Cognitive Coordination, Institutions and Clusters : An Exploratory Discussion

It is argued that cognitive coordination plays acentral role for trust-based cooperation and communication among entrepreneursin a regional cluster. This analysisalso proposes an explanation for howand why cognitive coordination may be especially efficient within regionalclusters.Cognitive coordination, when applied to innovation processes,means that communication and knowledge sharing costs are lowered, which mayboost the rate of interactive innovation. A regional cluster functions as a structure of incentives that is defined byexplicit and implicit contracts, reputation, and competitive mechanisms. Italso facilitates cognitive coordination by defining specialized cognitivecategories and identifying certain dominant solutions to coordinationproblems. The analysis presents the cluster perspective, identifies the industrialactivity areas in which a cluster benefits from market coordination, anddiscusses horizontal and vertical relations between firms, and theincentive-related and cognitive aspects of coordination. Next, it addresses theprocesses of cognitive coordination, how entrepreneurs may build knowledgejointly with partner firms, and how shared knowledge may also be a cognitivesocial institution. It is argued that focal points often occur through analogymaking, which has both information and cognitive costs. A study of 54 furniture manufacturers in the Salling district of Denmarkillustrates how cognitive coordination may look and occur in a cluster. Thetheoreticalcase study showed how unplanned, decentralized coordinationtook place between independent firms. (TNM)