Cluster Absorptive Capability in Developing Countries an Evolutionary Perspective, in Old and New Economy

In past few years scholars of industrial dynamics and of localised production systems (LPS) (industrial districts, clusters, milieux, local innovation systems, local networks and the like) have increasingly stressed the importance of a cognitive approach as a tool for analysing and interpreting evolutionary dynamics of such agglomerated firms. Studies have emphasised the importance of the development of networks with external sources of information and knowledge as well as the diffusion and combination of external codified knowledge and tacit localised one (among others, Camagni, 1991, Freeman C., 1991, Rullani, 1994; Schiuma 2000). From one side, external sources of knowledge may serve to rejuvenate highly idiosyncratic pattern of local knowledge diffusion and avoid “lock in” (Arthur, 1988) and “entrophic death” (Camagni, 1991) phenomena. On the other side, there has been a growing concern in analysing the mechanism and economics of knowledge diffusion among local actors, with the final expectation of providing an interpretative framework of endogenous technological change in the cluster. In advanced countries literature diffusion and generation of knowledge in LPS have gone through at least three conceptual phases characterised mainly by different interpretations of knowledge and of the “collective use of it”. Briefly, the first one of them draws heavily from Marshallian (technological) externalities, “spillovers”, as it conceives knowledge as a public public or club good, freely available “in the air” via labour turn over, demonstration effects, informal communication of socially embedded actors and the like. In this perspective, LPS have been considered a meso-level locus of learning (collective learning) or a “cognitive laboratory” capable of generating somehow innovations on an endogenous basis, relying on “localised knowledge spillovers”. This stream of thought comprehends both the neo-marshallian tradition of Italian scholars (cf., among others, Becattini 1979, 2000; Bellandi, 1989) as well as the French school of GREMI and the geographers in general (Camagni 1991; Capello 1999; and see also Lawson, Lorenz 1999, Lawson 1997, Asheim, 1996). The latter, in fact, emphasise the concept of collective learning as an externality in itself, defined as a dynamic process of accumulating knowledge, transferred even against the will of the first inventor among economic agents via interactive mechanisms based on common rules and common organizational and managerial procedures (Capello, 1999). What results is that knowledge accumulation and generation is highly dependent on the presence of externalities favoured by firms’ embeddedness, trust and geographical proximity. This perspective is also supported by a different body of econometric-based analysis that provide evidence of the importance of localisation for the innovative activity (see Audretsch, Feldmann, 1996; Jaffe, Trajtenberg, Henderson, 1993; Feldman, 1999), thus reinforcing the view that geographical concentration of innovative effort accrues innovative capability as it generates spillovers. 1 Please note, those studies, are explaining spillovers conditional to the industry and the industry life cycle: “there is evidence that there are geographic limits to the extent to which knowledge may spillover, however this is not to say that location is important to innovation in all circumstances. There is further evidence that the degree to which location matters to innovation depends upon the type of activity, the stage of the industry life cycle and the composition of activity within a location” (Feldmann, 1999, page 21). A second stream of study of localised knowledge, instead emphasises more the importance of combination of localised tacit with external codified knowledge, stressing the fact that knowledge do not spill freely in the air but, instead, it is highly idiosyncratic and difficult to imitate. Different contributions are worth mentioning: from one side, the combination of tacit-codified knowledge (which is considered essential for new knowledge generation) is supported by the Nonaka, Takeuchi (1995) and Nonaka (1991) framework of socialization (tacit-tacit), externalisation (tacit-explicit), and combination (explicit-explicit) and