Clusters Of Firms Research Articles

A Review on Perspectives of Cluster Formation in Promoting Competitive Advantage for Small and Medium Enterprises and Sustainable Economic Growth

This article reviews the currently available literature to examine how clusters provided competitive advantage for small and medium businesses, in what ways it led to economic growth and directs the policy interventions of the Indian government. The evolution of clusters and the contribution of researchable issues in evolution are examined. The role of clusters in creating competitive advantage and the research related to redefining the evolution is presented. External economies are the benefits that occur to a business from the external environment of the business, which are beyond its control and results in cost benefits. The firms in cluster promoted the establishment of suppliers around their customers. This in turn benefitted both the supplier and the firm by reduced transportation cost and increased physical accessibility. The firms are also able to avail customized and specialized inputs from the supplier. Cost economies benefitted the firms and led to improved economic growth. Cluster approach has positive implication and important place in economic development of the country. The review of literature clearly brings up the developments in the concept of clustering as experienced across the world and the initiatives of the Government of India matching the developmental needs in this area of entrepreneurship development. The clusters have made better availability of information, in acquiring specialized resources, creation of innovation and competitiveness in the world markets.

Innovation and the network position of firms: the case of the Eskişehir–Bilecik–Kütahya ceramic cluster in Turkey

Since the 1990s, clusters, which are business systems created by firms concentrated in a particular geographical area, have attracted the attention of researchers from different fields. This study aims to explore the network structure of the Eskisehir–Bilecik–Kutahya (EBK) ceramic product cluster, which accounts for nearly 50% of the production of ceramic products in Turkey, and to analyze the relationships between the network positions and innovation performance of firms. To that end, in-depth interviews were conducted with 56 firms/institutions in the cluster. Social network analysis was used to generate network graphs demonstrating the buyer–supplier relations and technical advice ties of the actors in the cluster, and the relationship between the innovation performance of firms and their positions in the network was estimated with the Heckman selection model. The findings of the study show that firms in the EBK ceramic cluster have access to the basic activities in the value chain within the cluster and that the network of technical advice has a small number of actors and ties. In addition, degree centrality, which represents the number of ties the firms have, and closeness centrality, which represents the distance of actors from other actors in the network structure, increase the innovation performance of firms.

The relationship among enterprise clustering, prices, and productivity in Ethiopia’s manufacturing sector

AbstractWe use census panel data on Ethiopian manufacturing firms to analyze how enterprise clustering in local markets covaries with firm‐level output prices and physical productivity. We find a negative and statistically significant relationship between the density of firms that produce a given product in a given location and the local price of that product. We also find a positive and statistically significant relationship between the density of firms that produce a given product in a location and the physical productivity of same‐product firms in the location. These results are consistent with the notion that increased clustering of firms generates higher competitive pressure and positive externalities. Across firms that produce different products, we find no statistically significant relationship between enterprise clustering and firm‐level output prices and productivity. We also find no clustering effects across towns. Our results suggest that while clustering can impact firm performance, the advantages are narrow in scope.

Business Models and Sustainability Performance in European B Corps

Literature on sustainable business models has burgeoned in recent years, identifying different taxonomies to capture the variety of business models that are addressing environmental and social other than economic aspects. However, further knowledge is required to explain the link between sustainable business models (SBMs) and the achievement of sustainable performance. The paper aims at addressing this gap by exploring how SBMs relate to results achieved – taking into account the social, environmental and economic outcomes – by focusing on firms certificated as B Corps. We perform an analysis on original survey data on B Corps located in Italy, Spain and the UK. Findings confirm the variety of business model innovations adopted by sustainable firms, which are driving to different results. Specifically, important sustainable outcomes are achieved both by firms implementing environmentally-oriented BMs and socially-oriented BMs. Two clusters of firms emerged based on outcomes (high/low performance in all the three outcomes considered). Business models focused on substituting with renewables and natural processes, maximising material and energy efficiency, adopting a stewardship role and on encouraging sufficiency are more likely to be associated with firms with better economic, social and environmental results.

