Growth‐Oriented Small Firms and the Nature and Extent of Local Embeddedness: The Case of a Traditional Metalworking Cluster

Abstract

ABSTRACT Clusters now form a central element in many regional economic development policies. Location within a cluster of related industries is thought to increase a firm's competitive advantage resulting in higher output and productivity growth rates than in similar firms located beyond the cluster. This study focuses on owner‐managers operating small firms within a traditional cluster of metalworking industries and empirically examines the relationship between growth‐orientation and the extent and nature of cluster embeddedness. The results indicate only a limited number of differences in growth‐orientation given variations in levels of cluster embeddedness. Contrary to conventional wisdom, many of the most growth‐oriented entrepreneurs focus their activities outside the cluster, especially in terms of market‐based linkages. However, those firms with more advanced process technologies do tend to show above average within cluster linkages.