Clusters and rivalry: does localization really matter?☆
Introduction
Since the early nineties, we record an increasing number of studies focused on geographical clustering. Regardless of the approach, the level of analysis or the theoretical background, these studies share a common interest: to understand and to explain the relationship between localization and the growth of the firm.
Cooperation among firms in clusters has been viewed and deeply studied, as a powerful determinant of the competitive advantage of clusters and of the individual firms in such clusters. Rivalry also occurs in the literature as a possible explanation of the success of clusters and individual firms, but it has attracted much less attention in terms of either theoretical speculation or empirical research (Piore & Sabel, 1984; Porter, 1998a, p. 181).
Our paper addresses rivalry as a cognitive and social dimension of competition and, by drawing on managerial and organizational cognition studies on rivalry, it focuses on the role of localization in this context. Who are the rivals of clusters’ firms? Where are they located? How does their geographical localization influence the process whereby they make sense of their competitive environment? By addressing these questions we help to reduce the lacuna mentioned above.
Because of the limited theoretical and empirical material on the topic, we have adopted an exploratory approach. We collected data on 22 firms. The in-depth study of cases has been suggested as a useful method for building theory when the received theory is insufficient or contradictory and therefore inadequate for explaining the phenomena (Eisenhard (1989), Eisenhard (1991)). We used a set of semi-structured interviews to collect data from a sample of small firms belonging to a geographical cluster of the packaging machinery industry in Northern Italy, in what is known as “Packaging Valley” (Enright, 1991; Porter, 1990). In line with our theoretical approach and research intent, we adopted a visual-mapping technique as a tool for collecting data on rivalry.
The paper is organized as follows. We begin with a review of the literature on rivalry in geographical clusters, and we illustrate the basic features of managerial and cognition studies on rivalry. We then describe our methodology and the collection of our data, after which we present and discuss our results. We conclude by developing some propositions and indicating the implications for future research.
Section snippets
Rivalry in geographical clusters
We define a geographical cluster as a spatially concentrated group of firms that compete in the same or related industries and are connected through a set of vertical and horizontal relationships (Porter (1990), Porter (1998a)). Geographical clusters have been studied at the aggregate level (Antonelli, 1999; Jaffe, Trajtenberg, & Henderson, 1993) and at the firm level, with a focus on the impact of the cluster on the resources and activities of the individual firm (Enright, 1991; Piore & Sabel,
Method and data collection
In order to answer our research questions, we needed to address two problems. First, we needed to collect data on a sample of firms that belong to an industrial cluster but are not service or manufacturing firms with a largely local market. The idea here is to overcome the biases that, in our opinion, have to some extent marred the results of previous studies. Secondly, we needed a research methodology that allowed us to record actors’ perceptions of their rivals and to study their sense-making
Results
In this section, we present the results of our analysis. The different research questions are presented in turn, followed by a description of our results and comments as related to the particular questions. Is rivalry a “small number” phenomenon? Concerning the number of rivals identified by the firms in the cluster, we organized the results in Table 1.
For each firm, we show the number of rivals identified and their localization. On average respondents indicated 4.91 rivals. The firms in the
Propositions
Three propositions can be advanced on a basis of the results presented above, and these in turn can contribute to the discussion on rivalry in geographical clusters.
The first proposition arises from our observations of “how many” and “who” the rivals of cluster firms are. Our results show that generally speaking the usual capacity for observing a small number of firms holds true in the case of the firms belonging to our cluster, as well. Although firms in the cluster share resources with many
Conclusions
Despite the growing interest in the sources of competitive advantage in geographical clusters, questions concerning the identity of the rivals of firms in the cluster and how firms compete with these rivals have rarely been addressed. In this paper, we depart from the conventional approach in studies on geographical clusters, and look instead at rivalry and competition as two distinct phenomena. Assuming competition to be one of the criteria necessary to define geographical clusters, the part
Acknowledgements
We would like to express our gratitude to Annalisa Chiorboli, Marco Iarussi, Francesca Pitta, Alex Santi, Enrico Sassi, Luca Sestilli for their invaluable help in the field work. Building and maintaining the relationships with tens of firms proved an essential step towards the completion of this project.
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Previous versions of this article were presented to the Strategic Management Society, 19th Annual International Conference, Berlin 1999 and to the EGOS 17th Colloquium, Lyon, France, 2001.