Eco-innovation and its role for performance improvement among Chinese small and medium-sized manufacturing enterprises

Due to the growing public quest for environmental protection, small and medium-sized manufacturing enterprises (SMMEs) are under pressure to adopt eco-innovation to improve their operations. However, whether and how eco-innovation efforts can bring performance improvements may rely on the implementation level of eco-innovation and other traditional environmental management (TEM) practices. Drawing on the contingency theory, we develop and empirically test a model which proposes the existence of different firm clusters of SMMEs based on their eco-innovation implementation levels and that the performance improvement associated with eco-innovation practices is contingent on the firm clusters and TEM practices (i.e., internal source reduction, external compliance and communication, and internal management and control). Using survey data collected from 382 SMMEs in China, our cluster analytic results reveal two firm clusters of SMMEs characterized by three types of eco-innovation (technology, management, and marketing) implementation. From the results, we observed eco-innovation adopters involving 225 SMMEs (58.9% of the sample). The rest of 157 SMMEs (41.1% of the sample) are labeled as eco-innovation planners. T-test results show that the implementation levels of eco-innovation and TEM practices, as well as environmental and economic performance improvements, are different between eco-innovation planners and adopters. Results from hierarchical regression analyses further show that implementing certain eco-innovation practices jointly with TEM practices is beneficial for performance improvements. External compliance and communication are helpful for management innovation to bring environmental performance among eco-innovation planners, but it can be detrimental to environmental image together with marketing innovation. For eco-innovation adopters, internal source reduction is helpful for both technology and management innovation to deliver environmental performance. Technology innovation and internal source reduction can jointly bring economic performance improvement among eco-innovation planners, but such joint efforts can weaken the economic performance improvement for eco-innovation adopters. Our paper contributes knowledge on the role of eco-innovation to bring performance gains among SMMEs in China, a major manufacturing hub in Asia servicing global production demands. We also examine the performance contingencies of eco-innovation with TEM practices in the SMMEs, providing practical implications for them to improve operations, as well as policy insights for governments to promote the performance benefits of eco-innovation, particularly targeting for the smaller-sized manufacturers in the industry.

Sites of qualification: the motorcycle rider airbag and the production of safety

ABSTRACT The paper mobilises the distinctive notion of ‘sites of qualification’ as a means of providing an expansive understanding of how innovative products are designed, produced and brought to consumer markets. We focus on the development of a new safety product for motorcyclists, the rider airbag, in which inflatable body protection is either incorporated into, or worn underneath, textile jackets and leather suits. The paper follows the airbag’s trajectory across a range of different sites, including lead firms and their territorial settings; MotoGP racetracks, mobile laboratories and professional riders; courts of law; and showroom and archive locations. The paper’s sites of qualification approach expands understandings of innovation by constructing a dialogue between two sets of literatures: actor-network approaches to the qualification of products; and narratives which understand economic innovation as emerging through clusters of agents and firms within industrial districts. The conclusion emphasises that sites of qualification are integral to the ways in which technical products such as the rider airbag are made social.

The effect of the small-firm dominated ecology on regional innovation

Small firms are often viewed as the remedy of regional development and growth, but there is little empirical evidence if the cluster of innovative small firms thrives regional innovation performance. This paper attempts to answer a timely policy question of “How vital is small-firm dominated ecology for regional innovation?” by investigating the mix of firm size within a region. The results find that the effect of the proportion of small firms in a region is nonlinearly associated with the regional innovation activity, proposing that a mix-model of large and SME firms induces more innovation commercialization. The results of this study shed some light for policymakers to assess the “knowledge searching” strategies of firms when choosing locations.

Do manufacturing entrepreneurs in Australia have (or develop) a productivity advantage?

Young firms are integral to productivity enhancing resources reallocation. However, manufacturing entrepreneurs in Australia are quite unproductive upon entry. Yet, the productivity of those that survive makes a quantum leap in one year and converges 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. These firms are the ones contributing the most to resources reallocation. The findings shed light on a multitude of externalities affecting the productivity of young firms and have implications for the related government policies.

Productivity spillovers and human capital: A semiparametric varying coefficient approach

This paper examines whether there are productivity spillover effects among clustered firms and, if so, whether a firm’s human capital affects its absorption of spillovers. To analyze these questions, we use a semiparametric spatial autoregressive production function in which the coefficients are smooth unknown functions of firms’ human capital. The varying coefficients not only allow flexible interactions between human capital and other inputs, but also permit heterogeneous spatial dependence and spillover effects among firms. Although the commonly used spatial matrix captures the possible learning opportunities among firms, we hypothesize that a firm with more human capital is better at seizing these opportunities. We address the simultaneity issue arising from the endogeneity of inputs by using the proxy variable method. Finally, we apply the model to analyze the productivity spillovers and the human capital effect of China’s computer and peripheral equipment industry from 1998 to 2007.