internalisation (explicit-tacit) (among others, Becattini, Rullani 1993; Morgan, 1997, Lawson and Lorenz, 1999; Cohendet, Kern, Mehmanpazir; Munier, 1999). Though these contributions have stressed the importance of combination of different pieces of codified and tacit knowledge, little has been done to shed light on how this combinations occur. In this frame, interesting insight has been offered by a recent cognitive approach of study of LPS (see Belussi, Gottardi, 2000; Belussi Pilotti, 2001, among others) that shifts the emphasis from the meso level of analysis to a more micro level, acknowledging the importance of firm cumulative learning in the local system evolutionary change. Whereas, Antonelli (1999; 2000) emphasises the combination of pieces of complementary knowledge, owned and controlled by different agents, in the process of generation of new knowledge and technical change that he defines as “collective knowledge”. Furthermore, he stresses the “knowledge trade-off”, between the conflicting effects of property rights on innovation incentive and on information dissemination. In his perspective knowledge is not freely available in the air either, as it is hindered by appropriability regimes and communication costs. Other perspectives can be added in this second frame, that concentrate on knowledge flows and on the combination of tacit and codified knowledge (see e.g. Albino et al., 1999; 2001 and Schiuma, 2000). The third stream of studies is based on recent contributions of Cowan, Foray (1997) and Cowan, David, Foray (2000) and undelrines to the overestimation of tacit knowledge in generating new knowledge or technical change. Applications of this insight to LPS have to be found in Breschi, Lissoni (2001) and empirical evidence in Lissoni (2001), that reconsider previous approaches of “localised knowledge systems” and stress the importance of epistemic communities in the process of knowledge transfer and further knowledge generation, supporting, with a different vision, the fact that knowledge is not “in the air” but circulates within a number of relatively close networks. This brief review of main approaches to the economics or analysis of dynamic evolution of localised firms, runs parallel to the lack of evolutionary or cognitive perspective in the literature concerning industrial clusters in developing countries (cf. Bell, Albu, 1999). In fact, most of the studies in that context have been relied on the concept of “Collective Efficiency” (Schmitz, 1982; 1995; 1999) whose reference to knowledge flows was mainly constrained into that of knowledge spillovers (first type of interpretation). Only recently, they acknowledged the importance of technological capability accumulation and learning, as means of overcoming lock in and “entrophic death” phenomena, likely to occur in developing countries. In their words, “the cluster literature emphasises the need to improve co-operation and local governance. Even the resources for product and functional upgrading are seen mainly to come from within localities. Links with wider world are frequently acknowledged, but they are weakly theorised” (Humphrey and Schmitz (2001), p. 14). Nevertheless, latest approaches in that direction refer to governance issues and follow a “Global Value Chain” approach (Gereffi G., 1994; 2001; Humphrey J., Schmitz H., 2001; Sturgeon T.J., 2001; Gereffi G., Humphrey J., Kaplinsky R., Sturgeon T.J., 2001) that identify global foreign buyers or suppliers as the main carriers of technological knowledge towards the cluster. Furthermore, other contributions (cf. Konstadakopulos D., 1999) have adopted a “collective learning” perspective à la GREMI in high tech clusters in NICs. Finally, a systematic study of “local innovation systems” in Latin America have been carried out by Lastres and Cassiolato (cf. Cassiolato, Lastres 1999; 2001 and Mytelka 2000). The overview of studies running parallel in advanced and developing countries’ clusters suggeststhat there is room for further investigation of knowledge flows and learning mechanisms in thelatter context. Drawing from both review of empirical evidence in developing countries andtheoretical contributions in this field, a framework has been developed, that extends Cohen andLevinthal (1989;1990) Absorptive Capability to a meso level of analysis, thus defining the “ClusterAbsorptive