Clusters Of Firms Research Articles

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.

From suppliers to nodes in global value chains: An upgradation of the ICT cluster of Pakistan through regional and national innovation systems.

The bottom-level weaker position of developing countries industrial clusters in GVCs make them prone to the threats of non-compliance of international standards and power dominance by lead firm in GVCs as empirically evident from the traditional industrial clusters of Pakistan. In the context of sceptical literature on the upgrading of supplier firms in GVCs, this research argues that the GVC analysis is limited because the GVC approach takes a quite identifiable linear perspective because the main actors taken into account are firms along the value chain and the lack of attention to the institutional context within which local firms interacting in GVC are embedded. The main research question is how do the innovation systems at the regional and national level support industrial clustered firms in their ability to upgrade from a position of SUPPLIERS to NODES in GVC through the links with knowledge institutes embedded in ISs and GVCs. This research tests the hypotheses using an empirical study of the ICT clusters of Pakistan significantly agglomerated in the cities of Islamabad, Lahore and Karachi. The econometric analysis of cluster firms’ data shows that knowledge links with the knowledge institutes do not support the upgrading of firms in GVC. The policy implications for the upgradation of industrial clusters through the assessment of knowledge links is drawn for the other developing countries.

Exploring the Asymmetric Cost Behavior in the Context of European Non-Listed Firms

This study provides international empirical evidence for the asymmetric cost behavior of the cost of goods sold and the operating expenses in the context of the European non-listed firms. We employ a data sample of 4,177,625 firm years observations from Amadeus Database for the period 2009-2017 to explore the asymmetric cost behavior phenomenon at the EU-28 countries pool and country level. Substantial variation in the direction of the asymmetric cost behavior, across countries and firm size clusters, is observed. However, in a considerable number of cases, the cost of goods sold and the operating expenses exhibit symmetric cost behavior. We conjecture that the reasons behind the observed pattern of asymmetric cost behavior in the organizational setting of non-listed firms are the relatively low availability of entrepreneurial economic resources and the presence of entrepreneurs which might affect the resource allocation decision-making process.

Institutional pressures and cluster firms’ ambidextrous innovation: the mediating role of strategic cognition

PurposeHow do institutional pressures influence the cluster firm’s innovation? Institutional pressure consists of regulative, normative and cognitive pressures; most scholars have only focused on the influence of regulative pressure as institutional environment on innovation. In addition, the nature of strategic cognition, as the mediator act on innovation strategy, remains underexplored in the literature. Based on institution theory and ambidextrous innovation theory, this study aims to propose a framework to examine the mechanism of institutional pressures acting on ambidextrous innovation through the moderated mediating role of strategic cognition in clusters.Design/methodology/approachUsing survey data collected from 422 sampled firms in China, regression models were used to test hypotheses from the mediating role of strategic cognition between institutional pressures and cluster firm’s ambidextrous innovation.FindingsThe results showed that regulative, cognitive pressures and, especially, normative pressures have significant positive effects on cluster firms’ ambidextrous innovation. Strategic cognition presented by prospector and analyzer mediates the relationship between institutional pressure and ambidextrous innovation except defender; dynamic environment positively moderates the mediating effects of prospector cognition on explorative innovation, and negatively moderates the mediating effects of analyzer cognition on exploitative innovation.Originality/valueThe findings of this study have some implications that strategic cognition played a partially meditating role between the institutional pressure and ambidextrous innovation. Government should construct a dynamic innovation policy system according to the resource endowment in different regions; furthermore, classification support system to cluster firms with different strategic cognition should be built.

Clustering and firm productivity spillovers in Indonesian manufacturing

Earlier studies on foreign direct investment (FDI) and firm productivity have mainly focused on the general impacts of FDI on local firms’ productivity. This current research extends the existing literature by examining the heterogeneity issue in firm productivity by clustering Indonesian manufacturing firms into nine industrial groups. Two estimation methods are applied: stochastic frontier analysis and panel data analysis, which emerge three key findings. Firstly, the impacts of FDI vary among firm clusters, with six out of nine clusters are able to grasp the positive benefits of FDI, whereas three out of nine clusters experience negative productivity effects. Secondly, the labor-intensive clusters tend to receive negative productivity effects, whereas the capital-intensives clusters receive positive productivity impacts. Thirdly, the sources of FDI-productivity vary across clusters, with scale-efficiency as the most dominant source and technology advancement as the second dominant source. These findings justify the importance of estimating firms in homogenous industrial groups to gain precision findings of productivity benefits.

