Growth-Oriented Small Firms and the Nature and Extent of Local Embeddedness: The Case of a Traditional Metalworking Cluster

Clusters now form a central element in many regional economic development policies. Location within a cluster of related industries is thought to increase a firm's competitive advantage resulting in higher output and productivity growth rates than in similar firms located beyond the cluster. This study focuses on owner-managers operating small firms within a traditional cluster of metalworking industries and empirically examines the relationship between growth-orientation and the extent and nature of cluster embeddedness. The results indicate only a limited number of differences in growth-orientation given variations in levels of cluster embeddedness. Contrary to conventional wisdom, many of the most growth-oriented entrepreneurs focus their activities "outside" the cluster, especially in terms of market-based linkages. However, those firms with more advanced process technologies do tend to show above average within cluster linkages. Copyright 2004 Gatton College of Business and Economics, University of Kentucky..