WHAT DRIVES INNOVATIVE OUTPUT IN EMERGING CLUSTERS? Evidence from the wine industry

This paper explores the drivers of innovative output of firms that belong to emerging clusters, defined as those clusters that are not as “vibrant” or leading as e.g. Silicon Valley, but yet strive to emerge in the international competition. Using evidence of two wine clusters in Italy and Chile, this paper finds that firms’ internal knowledge bases and their external openness are more significant than intra-cluster network embeddedness in explaining innovation. In particular, the paper tests for two competing structural positions within the intra-cluster knowledge network – network closure and structural holes – and finds that network closure affects innovation but with diminishing returns. However, this variable looses significance when accounting for external openness. Implications for managers of emerging clusters are noted.