Financial distress and commodity hedging: Evidence from Canadian oil firms

Properly implemented risk management practices can help maximize shareholder value by reducing the expected cost of financial distress, and as such firms in deeper financial distress are expected to hedge more. However, empirical studies on such relationship have yielded mixed results. This paper documents the main determinant of hedging decisions using a newly assembled dataset for 92 Canadian-based, publicly traded oil extraction companies between 2005 and 2015. We adopt empirical techniques - Honoré's semiparametric model and simultaneous equations with the minimum distance estimator - that explicitly deal with issues that frequently arise when studying hedging decisions, namely a clustering of firms that choose to not hedge at all and the endogeneity associated with concurrent determination of hedging and borrowing decisions. Even after controlling for endogeneity and other possible drivers of hedging, we still detect a positive and statistically significant relationship between a firm's perceived financial distress and the degree to which it hedges.

Measuring technical efficiency and shadow price of water pollutants for the leather industry in India: a directional distance function approach

This paper measures the cost of reducing pollution from the Kanpur leather industry which is a prime source of pollution in India’s largest river basin of Ganges. The study uses directional distance function approach to examine the efficiency of leather firms in abating two undesirable pollutants (total suspended solids and chromium) while expanding the desirable leather output, and provides robust estimates of the marginal abatement cost for different production and pollution abatement strategies. The study is based on the primary data collected for 61 firms in Kanpur leather cluster for the year 2016. The results show that leather firms are technically inefficient and incur high abatement cost under the existing command and control regulations. The least inefficient strategy is a balanced policy that allows firms to reduce pollution without compromising their goal of output expansion. The study finds that old, small and more pollution intensive firms can abate pollution at least cost under a market-based regime. The shadow price of pollutants estimated in this paper are useful tools in determining equilibrium discharge permit price for design of market-based instruments.

Do clustered firms outperform the non-clustered? Evidence of financial performance in traditional industries

Previous research presented in numbers of studies strongly suggests that locating in a cluster generates valuable benefits to clustered firms. These include better access to suppliers and other scarce inputs, superior knowledge and innovation, a better position from which to build a social network as well as proximate to successful competitors. Yet when the positive impact of agglomeration and clustering has been questioned on the strictly financial performance of clustered firms, the results of these studies are not so convincing and question the enthusiasm for cluster theory shown by scholars, practitioners, and policymakers. The aim of our research is to enrich existing knowledge concerning the benefits of clustering, as well as to test if localisation in a natural cluster, and membership in a cluster organisation has a positive impact on financial performance. We propose to measure that by selected financial indicators such as ROA, ROS, labour productivity and Economic Value Added, focussing our research on traditional industrial sectors – plastics and textiles seated in the Czech Republic. The results of analysing firm-level data in the period of 2009–2016 fail to confirm any significant influence of firm localisation in natural cluster or membership in the cluster organisation on financial performance for firms in studied sectors. We achieved the same results by investigation of potential differences for young firms, SMEs or underperforming firms.

HIGH-PERFORMANCE LEVEL AND TECHNOLOGY MANAGEMENT AMONG WINERY FIRMS IN THE WINE INDUSTRY CLUSTER OF BAJA CALIFORNIA: A FSQCA APPROACH

ABSTRACT This paper analyzes how wineries in the wine industry cluster of Baja California in Mexico achieve a high-performance level and engage in technology management. The study uses the fuzzy-set qualitative comparative analysis approach to inquire into the necessary and sufficient conditions for firms in this industry cluster to attain a high-performance level. Our research hypothesis suggests that the presence of some resources (conditions) in the wine industry cluster of Baja California is a necessary and sufficient condition (set-theoretic relations) to achieve a high-performance level (outcome). Accordingly, this study examines the causal complexity observed in set-theoretic relations and high-performance levels in the wine industry cluster of Baja California. An important finding in this research is that winery firms in Baja California do not need to develop interdependent innovations to achieve a high-performance level. However, research and development efforts, good supplier relations, and production capacity are necessary conditions to achieve a high performance level in this cluster.

Ownership structure segmentation of Indian listed firms: a governance perspective

The research paper studies the present ownership structure of S&P BSE 500 Indian listed firms in order to take heed of the expected level of shareholder engagement and the level of governance practices of such firms. The paper employs a cluster analysis approach to identify the distinct cluster or group of firms with probably similar level of shareholder engagement and governance practices. It is found that ownership of publicly listed companies is concentrated in the hands of Indian promoters and non-promoter institutional shareholders. Thus, the institutional investors have become important owners alongside the Indian promoters and can play dominant role in the control and management of the firms they invest in. They would help to enhance corporate governance practices via shareholder activism and engagement. The study is relevant for board of directors (BOD), institutional investors and policy makers, regulators, think tanks, corporates, investors and researchers.