How does the ambidexterity of technological learning routine affect firm innovation performance within industrial clusters? The moderating effects of knowledge attributes

This paper focuses on the influence of the ambidexterity of technological learning routine on firm innovation performance within industrial clusters. Specifically, this study seeks to examine how the combined dimension and the balance dimension of the ambidexterity of technological learning routine affect innovation performance of cluster firms. In addition, this study examines the moderating effect of knowledge tacitness and knowledge heterogeneity on the relationship between the ambidexterity of technological learning routine and innovation performance. Survey data from 217 industrial cluster firms in China reveals that the combined ambidexterity of technological learning routine promotes firm innovation performance, whereas the effect of the balance ambidexterity of technological learning routine on innovation performance is not supported. Besides, knowledge tacitness moderates the relationship between the ambidexterity of technological learning routine and firm innovation performance within industrial clusters, while the moderating effects of knowledge heterogeneity on the relationship between combined or balance ambidexterity of technological learning routine and innovation performance are not supported. This paper brings greater theoretical insights into the notion of technological learning routine by applying the ambidexterity perspective, and advances the understanding of the contextual factors between the routine ambidexterity-innovation performance relationship through elucidating the moderating role of knowledge attributes.

Clusters and firm-level innovation: A configurational analysis of agglomeration, network and institutional advantages in European aerospace

Clusters have the potential to strengthen firm innovation. However, our knowledge of how firms are affected by the external resources found in clusters, and how this relates to their level of internal resources, is limited. There are seemingly conflicting theoretical assumptions and empirical findings on both the individual and combined impact of these resources. Our paper seeks to reconcile these by adopting a configurational lens, allowing for multiple pathways to innovation. Applying fuzzy-set Qualitative Comparative Analysis (fsQCA) to a sample of firms in European aerospace clusters, we uncover that innovation outcomes can only be explained through combinations of internal assets, and external resources provided by geography, networks, and institutions. No single resource, in isolation, is sufficient. We distinguish between a total of seven pathways. These vary from weak firms benefitting from localized knowledge spillovers, to strong firms with extensive non-local networks. We find that the relationship between internal and external resources is causally complex, with even the potential for negative innovation impacts. Hence, we provide a first step towards harmonizing the literature's different approaches to understanding clusters’ impact on firms.

Endogenous effects and cluster transition: a conceptual framework for cluster policy

ABSTRACT The clustering of firms in related fields has a positive impact on economic performance and innovative behaviour. The cluster lifecycle model provides a framework in order to add a temporal dimension to this ongoing debate. This model conjectures that clusters undergo various phases, in each of which they exhibit distinct characteristics in terms of size, economic performance and knowledge sourcing pattern. While there is strong evidence of a dynamic interplay between knowledge networks and clusters, we know little about how the structural configurations of a knowledge network engender cluster transition, and how these dynamics can be captured and integrated into policies. First, this paper contributes to this debate by providing a conceptual framework that accounts for cluster evolution based on endogenous micro-forces that are immanent in a knowledge sourcing structure. Secondly, this article underlines the failures of recent network-related cluster policies and discusses how the developed framework alleviates these issues.

Creative entrepreneurship and urban space: Exploring the location preferences of creative professionals in Αthens during the economic recession

