and countries. Our analysis reveals a surprising degree of within-country heterogeneity in the experience of firms. While previous studies have found a positive relationship between the reliability of power and firm growth, we find that such a clear relationship seems not to prevail. In other words, some firms are able to cope with an unreliable supply of power while many others do not. This may be because firms self-select into industries which promise high returns despite anticipated power problems. Further research on the conditions determining entry would provide insight into why some firms succeed in a poor business environment, while others are unable to thrive.

Firm evolution and cluster specialization: a social network analysis of resource industry change in two Australian cities

ABSTRACTEvolutionary perspectives have been increasingly applied to understanding industry agglomeration. By tracking change over time, evolutionary perspectives shed a light on firm-level and sectoral changes that are contextualized within global industrial shifts. This paper addresses a research gap in evolutionary economic geography and regional science by applying network dynamics of industrial agglomeration though industry- rather than firm-level relations. It uses network analysis techniques to track the evolution of two industry agglomerations between 1993 and 2015. It focuses on the resource agglomerations in Brisbane and Perth, Australia, to evaluate changes that occurred over the period of the most recent commodities-driven economic boom period. By highlighting changes in forward- and backward- linkages within firms in resource economy agglomerations, it unpacks the shifting position of core industries in inter-industry networks. Results indicate that firms either consolidated around competencies or broadened towards greater flexibility, the extent depending on the local environment. Professional services and specific resource-related activities gained centrality, while manufacturing and various intermediary services such as transportation and warehousing lost centrality. This indicates that core competencies were built around key resource sectors (notably oil and gas), while companies ‘shed’ activities that were beyond their core competencies, particularly those that could be outsourced to outside firms. This paper ultimately proposes a novel way of tracking the evolution of industry agglomeration, and by focusing on the resource industry it provides insight beyond other studies focusing on manufacturing or services.

The impact of knowledge attributes on technological learning routine within industrial clusters

From a knowledge processing perspective, this paper defines the concept of technological learning routine based on four distinct processes in technological learning: knowledge acquisition, knowledge maintenance, knowledge reactivation and knowledge transformation. We propose that knowledge attributes (i.e., knowledge tacitness and knowledge heterogeneity) have significant impacts on the intensity and the variety of the technological learning routine within industrial clusters. Survey data from 231 industrial cluster firms reveals that knowledge tacitness has a positive and significant influence on both the intensity and the variety of the technological learning routine, while knowledge heterogeneity is negatively related to the variety of the technological learning routine within industrial clusters. This study contributes to the literature through clarifying the operationalisation of the technological learning routine construct and providing a comprehensive understanding of the relationship between the knowledge attributes and technological learning routine within industrial clusters.

The impact of knowledge attributes on technological learning routine within industrial clusters

From a knowledge processing perspective, this paper defines the concept of technological learning routine based on four distinct processes in technological learning: knowledge acquisition, knowledge maintenance, knowledge reactivation and knowledge transformation. We propose that knowledge attributes (i.e., knowledge tacitness and knowledge heterogeneity) have significant impacts on the intensity and the variety of the technological learning routine within industrial clusters. Survey data from 231 industrial cluster firms reveals that knowledge tacitness has a positive and significant influence on both the intensity and the variety of the technological learning routine, while knowledge heterogeneity is negatively related to the variety of the technological learning routine within industrial clusters. This study contributes to the literature through clarifying the operationalisation of the technological learning routine construct and providing a comprehensive understanding of the relationship between the knowledge attributes and technological learning routine within industrial clusters.

