Academic journal article Management Revue

Balancing Firm and Network-Based Resources to Gain Competitive Advantage: A Case Study of an Artisanal Musical Instruments Cluster in Germany

Academic journal article Management Revue

Balancing Firm and Network-Based Resources to Gain Competitive Advantage: A Case Study of an Artisanal Musical Instruments Cluster in Germany

Article excerpt

The question of whether firms gain competitiveness through local networks and clusters becomes more relevant than ever as globalization proceeds. This is particularly true for traditional and craft-based clusters, districts and business networks. A central question emerging for these types of networks is: (How) can they build competitive advantage using local production systems and network ties as core resources? The present article aims at shedding light on this issue by presenting a case study of an artisanal cluster operating in the manufacturing of classical musical instruments. Focusing on a resource-based perspective and using a qualitative research approach, the paper explores the critical resources necessary for generating competitive advantage through local networking. It critically investigates how competitive advantage is gained for the network and which are the drivers of sustaining competitive advantage in a dynamic view.

Key words: artisanal clusters, competitive advantage, local versus global linkages, resource-based view

(JEL: L14, L22, L69, 033)

1. Introduction

Despite a vast body of research dealing with clusters, industrial districts (IDs), or business networks, and the issue of competitiveness (Pinch et al., 2003; Tallman et al., 2004; Giuliani, 2005), only a few studies pay attention to traditional, craft-based networks or clusters and the way competitive advantage is achieved through local and global linkages in these constellations (Parlili, 2009; Sacchetti & Tomlinson, 2009; Petrou & Daskalopoulou, 2009). Only recently researchers like Yan et al. (2011), Felzensztein et al. (2010a, b), Festing et al. (2010) and Staber (2009) have begun to explore the specific contexts and architectures of SME-based clusters in traditional industries (for example, agriculture or textiles) or craft-oriented niches (such as luxury watches or musical instruments). The central questions regarding networks and clusters operating in such industries is: To which extent and how do these traditional production systems use local network resources versus firm-specific resources to build competitive advantage for global markets?

The present article presents a case study of a German artisanal cluster of mainly small and medium-sized enterprises (SMEs), operating in the production of classical musical instruments. Using a resource-based perspective and a qualitative approach, the article elaborates the critical resources necessary for generating competitive advantage through local networking. It critically explores how competitive advantage is gained for the network versus the individual firm within the cluster and which are the drivers of sustaining competitive advantage in dynamically changing, global markets.

2. Theoretical considerations and research propositions

2.1 Clusters, networks, IDs and the issue of competitiveness

Localized production systems continue to play an important role for the competitiveness of firms and regions. Research on regional clusters, business networks, or IDs, and firms' competitive advantage has seen a strong revival (Porter, 2000; Becattini et al., 2009). Although these approaches are often investigated from different disciplinary angles, there is a common denominator depicting some overarching principles and hypotheses on how network/cluster interaction works and what the impact is on the firm's competitiveness.

Quster theory, in essence, contends that firms integrated in clusters benefit from advantages of co-location with other firms and actors and from agglomeration economies within the cluster. In particular, Porter's "diamond" model of the competitiveness of regional clusters (Porter, 1 990, 2000) establishes a link between a firm's cluster participation and its competitive position. In his model, economic advantages associated with geographical proximity and the nature of interaction of the cluster members, such as knowledge spillovers and innovation, specialized labour pools, access to technology and other resources, generate benefits to firms within clusters and add to their firm-level competitiveness. …

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