Clusters, networks and firms' product success: an empirical study

Purpose – This paper aims to analyze the relationship between different kinds of networking and the performance of firms in industry clusters. In particular, it studies the importance of local embeddedness and external openness for product success in two wine clusters in Chile and Italy. Design/methodology/approach – The analysis is based on original firm‐level data. A case‐study methodology is combined with econometric analysis. Findings – The empirical analysis shows that local embeddedness positively influences the development of successful products, but with decreasing returns. More importantly, however, the author finds that external openness is more significant than local embeddedness for explaining firm success. Practical implications – The paper has implications for managers not working in current “hot spots” who are keen to transform their environments into thriving economies. The author recommends that managers look beyond the local context and establish extra‐cluster linkages with relevant knowledge sources, which may vary from sector to sector. Managers should tap into local knowledge but avoid local over‐embeddedness. Originality/value – The paper contributes to the understanding of how and whether networks influence the performance of cluster firms.