Formation and dissolution of inter-firm linkages in lengthy and stable networks in clusters

Firms aspire to take advantage of technical and business networks through inter-organizational interactions to improve performance. Consequently, researchers are increasingly focusing on the dynamics and implications of network formation at both local and global levels. The recent research trend does not consider a monotonic effect and simplistic approach to proximity because proximity is a complex multidimensional concept. Using data from a foodstuffs cluster in the Valencian region (Spain) and advanced econometric methods such as Exponential Random Graph Models, this study aims to clarify the detrimental effects and complementarities that may arise among proximity dimensions. After controlling for network endogenous forces and firm characteristics, findings reveal the negative effect of cognitive and institutional proximity dimensions on the creation of linkages in advanced stages of the cluster life cycle. Furthermore, social proximity and geographical proximity favor the formation of inter-firm relationships and reinforce the organizational dimension.