Capability” (CAC) as that of identifying, assimilating and exploiting knowledge comingfrom sources external to the cluster. This perspective is centred on firm’s level capabilities andparticularly assumes that knowledge acquisition and diffusion patterns are shaped more byparticular key actors rather than by the bulk of firms operating in the cluster. In fact, it is throughlocal private or institutional “Knowledge Gatekeepers” (KGs) (cf. Gambardella, 1993; the conceptof KG is derived from Allen, 1977), that knowledge is channelled towards the cluster andeventually (according to local non-KGs firms capabilities) diffused and recombined in thegeneration of new knowledge. A taxonomy of different levels of CAC has been developed, torepresent different evolutionary stages of such LPS, from a static (low level of CAC, characterisedby the absence of KGs and with few knowledge exchange and creation) to a more dynamic one(with strong KGs and knowledge exchange and generation among them and the other local non-KGs). Reviewed empirical evidence of clusters in developing countries (in the old and neweconomy) will be presented to support the framework developed.This framework will allow for a comparison among different levels of Cluster AbsorptiveCapabilities and performances and will shed light on the differences both in knowledge acquisitionand generation in clusters performing differently.Finally, this approach could be potentially fruitful to investigate with a cognitive perspective acomplex phenomenon as that of LPS, that cannot be fully understood by means of technologicalspillovers and requires a purposive analysis of firm capabilities as well as a thorough understandingtacit-codified conversion processes. ReferencesAlbino V., Garavelli A.C., Schiuma G., "Knowledge Transfer and Inter-Firm Relationship: The role of the LeaderFirm", Technovation Journal, Vol. 19, 1999.Albino V., Garavelli A.C., Schiuma G., “Measuring the knowledge codification in learning organisations”,Technovation Journal, Vol. 20, 2001.Allen T.J., "Managing the flow of technology: technology transfer and the dissemination of technological informationwithin the R&D; organization", MIT Press, 1977Antonelli C., “Collettive Knowledge communication and innovation: the evidence of technological districts”, RegionalStudies, Vol. 34.6, 2000.Antonelli C., “The evolution of the industrial organization of the production of knowledge”, Cambridge Journal ofEconomics, 23, 1999.Arthur W.B., “Competing technologies: an overview”, in Dosiet al., “Technical change and economic theory”, PinterPubl., 1988.Asheim B., “Industrial districts as “learning regions”: a condition for prosperity”, European Planning Studies, Vol. 4(4), 1996Audretsch D.B., Feldmann M.P., “R&D; spillovers and the geography of innovation and production”, The AmericanEconomic Review, Vol. 86, N. 3, June 1996.Becattini G., “Dal settore industriale al distretto industriale”, Rivista di Economia e Politica Industriale n. 1, 1979.Becattini G., “Il distretto industriale : un nuovo modo di interpretare il cambiamento economico", Rosenberg&Sellier;,Torino, 2000.Becattini G., Rullani E., “Sistema locale e mercato globale”, Economia e Politica Industriale, n. 80, 1993Bell M., Albu M., “Knowledge systems and technological dynamism in industrial clusters in developing countries”,World Development, Vol. 27, N°9, 1999.Bellandi M., “Capacità innovativa diffusa e sistemi locali di imprese”, in Becattini G., “Modelli Locali di Sviluppo”, IlMulino, Bologna, 1989.Belussi F., Pilotti L., “Knowledge creation and collective learning in the Italian LPS”, 2001.Belussi Gottardi, “Models of localised technological change”, in Belussi F., Gottardi G. (eds.) “Evolutionary patterns oflocal industrial systems. Towards a cognitive approach to the industrial district”, Ashgate Publishing Ltd, 2000.Breschi S., Lissoni F., “Knowledge spillovers and Local Innovation Systems: a critical survey”, Luic Papers, n. 84,2001. Camagni R., “Introduction: from the local milieu to innovation through cooperation networks”, in Camagni (ed.)