Δημιουργική επιχειρηματικότητα και αστικός χώρος: Εξερευνώντας τις προτιμήσεις εγκατάστασης των δημιουργικών επαγγελματιών στην Αθήνα κατά τη διάρκεια της οικονομικής ύφεσηςΟι σχέσεις μεταξύ της δημιουργικότητας, του χώρου και της οικονομικής δραστηριότητας έχει εξεταστεί με πολλούς τρόπους στην ακαδημαϊκή έρευνα. Από τη μια πλευρά, η συσπείρωση επιχειρήσεων σε έναν τόπο έχει βρεθεί ότι προάγει τη δημιουργικότητα στο αστικό περιβάλλον (βλέπε θεωρίες clustering). Από την άλλη πλευρά, τα δημιουργικά άτομα φαίνεται ότι ενθαρρύνουν την οικονομική ανάπτυξη των πόλεων, έλκοντας εργοδότες σε μέρη όπου επιθυμούν να διαμείνουν. Και τρίτον, τα ειδικά χαρακτηριστικά ενός τόπου, ιδιαίτερα των αστικών τόπων, έχουν αποδειχθεί ότι έχουν θετικό αντίκτυπο στην ατομική δημιουργικότητα. Η μελέτη μας προσπαθεί να εμπλουτίσει την παραπάνω σχέση, διερευνώντας τους οικονομικούς και μη οικονομικούς παράγοντες που ωθούν δημιουργικούς εργαζομένους να επιλέξουν το κέντρο της Αθήνας ως τόπος εγκατάστασης των επιχειρήσεών τους και τα άμεσα και έμμεσα οφέλη αυτών των παραγόντων σε σχέση με τη δημιουργική τους εργασία. Με αυτόν τον τρόπο συγχωνεύουμε τις μικρο- και μακρο απόψεις που υπάρχουν για τη σχέση μεταξύ δημιουργικής επιχειρηματικότητας και τόπου σε ένα περιβάλλον που μπορεί να έχει πειραματικό χαρακτήρα, δεδομένου ότι ο αστικός ιστός στην Αθήνα έπρεπε να αναδημιουργηθεί λόγω της οικονομικής κρίσης του 2009 και των επακόλουθων μέτρων λιτότητας.

Neural Networks in Accounting: Clustering Firm Performance Using Financial Reporting Data

ABSTRACTThis paper considers the use of neural networks—namely self-organizing maps (SOMs)—to analyze and cluster firms' financial performance. Applying SOMs to financial statement data is a consolidated practice; however, in this paper SOMs are used to overcome several limitations encountered in previous works on financial reporting indicators such as the small number of companies in the sample, the limited number of ratios, the homogeneity of the economic sector, and the lack of explanation and further analysis of the SOM outputs. This study uses a large financial dataset related to more than 3,000 companies belonging to every economic sector; it demonstrates that SOMs can effectively process a large dataset of heterogeneous data. Moreover, the SOM results are supported by detailed explanations of the research methodology applied, and further traditional financial analysis addresses the black box nature of the SOMs and can help professionals in the understanding and use of SOMs.

Agglomeration and trade performance – evidence from the Norwegian salmon aquaculture industry

Geographical concentration of industries tends to be important for firms that depend on innovation and are intensive in the use of specialized technology and labor. In this paper, we investigate the interaction between agglomeration and trade performance in the Norwegian aquaculture industry. We include a variable for regional clustering in a standard gravity model and estimate its impact on different margins of trade. When controlling for destination country, we find that firms that operate in clusters obtain higher export prices and ship more frequently and in smaller bulks. For a highly perishable product like fresh salmon, this may suggest that firms in clusters are served by more efficient supply chains bringing the product to market with timely and efficient logistics.

The Legitimacy of Clustered Firms: A Dynamic Perspective

A country’s competitive advantage is often characterized on a specific industry in which firms are drastically inclined to clustering together. The previous literature has limited discussion on how the clustered firms through constantly renovate their own abilities and by complying with the institutional legitimacy to gain recognition and support among the other members of the cluster so that they can gain access to cluster’s resources to create and maintain its competitive advantage. Although there are researches focusing on how industrial structure help clustered firms to generate competitive advantages, some empirical studies show that in a fast-changing environment, firms usually fail to adapt to sudden policy or technological changes. Thus, based on dynamic absorption capacity and institutional legitimacy, this study seeks to explore how the clustered firms absorb, learn, integrate and exploit new abilities continuously, as well as develop and utilize external knowledge and capabilities to adapt to rapid environmental changes. In addition, emerging economies have attracted an increasing amount of attention because of rapidly expanding economies and rapid-growth markets provide tremendous business opportunities, especially the China which affects many countries’ economies in the word. The results of this study express that the dynamic absorptive capabilities have positive effect on a clustered firm’s performance, but if a clustered firm always conform to institutional legitimacy which will result in performance dilemma, which is different from other previous research.

