Social Capital Determinants of Preferential Resource Allocation in Regional Clusters

By Pulles, Niels J.; Schiele, Holger | Management Revue, April 1, 2013 | Go to article overview

Social Capital Determinants of Preferential Resource Allocation in Regional Clusters


Pulles, Niels J., Schiele, Holger, Management Revue


Regional clusters are known to facilitate firms in achieving higher levels of competitive advantage. This observation suggests that cluster firms manage to obtain better competitive resources than firms outside the cluster. The strong social ties in regional clusters are considered to be a crucial factor in the resource exchange between cluster firms. In this paper, we integrate this social perspective from the cluster literature with a recent stream in the resource-based view (RBV) literature. This stream seeks to explain the phenomenon of preferential resource allocation. That is, how can firms obtain better resources from a resource environment that is shared with competitors? Although preferential resource allocation has revealed to be a relevant concept, little is known about its actual antecedents. We introduce a conceptual framework that builds on the social interactions among cluster firms to explain the concept of preferential resource allocation. More specifically, we develop propositions on the antecedents of preferential resource allocation by building on the structural, relational, and cognitive dimensions of social capital theory, and a firm' s embeddedness in a regional cluster. In so doing, this paper provides insights that may contribute to a better understanding of the competitive advantage of cluster firms, and it opens onto current streams in the RBV literature.

Key words: regional clusters, preferential resource allocation, resource competition, inter-firm resource exchange

(JEL: L10)

1. Introduction

Firms benefit from being located in a cluster. For example, firms in clusters tend to be more innovative than isolated firms (Baptista & Swann, 1998; Molina-Morales & Martinez-Fernandez, 2003). In fact, research in economic geography has highlighted that innovations have a tendency to appear in a concentrated way in selected centers (Breschi & Lissoni, 2001; Feldman, 1999). As a result, firms in regional clusters appear to have an advantage and have shown to be more profitable than their isolated competitors in the same industry (Fabiani & Pellegrini, 1998).

The concept of regional clusters refers to a group of interconnected actors within a particular field and their characteristic of tight geographical boundedness (Porter, 1998; Tallman, Jenkins, Henry, & Pinch, 2004). However, proximity alone between firms is not a sufficient explanation for the competitive advantage of regional cluster firms firms (Kukalis, 2010; Mitchell, Burgess, & Waterhouse, 2010; Zaheer & George, 2004). Instead, the social connectivity and interaction between the actors seem to be a more adequate explanation (Dijk & Sverrisson, 2003; Doloreux & Parto, 2005; Steinle, Schiele, & Mietzner, 2007), as these factors are argued to be facilitated by the proximity and size of the cluster (Kajikawa, Takeda, Sakata, & Matsushima, 2010). Within the stream of literature addressing the social interaction within cluster firms, it has been argued that the strong ties among cluster firms enable resource exchange on different levels in the cluster (e.g., Brown et al., 2007; Brown et al., 2010; Gulati, Lavie, & Madhavan, 2011). For example, it has been shown that members of a cluster have a higher intensity of resource exchange compared to firms that do not belong to a cluster (Molina-Morales & Martinez-Fernandez, 2003). Tallman, Jenkinks, Henry, and Pinch (2004) observed that economic geographers view resource exchange as critical in defining the competitive advantage of regional clusters.

However, resource exchange alone might not be sufficient to explain the competitive advantage of firms in clusters. From a resource-based view (RBV), competitive advantage is a relative notion that implies that firms must obtain better resources than their competitors to be competitive. Firms with a comparative advantage in resource access will more easily attain a position of competitive advantage (Hunt & Davis, 2008). …

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Social Capital Determinants of Preferential Resource Allocation in Regional Clusters
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