“Innovation Networks: spatial persepectives”, Belhaven Press, London, 1991.Capello R., “Spatial transfer of knowledge in high technology milieux: learning versus collctive learning processes”,Regional Studies, Vol. 33, 4, 1999Cassiolato J.E., Lastres M.M. (eds.), “Globalizacao e inovacao localizada: experiencias de sistemas locais noMercosul”, IBICT/MCT Brasilia, 1999Cohen W.M., Levinthal D.A., “Innovation and learning: the two faces of R&D;”, The Economic Journal, 99, 1989Cohen, Levinthal, “Absorptive capacity: a new perspective on learning and innovation”, Administrative ScienceQuarterly, 35, 1990. Schmitz H., “Collective efficiency and increasing returns”, Cambridge Journal of Economics, 23,1999aCohendet, Kern, Mehmanpazir; Munier, Cambridge Journal of Economics, 23, 1999Cowan R., David P.A., Foray D., “The explicit of economics of knowledge codification and tacitness”, Industrial andCorporate Change, Vol. 9, N. 2, 2000.Cowan R., Foray D., “The economics of codification and the diffusion of knowledge”, Industrial and CorporateChange, 6, 1997Feldmann M.P., “The new economics of innovation, spillovers and agglomeration: a review of empirical studies”,Economic Innov. New Techn., Vol. 8, 1999Freeman C., “Networks of innovators: a synthesis of research issues”, Research Policy 20, 1991Gambardella A., Rullani E., “Divisione del lavoro tecnologico e media di condivisione delle conoscenze: alla ricerca dinuove istituzioni”, Economia e Politica industriale, N. 101-102, 1999Gereffi G., “Beyond the producer-driven/buyer-driven dichotomy. The evolution of Global Value Chains in the InternetEra”, in IDS Bullettin, Vol. 32, N. 3, 2001.Gereffi G., “The organisation of buyer-driven global commodity chains: how US retailers shape overseas productionnetworks” in G. Gereffi and M. Korzeniewicz, “Commodity chains and global capitalism”, Wesport CT Praeger, 1994Gereffi G., Humphrey J., Kaplinsky R., Sturgeon T.J., “Introduction: globalisation, value chains and development”, inIDS Bullettin, Vol. 32, N. 3, 2001.Humphrey J., Schmitz H., “Governance in global value chains“, in IDS Bullettin, Vol. 32, N. 3, 2001.Jaffe A.B., Trajtenberg M., Henderson R., “Geographic localization of knowledge spillovers as evidence from patentcitations”, Quarterly Journals of Economics, 188, 1993.Konstadakopulos D., “Reinforcing the learning behaviour of small innovative firms of the ASEAN Region: a newapproach to Regional Integration”, Report to ESP, 1999.Lastres M.M., Cassiolato J.E., “Globalizacao e os sistemas de inovacao no Mercosul nos anos 90: implicacoes parapolitica”, in Guimaraes N.A., Scott Martin (eds.), “Competitividade e desenvolvimiento. Atores e institucoes locais”,Secac Editora, Sao Paulo, 2001Lawson C., “Territorial clustering and high-technology innovation: from industrial districts to innovative milieux”,ERSC Working Paper 54, 1997.Lawson C., Lorenz E., “Collettive learning, tacit knowledge and regional innovative capacity”, Regional Studies, Vol.33.4, 1999Lawson C., Lorenz E., “Collettive learning, tacit knowledge and regional innovative capacity”, Regional Studies, Vol.33.4, 1999Lissoni F., “Knowledge codification and the geography in innovation: the case of Brescia mechanical cluster”, ResearchPolicy 30, 2001.Manskell P., Malmberg A., “Localised learning and industrial competitiveness”, Cambridge Journal of Economics, 23,1999.Morgan K., “The learning region: institutions, innovation and region renewal”, Regional Studies, Vol. 31.5, 1997Mytelka L.K., “Local System of Innovation in a Globalized World Economy”, Industry and Innovation, Vol. 7, N. 1,2000Nonaka I., “The knowledge-creating company”, Harvard Business Review, November-December 1991Nonaka I., “The knowledge-creating company”, Harvard Business Review, November-December 1991Nonaka I., Takeuchi H., “The knowledge-creating company. How Japanese companies create the dynamics ofinnovation”, Oxford University Press, 1995Nonaka I., Takeuchi H., “The knowledge-creating company. How Japanese companies create the dynamics ofinnovation”, Oxford University Press, 1995Rullani E., “Il valore della conoscenza”, Economia e Politica Industriale, n. 82, 1994Schiuma G., “Dinamiche cognitive dei distretti industriali in evoluzione”, Economia e Politica Industriale, n. 106, 2000Schmitz H., “Collective Efficiency: growth path for small-scale Industry”, Journal of Development Studies, Vol. 31,No. 4, April 1995.Schmitz H., “Growth constraints on small-scale manufacturing in developing countries: a critical review”, in WorldDevelopment, Vol. 10 (6), 1982.Sturgeon T.J., “How do we define value chains and production networks”, in IDS Bullettin, Vol. 32, N. 3, 2001.