Achieving Scale Collectively

This paper argues that rental market interactions allow small firms to increase their effective scale and mechanize production, even when each individual firm would be too small to invest in expensive machines. We conduct a novel 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. Our results show that the rental market is quantitatively important for mechanization and productivity since it provides a workaround for other market imperfections that keep firms small. We also show that the rental market shapes the effectiveness of policies to foster mechanization, such as subsidies to purchase machines.

Особливості управління в морських портових кластерах

The article emphasizes that seaports are regarded as a concentration of economic activity associated with the arrival and service of ships and cargo at the ports. As a consequence, some seaports may become a concentration of logistic activities, commercial centers, hubs and transport hubs, while others do not involve such activities. Ports are also industrial areas. Due to the need to store in seaports such commodities as oil, coal and iron ore, some production activities, including chemical and steel, are often located in seaports. Ports are also trading centers. For some goods, such as steel, grain and oil, trade occurs where they are stored because buyers and sellers want to check the goods or because shipping pricing information is elementary for trading companies. Thus, handling, transportation, logistics, specific production activities and specific trading activities are highly interconnected. The cluster perspective allows analysis of such agglomeration processes. The cluster perspective enriches existing management theories in seaports. It is noted that the analysis of management in seaports has largely been reduced to the role of port authorities. Despite the central role of port authorities (port clusters), it can be argued that the port authority is a kind of arrangement to improve cluster management but not the only organization. Other arrangements include the formation of associations, the development of public-private partnerships and the use of networks. It is established that the quality of cluster management depends on the level of transaction costs in the cluster and the sphere of coordination over price. Four variables are identified that affect port cluster performance. Cluster management can be evaluated by analyzing these four variables. It is emphasized that port authorities are no longer a central element and play an important role in managing the cluster, but their role is interconnected with the activities of private firms, associations and public-private organizations. The analysis of the management in the port clusters allows to complement the understanding of the port and competitiveness. The cluster management options apply to the port cluster of Rotterdam. Experts received answers on a wide range of cluster management issues. The empirical results confirm the relevance of the cluster management approach. An analytical framework for the analysis of port cluster management is proposed. The results of the conducted studies are the basis for further empirical studies. Among the interesting areas of research are comparative analysis of port clusters, comparative analysis of the roles of port cluster management bodies, and analysis of the role of leadership firms in port clusters, with particular attention to the possible roles of leadership firms in the ports of developing countries.

Innovating in the textile industry: An uncoordinated dance between firms and their territory?

Considering the process of innovation development, this paper aimed to examine the effect of different dimensions of proximity and the level of coordination that exists in a textile cluster. This study employed a qualitative method, based on in-depth interviews that were conducted with two leading firms in a textile cluster in Valencia, Spain, which is subject to intense competition from producers in Asia. Firms were selected according to the criteria of innovation development and opportunity. This is a pilot study that precedes a more ambitious one. The results suggested that firms’ innovations are developed in an isolated, discontinuous, marginal, and uncoordinated way, and clustering has a marginal effect. Furthermore, despite high geographical and cognitive proximity, low social proximity is maintained by the low level of trust between the firms. These findings may be of significant practical value for practitioners and institutions. Firms can gain a better understanding of the importance of being located in a cluster, as this is a key factor for their survival under intense competition. However, geographical proximity is not sufficient, and firms need to cooperate with each other and share their ideas and experiences. In addition, institutions should interact more with companies, speak their language, meet their needs, and devise strong cluster initiatives. This study provides a more comprehensive understanding of how institutions and firms interact within a cluster in the process of innovation development and elaborate upon different dimensions of proximity among firms.

Panacea or Illusion: An Empirical Analysis of European Science Parks in the Case of Follower Regions

Science and Technology Parks (STPs) have been a key policy instrument in promoting the clustering of science and high-tech firms in a particular territory and have been perceived as the solution to accelerating structural change and innovation performance within a region. Hence this policy instrument, despite the variety of conceptual approaches underlying its use, gained much popularity and benefited from significant investments across European regions and especially follower regions, which were attempting to catch up. This paper addresses these issues by discussing the many interpretations of a science park and attempting to contribute to a unified definition by studying the role of these policy instruments within the innovation system framework, and by analyzing a set of 55 science parks in the UK, Spain and Portugal to highlight key functions commonly associated with better performing parks. JEL Codes: O30