Straining but not thriving: Understanding network dynamics in underperforming industrial clusters

Abstract

We investigate the micro-connectivity drivers of network change in an underperforming industrial cluster in Argentina. Our analysis is based on data collected in two onsecutive surveys, conducted in 2005 and 2012, of entrepreneurs in the electronics cluster in Cordoba. We find that social and institutional factors influence microconnectivity choices at the local level, while firms that are more open to non-local knowledge have the tendency to behave like external stars, potentially limiting the flow of non-locally generated knowledge into the cluster network as it grows. We interpret these results using the intuitions from strain theory and suggest that strain may engender an 'everyone for themselves' mentality in the most open cluster firms as they seek to escape from a condition of underperformance. We posit, also, that local social and institutional ties are relevant for most cluster firms to survive, but are not sufficient for the cluster to thrive.