Geographic Concentration of Companies and Relationship Resources at the Horizontal Level.
| Autor | Moreira, Vinicius Farias |
1 Introduction
The cluster as an option for a regional economic development strategy can be found in different types of industries, present in developed and developing countries, in small and large economies, in rural and urban areas, and at different geographic levels, such as nations, states, metropolitan regions, or even cities (Eisingerich, Bell, & Tracey, 2010; Porter, 2000).
The terms used to analyze the advantages of a locality are diverse, such as industrial districts, industrial clusters, industrial agglomerations, local productive and innovative arrangements, localized production systems, technological districts, etc. (Giuliani & Bell, 2005; Lastres, Cassiolato, & Campos, 2006; Malmberg & Maskell, 2002; Porter, 1998). In any case, it is important to recognize that such agglomerations have been popularized in the specific literature as clusters, highlighting their importance in the national and international context for job generation, economic growth, technological development, and export potential (Suzigan, Garcia, & Furtado, 2005).
In this paper, the concept of cluster established by Michael Porter was used as a reference. This author introduced it to Strategic Management (Lazzeretti, Sedita, & Caloffi, 2013) and has been a reference for public policy academics and developers (Martin & Sunley, 2003; McCann & Folta, 2008). In seeking to identify the competitive advantage of countries, Porter (1991) ended up highlighting the existence of clusters as propellers of superior performance, independent of the performance of the countries. A cluster is understood as a group that is geographically close to interconnected companies and associated institutions in a particular field, bound by common and complementary interests (Porter, 2000).
A cluster is usually defined based on the horizontal dimension in which many companies operate in the same industry, i.e. produce a similar final product (Malmberg & Maskell, 2002). Within it, interconnected companies have additional advantages such as easy access to specialized suppliers of raw materials and equipment, facilitated channels for customers, service providers, related industry companies, and associated institutions (universities, support agencies, and commercial associations, for example), while competing and cooperating with each other (Giuliani, 2013; Molina-Morales & Martinez-Fernandez, 2004; Porter, 1998; 2000).
It is assumed that the development of a cluster and its companies are directly related, happening simultaneously, and hence separate and isolated analysis of either of these levels is insufficient to understand the process of value creation (Ter Wal, 2013). In this sense, and considering the literature on cooperative relationships, this paper seeks to know: In what way does cluster participation enable firms to create superior conditions through relationships between firms? The paper aims to offer new insights on how to identify the value creation process through the relationships between companies of the same cluster, based on the evidence from an important agricultural cluster in Brazil. According to Chim-Miki and Batista-Canino (2017), organizations that compete and cooperate, in so-called coopetition, compete for the overall benefits of their transactions and not only for market share. The process of value creation in inter-organizational cooperations is the phenomenon this paper focuses on.
The empirical field is the fruit-growing cluster of the San Francisco River Valley and its mango and table grape exporting companies. According to data from the Brazilian Ministry of Development Industry, and Foreign Trade (MDIC), mango and table grape exports are quite representative in fruit exports, and the Sao Francisco River Valley (SFRV) accounts for about 90% of the volume exported. The fruit cultivation practiced in the northeastern semi-arid region, using modern irrigated agriculture techniques, allows fruit production to occur throughout the year, and is an important factor of national development.
This study aims to analyze how horizontal relationship resources collaborated in the value creation process of fruit producing and exporting companies geographically concentrated in the Sao Francisco River Valley. The study makes advances in the knowledge of the area by considering the microeconomic level of the firm in the cluster, which has received less attention among mainstream cluster studies (Giuliani, 2013, Hervas-Oliver, Albors-Garrigos, Miguel, & Hidalgo, 2012; Rigby & Brown, 2015), also highlighting the strategies of companies used to create value through their relationships with other companies in the cluster.
In addition to the Introduction, this paper includes a topic on the theoretical Basis, presenting the central pillars that give rise to the benefits of relationships between companies; the Methodological Aspects, which indicate the criteria and conducts used for the research; the Results and Discussion, highlighted in the section entitled Horizontal Relationship Resources of the San Francisco River Valley; and finally, the Conclusions.
