Do clustered firms outperform the non-clustered? Evidence of financial performance in traditional industries

Abstract

Previous research presented in numbers of studies strongly suggests that locating in a cluster generates valuable benefits to clustered firms. These include better access to suppliers and other scarce inputs, superior knowledge and innovation, a better position from which to build a social network as well as proximate to successful competitors. Yet when the positive impact of agglomeration and clustering has been questioned on the strictly financial performance of clustered firms, the results of these studies are not so convincing and question the enthusiasm for cluster theory shown by scholars, practitioners, and policymakers. The aim of our research is to enrich existing knowledge concerning the benefits of clustering, as well as to test if localisation in a natural cluster, and membership in a cluster organisation has a positive impact on financial performance. We propose to measure that by selected financial indicators such as ROA, ROS, labour productivity and Economic Value Added, focussing our research on traditional industrial sectors – plastics and textiles seated in the Czech Republic. The results of analysing firm-level data in the period of 2009–2016 fail to confirm any significant influence of firm localisation in natural cluster or membership in the cluster organisation on financial performance for firms in studied sectors. We achieved the same results by investigation of potential differences for young firms, SMEs or underperforming firms.