Best practices of the SME mining suppliers in the Antofagasta region of Chile

In regions whose industrial structure is organized around one or more large firm corporations, the best practices of small and medium enterprises (SMEs) depend on where firms are located in the supply chain. This paper studies 351 SMEs in the Antofagasta Region in Chile between 2007 and 2008, where multinational and public mining companies are the drivers of the local economy and the government is promoting the formation of a mining cluster. Structural equation model (SEM) is used to show that first-tier SME mining suppliers, directly related to large corporations, follow business practices that promote international certification, quality control and investment in innovation, while in contrast second-tier SMEs are more focused on avoiding insolvency and client orientation. These results cast doubt on the formation of a mining cluster in the region and suggest the need for differentiated policies in these two groups of SMEs, especially those related to knowledge transfer.