2 theoretical Basis
Local resources are those intangible resources and capacities shared by companies within the same cluster, and suggest the application of the same logic geared towards achieving a sustainable competitive advantage (Barney, 1991), making it hard for companies outside the cluster to understand. This type of knowledge is based on routines related to the history of the companies, business practices, specific institutions, and multiple links between the actors (Molina-Morales & Martinez-Fernandez, 2004). This perspective is strongly influenced by the Knowledge-Based View (KBV), which emphasizes the interactions and knowledge exchanges between the cluster companies and the knowledge creation capacities of the cluster (Arikan, 2009; Malmberg & Maskell, 2002; Tallman, Jenkins, Henry & Pinch., 2004). This involves an additional understanding of the sustainability of competitive advantage for clusters and for companies within them, subsidizing the understanding of the resources of the locality (Hervas-Oliver & Albors-Garrigos, 2007; Tallman et al, 2004). This flow of knowledge circulating in a cluster (knowledge spillovers) enables companies located in this geographic space to introduce innovations faster than others located outside it (Bahlmann & Huysman, 2008).
Local rivalry is an aspect that allows companies to structure and strengthen themselves against international rivals and competition from big players. Furthermore, its dynamics fuel all other aspects of the cluster's structure (Verschoore, Wegner, & Balestrin, 2015). It is supposed that in cases where companies within a cluster are in vigorous competition with each other, the logic of spatial organization may fail (McCann & Folta, 2008; Porter, 1998). The cooperation is based on the fact that each individual company would have to overcome great obstacles to gain access to the opportunities when compared to joint action. Companies in a cluster use different network types to access the knowledge of local and more distant actors (Giuliani, 2013). Knowledge and learning are social and territorial processes, therefore local resources in which the personal contact is fostered by geographical proximity and there is a concentration of economic activity are key elements in the transfer of knowledge (Bahlmann & Huysman, 2008). Among local actors, horizontal relationship resources, such as those developed and shared by companies producing similar goods and competing with each other in the cluster environment, are generally highlighted and have a positive influence on their international competitiveness (Giuliani, 2013; Porter, 1998; Ter Wal, 2013; Zen, Fensterseifer, & Prevot, 2014).
The relational view is explored by Dyer and Singh (1998), who indicate that cooperation between companies aims to establish value creation links between them, which can be critical resources in the search for competitive advantage in environments where companies maintain multiple and frequent relationships.
For Dyer and Singh (1998), relational resources are protected by mechanisms aimed at preserving their promised returns, notably: a) the causal ambiguity of these resources; b) the discomfort of temporal compressibility, indicating that even if the competitors understand what generates the returns, they can not be quickly replicated; c) the possibility that the assets present in the interconnectivity currently require values that no longer invite to imitation and whose roots were planted in a previous period; d) the difficulty of finding partners with strategic resources complementary to the relational capacity; e) the possibility that the capabilities of a potential partner are indivisible or inaccessible (for example, due to its relationship with other companies); and, finally, f) it may be that the institutional environment is socially complex, involving the existence of formal rules (legal controls) or informal rules (social controls) that combat opportunism and encourage cooperative behavior. These mechanisms are basically the same as those applied to the difficulty of imitating strategic business resources (Barney, 1991; Dierickx & Cool, 1989).
Competition will coexist with cooperation because they occur in different dimensions and between different players, generating a mutual gain. This hybrid of competitive cooperation, recognized as coopetition (Brandenburger & Nalebuff, 1996; Chim-Miki & Batista-Canino, 2017), is the expected behavior within a cluster, leading to strategic management based on coopetition, i.e. managing the inherent tensions of these relationships, and becoming a key to the cluster's success, for it allows for cost savings and stimulates innovation (Bengtsson, Raza-Ullah, & Vanyushyn, 2016; Chim-Miki & Batista-Canino, 2017).
Cluster members have privileged access to specialized information about the market, technical...
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