Multiview Hierarchical Agglomerative Clustering for Identification of Development Gap and Regional Potential Sector

The identification of regional development gaps is an effort to see how far the development conducted in every District in a Province. By seeing the gaps occurred, it is expected that the Policymakers are able to determine which region that will be prioritized for future development. Along with the regional gaps, the identification in Gross Regional Domestic Product (GRDP) sector is also an effort to identify the achievement in the development in certain fields seen from the potential GRDP owned by a District. There are two approaches that are often used to identify the regional development gaps and potential sector, Klassen Typology and Location Quotient (LQ), respectively. In fact, the results of the identification using these methods have not been able to show the proximity of the development gaps between a District to another yet in a same cluster. These methods only cluster the regions and GRDP sectors in a firm cluster based on their own parameter values. This research develops a new approach that combines the Klassen, LQ and hierarchical agglomerative clustering (HAC) into a new method named multi view hierarchical agglomerative clustering (MVHAC). The data of GRDP sectors of 23 Districts in West Java province were tested by using Klassen, LQ, HAC and MVHAC and were then compared. The results show that MVHAC is able to accommodate the ability of the three previous methods into a unity, even to clearly visualize the proximity of the development gaps between the regions and GRDP sectors owned. MVHAC clusters 23 districts into 3 main clusters, they are; Cluster 1 (Quadrant 1) consists of 5 Districts as the members, Cluster 2 (Quadrant 2) consists of 12 Districts and Cluster 3 (Quadrant 4) consists of 6 Districts.

Manufacturing without the firm: Challenges for the maker movement in three U.S. cities

Participants in the U.S. maker movement generate market-worthy consumer goods from the bare bones of novel ideas and simple production equipment. For cities and policymakers, making thus represents the opportunity to develop new manufacturing industries and employment. For makers to transform themselves into large-volume producers, however, they must negotiate significant financing, production and distribution barriers without recourse to the capabilities of the large manufacturing firm. Drawing on 137 interviews with makers and maker-supporting organizations, we call attention to the challenges of “manufacturing without the firm,” as well as the extent to which the localized institutional ecosystems in which makers are embedded may help them circumvent these challenges. Our findings indicate that the maker movement's generative prospects rest on these firms' ability to negotiate problems of production and markets that have beset clusters of small firms for many decades.

Influencing Factors of Product Diversification and Innovation: An Exploration of Geographic Clustering and Product Breadth

Numerous scholars have considered the effects of the geographical clustering or agglomeration of firms. However, the debate over the relationship between firm clustering and firm outcomes has yet to be resolved. Based on our analysis, we propose that firms that are located in clusters benefit from a broader product offering or diversification. However, we also predict that increases in cluster size, beyond a certain point, yields a reduction in product breadth. Our aim in this article is to propose a roadmap for future research on product diversification, to more fully explicate the previous mixed cluster-performance results and strategic marketing implications

Stakeholder Orientation in Cruise Lines’ Mission Statements

Consistent with the extant management literature, mission statements are crucial for the sustainability and growth of any firms and have been considered to be a tool for the strategic management process. Despite the considerable attention awarded to this theme, the role of the mission statement in the strategic management of tourism firms has not been sufficiently highlighted. The present paper tries to bridge this literature gap and aims to (i) analyze the content of mission statements; and (ii) investigate the stakeholder orientation of cruise line mission statements. We apply a content analysis method to analyze the mission statements of 44 cruise lines, employing three different perspectives: (1) the inclusion of stakeholder groups; (2) mentions of specific “mission” components; (3) reference to four goals usually assigned to mission statements. The analysis was performed using the software package QDA-Miner. The results suggest that it is possible to identify four clusters of firms that present similar content in their mission statements, and that cruise companies tend to reserve a major attention to customers. This contribution presents some valuable research implications mainly useful for researchers and academics, but also maybe of benefit to professionals and investors.

Geography of knowledge sourcing, heterogeneity of knowledge carriers and innovation of clustering firms: Evidence from China's software enterprises

The increasing complexity of innovation has triggered a plenty of studies on external knowledge sourcing and innovation performance of clustering firms. While existing economic geography literature places much emphasis on the geographical dimension of knowledge flows, the relative importance of different types of knowledge sources and their geographical identity in innovation have been largely undervalued. Drawing upon a firm-level questionnaire survey and face-to-face interviews on the software firms in a Chinese regional economy, we reveal that, contrary to the conventional wisdom of distance decay and geographical proximity, no significant difference is found between local and non-local suppliers, customers, and rivals as the external sources of knowledge for firm innovation. Local universities and research institutions are identified by firms as the better and more effective sources of knowledge than others outside of the region. Whereas suppliers and rivals make no significant difference to firm innovation, knowledge obtained from customers is reported to be highly significant to the innovation performance of software firms. Findings of this research cast doubts over the prevailing uncritical and undifferentiated perception of the functioning of geography and inter-firm linkages in the processes of firm innovation as well as the under-socialized understanding of knowledge flows between different agents.