Ownership structure segmentation of Indian listed firms: a governance perspective

The research paper studies the present ownership structure of S&P BSE 500 Indian listed firms in order to take heed of the expected level of shareholder engagement and the level of governance practices of such firms. The paper employs a cluster analysis approach to identify the distinct cluster or group of firms with probably similar level of shareholder engagement and governance practices. It is found that ownership of publicly listed companies is concentrated in the hands of Indian promoters and non-promoter institutional shareholders. Thus, the institutional investors have become important owners alongside the Indian promoters and can play dominant role in the control and management of the firms they invest in. They would help to enhance corporate governance practices via shareholder activism and engagement. The study is relevant for board of directors (BOD), institutional investors and policy makers, regulators, think tanks, corporates, investors and researchers.

Matching traceability and supply chain coordination: Achieving operational innovation for superior performance

Operational innovation is effective in overcoming supply chain challenges and achieving superior performance. In this study, we build on the socio-technical system (STS) perspective to explore operational innovation in the supply chain context. Specifically, a system comprising traceability and supply chain coordination (SCC) is proposed as a type of Internet-based operational innovation. Survey data of manufacturing firms were analyzed by a configuration approach. Three clusters of firms were identified with distinct configurations of traceability and SCC. As predicted by the STS perspective, firms can realize operational innovation by matching traceability and SCC properly, thereby achieving superior operational performance and customer satisfaction. Our findings expand the understanding of operational innovation in the supply chain context. This study contributes to the literature of operational innovation, STS and supply chain management. Managerial implications about operational innovation in Internet-based supply chain management are provided.

The resilience of green stocks during COVID-19: a clustering approach

There is growing evidence that ESG investments have demonstrated higher resiliency to the COVID-19 pandemic shock. While the performance of mutual funds is largely documented, there is limited evidence on stocks, especially in the European market. In this paper we focus on the environmental dimension of firms and we identify a green cluster among listed companies in the EU using a comprehensive database of environmental information. We let the data speak: we identify three clusters of firms (green, non-green and brown) by using clustering techniques and we evaluate their financial performances (return, risk and liquidity) over the full sample period and around the COVID-19 Crisis. We find that green firms yielded a lower return than non-green firms, especially after the Paris Agreement. However, in March 2020, green firms performed better than the other clusters. We find evidence that the COVID-19 period is not a special case, since green firms perform generally better during market contractions. We then extend standard asset pricing models by including the Green Risk Factor, the difference between the green and brown portfolios’ returns and we find that the Factor is significant for a large fraction of firms suggesting that climate risk is priced in stocks.

Bridging capital and performance in clustered firms: The heterogeneous effect of knowledge strategy

This study addresses the debate on the advantages and disadvantages of bridging capital for organizational performance in cultural tourism clusters, while also analyzing the moderating role of knowledge strategies -exploration and exploitation. The results of the empirical study show an inverted U-shaped relationship between bridging capital and both financial and non-financial organizational performance. Additionally, the findings reveal a divergent role for knowledge strategies. Exploration strategy reduces, and even reverses, the negative effect of a high level of bridging capital, especially on financial performance. However, exploitation strategy increases this negative effect of a high level of bridging capital. Clustered firms should seek a balance between advantages and disadvantages to determine the most appropriate level of bridging capital. In addition, when there is a high level of bridging capital, they should implement a knowledge exploration strategy rather than a knowledge exploitation strategy.

The role of the leverage effect in the price discovery process of credit markets

Starting from the analysis of a levered firm’s capital structure, I show that corporate default risk becomes measurable through the leverage effect, i.e., the negative correlation observed between stock returns and changes in stock volatility. In this model, the firm’s debt-to-asset ratio governs the elasticity of default probabilities relative to equity prices. I use a large dataset of S&P 500 firms and an extended timeframe (2008–2019) to examine the model’s empirical implications. First, the firm’s corporate leverage enhances the transmission of pricing information from the stock to the credit default swap (CDS) market. Second, equity and credit markets are more likely to be co-integrated when firms employ a higher debt-to-asset ratio. Although the stock market generally dominates the price discovery process, a small cluster of highly-leveraged firms exhibits a dominant CDS market share. Under the effect of corporate leverage, the credit market attracts informed trading and arbitrage resources.

