Simon Harris and Chris Carr 63
Many important similarities and differences in strategic behaviour between countries may be attributable to the institutional and ownership structures of firms, or the characteristics of those who manage them, as new institutional theory would indicate (for example, DiMaggio and Powell, 1983; Scott, 1995;
Kostova and Roth, 2002). The values research can lead international business researchers and managers to expectations that are unlikely to be fulfilled in practice in many areas. Further, we begin to see interactions between institutions and national values that are complex and which can generate apparently inconsistent and surprising outcomes. The need for further empirical research in this context thus appears urgent, but the difficulty of doing so, and in particular of separating institutional from national values effects, has been brought sharply into focus.
When engaging in international business by meeting, discussing, negotiating and agreeing with managers in other countries, international managers can prepare themselves for different purposes behind business abroad, and in this, a knowledge of national values gleaned from the popular books of Geert Hofstede and Fons Trompenaars might well help to indicate where these differences might lie. The case examples shown in this chapter help to illustrate how they may be manifested in practice. These differences may be deeply rooted and unlikely to change, and will need to be accommodated by being culturally aware if successful business relationships are to develop over time. But this study shows that international managers should not pay too much attention to the scriptures of the ‘values’ researchers when preparing for these interac- tions. The data used by these researchers came from salaried executives in large companies. This does not mean that cultural differences are unimportant when dealing with owner managers in smaller firms. It means that they are more difficult to understand and to deal with on the basis of present research, and that building successful business relations across nations will take time and cultural sensitivity.
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5
A New Perspective on Parenting Spin-offs for Cluster Formation
Manuel P. Ferreira, William Hesterly and Ana Teresa Tavares
Introduction
The factors propelling the competitiveness of industry clusters have been subject to extensive research. While these factors are reasonably understood, the conditions that lead to the emergence and evolution of clusters still warrant further examination. This chapter proposes that the emergence and development of at least some clusters are endogenously driven by the generation of new insider entrepreneurial spin-offs1 from incumbent firms. The specific conditions that lead to spin-off opportunities are beyond the scope of this chapter, but because these opportunities exist – for example because of technological or market changes or employee dissatisfaction – new firms will be founded. The majority of these spin-offs shape the cluster’s birth, configuration, technological specialization and evolution by remaining in the same region as the parent firm (Arthur, 1990; Zander, 2003). Hence, knowledge of the genesis of inter-firm ties in a cluster may permit a better understanding of the formation and evolution of the inter-firm organizational forms that prevail in clusters. This line of enquiry builds on recent research on how the emergence and growth of clusters are essentially an entrepreneurial process and on research studying entrepre- neurship as a regional phenomenon associated with unusual innovativeness and dynamism (for example Saxenian, 1994; Zander, 2003).
Clusters represent a pool of available resources (for example human re- sources and suppliers) upon which new firms can draw and so they are im- portant in the founding of new firms (Marshall, 1920; Arthur, 1990; Porter, 1998). Moreover, clusters ease the identification of opportunities for firms to
‘pursue collective strategies in conjunction with the competitive strategies of the individual members’ (Gulati, 1998, p. 305). Clusters also facilitate the identification of new opportunities because clients are likely to look at firms in
the cluster for specific technological expertise. Finally, the cluster makes the development of the entrepreneur’s support network easier because the entrepreneur’s pre-existing relationships with other firms in the cluster lower entry barriers and increase access to intangible resources such as business expertise (Saxenian, 1994).
The theme of this chapter is twofold: first, it proposes that clusters evolve endogenously through entrepreneurial spin-offs and second, it explores the characteristics of leader firms (here called flagships) and their role in clusters.
The idea of endogenous evolution primarily serves to highlight the relationships between the new spin-offs and parent firms and other offspring and how such ties may carry substantial networks benefits. These parent–progeny (Klepper, 2001; Phillips, 2002) and progeny–siblings relationships can be crucial to overcome the potential liabilities of newness and smallness (Stinchcombe, 1965; Hannan and Freeman, 1977) and the absence of legitimacy (Carroll, 1984) often characterizing small and new spin-offs. They increase the likelihood that the spin-offs will be successful as they help to identify opportunities and secure start-up resources (Singh et al., 1986; Oviatt and McDougall, 1995;
Higgins and Gulati, 2003). Hence, while contributing to the research on the evolution of clusters as a function of entrepreneurial activity and to the literature on the value of networks in supporting entrepreneurial dynamism and success, the chapter shows that some leader firms actually have a primary role in cluster evolution because these are the firms that will gestate more, and more successful, entrepreneurial spin-offs. The leaders are parent firms that generate a larger number of spin-offs because they offer greater network benefits to their offspring. Moreover, leader firms should be easily identifiable because they are larger, well-performing, deeply embedded and extensively connected higher-status central firms.
Understanding industry clusters may be important for the location decisions of multinational corporations (MNCs). MNCs increasingly seek knowledge from industry clusters (Tallman et al., 2004) to augment their own know- ledge capabilities (Tallman and Fladmoe-Lindquist, 2002). As much of the know- ledge accessed is location-bound, it requires a fair degree of local embeddedness for effective absorption. Issues such as the understanding of inter-firm dynamics in the relevant cluster, the extent to which networks of firms in the cluster are more closed or open and the patterns of inter-firm knowledge flows are essential aspects that require scrutiny by MNCs. By and large, MNCs may understand these issues by studying the genesis of the ties and configurations of firms in the cluster.
The remainder of this chapter reviews literature on cluster dynamism through entrepreneurial action. A model termed ‘motherhood’ is then ad- vanced which is distinct from the traditional parent–progeny literature and is based on the social network benefits that some leader firms offer their
Manuel P. Ferreira, William Hesterly and Ana Teresa Tavares 69
offspring. The chapter concludes with a discussion of cluster evolution, implications for theory and policy, and directions for future research.