Balancing localization and globalization:exploring the impact of firm internationalization on a regional cluster

Abstract

This paper explores the impact of firm internationalization on regional industrial clusters. The past decade has witnessed the popularization of two intertwined trends in geographic competitiveness: globalization and localization. While previous research has sought to understand and analyse how multinational enterprises pursue strategies to capture critical expertise and resources in dynamic regional environments, to date only limited efforts have sought to explore how internationalization affects 'cluster' relationships among locally founded, rapidly growing firms. Specifically, this paper explores whether the internationalization of local firms weakens the local relationships associated with industrial clusters. It reports the findings of research conducted on the internationalization of a cluster of companies in the photonics industry. Twenty-three senior executives were interviewed, face-to-face. Grounded theory methodology was applied to the data to create a new conceptual framework to explore how internationalization impacts the embedded social relationships of locally established firms. The findings suggest that, as firms internationalize, intimate local relationships become less significant. As local companies mature and their sales and markets expand, they develop new capabilities and operations. Firms pursuing strategies to develop capabilities outside their home region gain access to outside resources and, in turn, elect to reorient their level of intra-vs. inter-cluster interaction.

Modelling dynamics of knowledge networks and local connectedness: a case study of urban high-tech companies in The Netherlands

“…from 33 to 83%. The strongest reduction in the changing situation (33%) is true for a young research company after being acquired by a foreign company, a type of development also observed by DeMartino et al (2006). In conclusion, our experiment suggests some reduction of local connectedness in the current situation and a somewhat stronger -but also more differentiated-reduction if changes are taken into account.…”

“…One of the few empirical studies concerning small companies indicates that local company internationalization does impact the nature of local linkages, but the effect is nuanced and affected by individual growth strategies (DeMartino et al 2006). In this section, we discuss the outcomes of a comparative analysis of companies employing mainly local/regional knowledge networks (category 1) and companies employing mainly global knowledge networks (category 2) on current strength of local connectedness and changes in this strength.…”

New Zealand’s perfect storm of entrepreneurship and economic development

“…Shaffer and Hillman (2000) developed a grounded-theory model for internal conflicts in the formulation of businessgovernment strategies by corporations with diversified business units. De Martino et al (2006) used grounded theory to create a new conceptual framework on how internationalization impacts on social relationships of locally established firms. Rahman (2003) used the grounded approach in developing a model of how Australian businesses selected their international markets.…”

Guilty by Association: A Cross-industrial Approach to Sourcing Complementary Knowledge in the Uppsala Biotechnology Cluster

“…These firms/organizations are an integral and important part of a cluster in the sense that they are assisting firms in the core of the cluster by means of specialized services or products. According to a cluster life cycle, perspective local ties and relationships become less important as firms within the cluster develop and become more internationalized (DeMartino et al, 2006). Although these tendencies are perceptible within the Uppsala case, there are also some exceptions.…”