Implementing energy efficiency measures: do other production resources matter? A broad study in Slovenian manufacturing small and medium-sized enterprises

Literature has largely investigated barriers to energy efficiency in industrial firms. Recently, research is looking at the non-energy benefits accompanying the adoption of energy efficiency measures that may contribute to overcoming these barriers. In our study we take an innovative perspective by specifically exploring the relationships between energy efficiency measures and other production resources, being assessed by their importance and capability of firms to manage them efficiently. By analysing 10% of Slovenian small and medium-sized manufacturing firms, our exploratory findings show that decision-makers carefully look at the multiple effects (either positive or negative) energy efficiency measures may have on a number of other production resources, particularly on those closer to the production (shop floor). Additionally, companies seem to struggle in efficiently managing the most important production resources, thus suggesting that energy efficiency measures should be looked in close consideration to other resources, which represents a new barrier to energy efficiency not accounted by previous research. Further, we could not detect significant differences between clusters of small versus medium-sized firms and energy intensive versus non-energy intensive ones, differently from previous research that was emphasizing the larger perception of barriers in smaller and less energy intensive firms. Our findings may challenge the discussion over incentive schemes for energy efficiency measures by promoting those with the largest (positive) implications for other production resources.

The Case of the ‘Missing Middle’ in the Indian Manufacturing Sector: A Firm Level Analysis

This study revisits the ‘missing middle’ phenomenon of the Indian manufacturing sector. Though ‘missing middle’ has been described and analyzed by many studies, a key gap in the literature that we note is that the phenomenon of ‘missing middle’ has been taken as an accepted artifact of the Indian manufacturing sector. We look into the size-structure relation based on the argument that ‘class interval based’ and ‘aggregate level’ analyses of the industrial sector may be misleading. We use the firm level data available for Annual Survey of Industries (ASI) to check for the ‘missing middle’. We look for the trend both at the aggregate and disaggregate levels. We are unable to find a ‘missing middle’, either at the aggregate or disaggregate level, once we drop the classification of data based on apriori class intervals. We find that most firms in India are small firms and there is no evidence of a clustering of firms at higher size categories.

Factor Clustering with t-SNE

We cluster asset pricing factors using the t-distributed Stochastic Neighborhood Embedding (t-SNE), one of the most empirically successful dimensionality reduction techniques. t-SNE endogenously separates the strategies into six distinct clusters. The first five clusters resemble the standard value, momentum, investment, profitability, and volatility strategies. The sixth cluster is new, and we denote it as the Firm cluster. We show that the first five clusters are low dimensional and are dominated by their corresponding first principal components, while the Firm cluster is intrinsically high dimensional.

Firm Growth Performance and Relative Innovation Orientation of Exploration vs Exploitation: Moderating Effects of Cluster Relationships

ABSTRACTThis article studies the latent mechanisms underlying the non-linear correlation between a firm's relative innovation orientation of exploration vs exploitation and performance. We also investigate the moderating effects of cluster relationships on this relationship. Using a sample of 638 SMEs in four industry clusters in Tianjin, China, we confirm an inverted U-shaped correlation between a firm's relative innovation orientation and performance, and explicate the latent mechanisms underlying such an inverted U shape. We find that the number and strength of a firm's cluster relationships can moderate this inverted U-shaped curve: the former moves the turning point of the inverted U shape toward exploratory orientation, and the latter moves the turning point toward exploitative orientation. For improved performance, we discuss appropriate innovation balancing strategies for cluster firms with different cluster relationships, and optimal cluster strategies under different innovation-balancing conditions. This study adds to the increasing scholarly effort on latent mechanisms behind U-shaped relationships and moderating effects on such relationships in management research.

Non-safety costs: A novel methodology for an ex-ante evaluation

The costs related to occupational safety or, more precisely, non-safety aspects in the industry represent a moral and economic burden for individuals, employers and governments. Despite the importance of these costs, firms rarely recognize the real cost of non-safety and the opportunity to invest in improving their safety management system. The time and resources needed to collect appropriate, historical data for the evaluation of non-safety costs are indeed a problem for firms, most of all for small and medium enterprises. This paper develops a methodology for an ex-ante evaluation of non-safety costs, with a specific focus on SMEs, based on the collection of easily deducible data. In particular, the different cost items related to non-safety costs and the factors influencing them are identified. The cost functions for each cost item and, subsequently, the shapes of the cost functions are determined; this allows to cluster firms according to the shapes of functions of each cost item, as well as to understand which are the main occupational safety and health factors that distinguish different small and medium enterprises into peculiar groups. An example application of the methodology in a sample of Italian SMEs is proposed. The application paves the way to some remarks for policy and industrial decision-makers and advice for further research.