Moderating influence of internal resources on cluster externalities

Purpose – The purpose of this paper is to assess the benefits to firms arising from their geographical concentration; paying particular attention to the impact of specialized employees, information and knowledge spillovers and a collective reputation. Design/methodology/approach – The authors have taken into account two main approaches: a cluster one, where location may increase firms’ competitiveness; and the resource-based view, where internal resources are the key for firms’ success. Empirical evidence has been gathered from the Ham cluster in Spain combining secondary and primary data. The authors undertook a Tobit regression model since the dependent variable is limited. Findings – The authors observe that firms with human resources tend to benefit more from cluster externalities. On contrary, R&D and advertising investments induce firms to isolate themselves from crowded areas and prevent any local leakage. Research limitations/implications – It would be interesting to better understand the role that human resources play; undertake a longitudinal analysis; and take into account the resources of other proximate firms. Practical implications – Local advantages depends the maturity of the industry by reducing the attractiveness of cluster locations through greater competition in the input and final markets; while internal resources may improve a firm's ability to absorb these externalities, they may also create leakage that benefits neighbouring firms. Originality/value – It combines two approaches evaluating the moderating influence of internal resources on local externalities. It also offers new empirical evidence from a low-tech industry.