Physical distance vs. clustering as influences on contracting complexity for biopharmaceutical alliances

We examine whether the presence of alliance firms in the same regional cluster or in close physical proximity influences contracting behaviour of biopharmaceutical companies by enhancing coordination and mitigating the need for control. The literature addressing geographical proximity and alliance contracting fails to make a clear distinction between physical co-location and co-location within a cluster, although the two attributes are conceptually distinct. We find that geographic proximity is not related to contracting behaviour. The impact of co-location within a cluster is more nuanced. Specifically, we find that co-location in the San Francisco Bay Area cluster is associated with less complex contracting; however, co-location in other biotechnology clusters does not seem to be related to contracting behaviour. We believe that the informal business environment characterising the Bay Area cluster, as well as unique roles played by venture capital and law firms located in the Bay Area account for the distinct result.

Stock market liquidity, family ownership, and capital structure choices in an emerging country

This study examines the impact of equity liquidity and family ownership on capital structure decisions in an emerging market context. Using univariate analysis, I find a positive relationship between liquidity and leverage. Further, this study uses multivariate panel regression analysis with firm clustering, and controls for other variables. Contrary to studies on U.S. firms, I find insignificant empirical evidence that stock liquidity increases leverage for Egyptian firms. Moreover, evidence shows a significant positive relationship between family ownership and leverage. These results hold when employing the instrumental variables approach and estimating two-stage least Squares regressions to control for the endogeneity problem.

How Do Biotech Cluster Firms Catch Knowledge Spillovers? The Strong Impact Of The Institutional Mechanisms

This paper deals with the nature of the mechanisms supporting knowledge spillovers diffusion in high-tech clusters. The literature in the geography of innovation focuses on the existence of local knowledge spillovers, which are enhanced by geographic and technological proximity. However, the mechanisms explaining the diffusion of spillovers are not well understood. If knowledge spillovers exist, how does this knowledge diffuse among the actors? Do spillovers spread in the air, as suggested by Marshall? Or, are there mechanisms that explain their dissemination?
 Based on a firm survey data base and an original methodology, the paper explores the determinants of knowledge spillovers. The paper has twofold purposes; the first one is to determine the main mechanisms within a region enabling the diffusion of spillovers. The second objective is measuring the impact of these main mechanisms on firm’s innovation performance, indicating which of these mechanisms are more effective in transporting knowledge spillovers between agents. The results show new empirical evidences on the role played by institutions[1] in the dissemination of externalities. However, informal mechanisms, such as face-to-face contacts commonly stressed in the literature, have no significant and negative effects in this case.
 [1] Institutions are defined here as a kind of structures that matter in structuring social interactions (Hogdson, 2006). Institutions can enable or constraint choices and actions. So it can enhance agent behaviors and actions that otherwise would not exist. According to this definition, formal institutions supporting R&D and innovation activities of SMEs in the biotech industry can enable or constraint actions of these firms regarding accessibility to critical resources available in a given region such as knowledge, information, finance, etc. Finally, we can assume that Institutions structures can explain variation in regional innovation performance.

Do Manufacturing Entrepreneurs in Australia Have (or Develop) a Productivity Advantage?

Young firms are integral to productivity enhancing resources reallocation. However, they need to be more productive than the average firm to play that part. In Australia, manufacturing entrepreneurs are quite unproductive upon entry. Yet, the productivity of those that survive makes a quantum leap in one year and starts to converge to that of the mature firms. Those entrepreneurs that grow substantially by age three, termed as transformative, have a major productivity advantage. Interesting productivity dynamics are also afoot for entrepreneurs located within clusters of firms and patents that lead to productivity advantages. The findings shed light on a multitude of externalities affecting the productivity of young firms and have implications for the related government policies.