Industrial agglomerations as localised networks: the case of the Portuguese injection mould industry

A resurgence of interest in industrial agglomerations can be found among many different academic disciplines. This trend has been accompanied by a focus on how spatial proximity and the emergence of links between colocated actors may generate benefits for firms, namely, in the generation and diffusion of knowledge. By conceiving industrial agglomerations as territorially based networks, we argue that the dynamics in connections internal to those networks affect and are affected by local institutions as well as connections external to the territory. Our study of the injection mould industry cluster at Marinha Grande in Portugal suggests that firms profit from the emergence of relationships between colocated actors and other agglomeration benefits. However, we suggest that the potential of the industry to generate new knowledge appears to be founded on the patterns of interfirm connections, which selectively connect diverse capabilities both within and outside the agglomeration. DOI:10.1068/a3684 (1) We refer to the bodies of literature on industrial districts (Becattini, 1990), innovative millieux (Camagni, 1991), clusters (Bell and Albu, 1999; Porter, 2000), and the strands associated with the `Californian school of economic geography'' (Storper, 1995). innovation dimensions, depend on personal relationships, face-to-face communication, and interacting networks of individuals and institutions (Porter, 2000; 2001). But, as Sayer and Walker (1992, page 140) argue: `̀Territories operate in a loose and informal manner, akin to inter-firm networks, and students of industry often jump from those networks to territorial clusters without recognizing the two things are independent. Networks take a spatially concentrated form only when there are particular kinds of inter-firm (and intrafirm) relations and under the impress of territorially-based systems of governance.'' The roles of agglomerations are given varying emphasis depending on the researchers' theoretical perspective. Dicken and Malmberg (2001) contend that some approaches emphasise the clustering of firms within a limited geographical space and neglect their embeddedness in a wider industrial system. In contrast, others start with a functional perspective about the industrial system and tend to neglect the spatial dimension of interdependencies between firms. More recently, some authors have approached the phenomenon of industrial agglomerations, starting from a functional view of the industrial system and discussing the relevance of colocation for the activities and relationships of firms.(2) In this paper we also take a functional view and approach the territorial dimension from the logic of connections between colocated firms and local institutions. We combine a capabilities view of industrial coordination mechanisms (Loasby, 1998a; 1998b; Richardson, 1972) with a network view of industrial systems (Axelsson and Easton, 1992; Ha® kansson and Snehota, 1995) in seeking to interpret how the spatial agglomeration of firms operating in the injection mould industry in the Marinha Grande district of Portugal may facilitate certain local practices that contribute to the success of individual firms and of the cluster as a whole. Additionally, by focusing on interfirm relationships, we are led to analyse the interplay between homogeneity and heterogeneity in the types of relationships found in the cluster.We argue that this interplay reflects differences in the ways interfirm relationships and relationships between local institutions and firms are connected. These differences suggest that spatial proximity and cluster-specific institutions matter in a variety of ways for local firms, as they use and develop localised capabilities through deliberate and purposeful actions both inside and outside the area (Maskell and Malmberg, 1999b, page 11). The paper is structured as follows: in section 2 we briefly review arguments related to the generation and diffusion of knowledge, stemming both from spatial proximity and from the emergence of localised relationships. In section 3 we suggest that the relevance of spatial agglomeration can be better understood by focusing on relationships as a mechanism to coordinate, access, and disseminate knowledge. Section 4 starts with an historical perspective of the injection mould industry in Marinha Grande. Next, in section 5, we provide a description of some of the challenges firms face in designing and producing moulds. This helps us understand some problems firms often face and, in particular, their need to develop and access distributed knowledge related to the design and production of moulds. In section 6 we focus on the contrasting trajectories of the two local lead firms and describe their use of direct and indirectly connected relationships both within and outside the cluster. In section 7 we present some concluding comments on what appears to be a healthy tension between homogeneity and heterogeneity, which, we suggest, is related to the diversity found in the ways firms are embedded in connected and counterpart-specific relationships. The collective health of the cluster is associated both with deliberate strategies to promote (2) As Sayer (2000, page 112) argued, ``Space is certainly important, but to say what that importance consists in, we normally have to move to a more concrete kind of analysis where we identify particular kinds of objects, relations and processes constituting it in concrete spatial conjunctures.'' 264 J Q Mota, L M de Castro