Do Industrial Clusters Still Matter to Trust-Building in the Internet Era? A Network Embeddedness Perspective

Abstract

Despite the considerable amount of research regarding trust as one of the most important characters and competitive advantages for an industrial cluster, few empirical studies have examined whether geographic proximity still leads to higher levels of trust in the current Internet era. This article explores this issue of trust from a network embeddedness perspective. Based on the data from Zhongshan gas appliance cluster, we employ structural equation modeling to examine the extent to which relational embeddedness, structural embeddedness, and positional embeddedness have any impact on trust-building in the cluster. Our findings reveal that high clique trust and low aggregate trust coexist in the cluster, showing that the effect of geographical proximity on trust has been weakened and is no longer a sufficient condition for trust-building. This study also gives some suggestions on how to improve the trust within a cluster through network governance.Lez Rayman-Bacchus is a research follow in the Business School, University of Winchester, United Kingdom. He also founded the Centre for Corporate Responsibility at London Metropolitan University, and the international symposium on Corporate Responsibility and Sustainable Development. His research interests include the practice of strategy and international management, currently focused on Chinese SME attitudes and behavior in industrial network clusters, and that of Middle Eastern businesses. He has a background in both industry and academia. He spent more than 15 years with high technology multinational companies working in business development and marketing, before moving into research and teaching on strategy, corporate responsibility and sustainability, corporate ethics, and corporate governance. He has published more than about 30 papers as well as one academic book.GuangMing Xiang is pursuing master's degree in finance at the School of Management and Economics in UESTC.

Dancing with Giants: A Unified Framework for Cooperation Networks, Speed of Internationalisation, and Performance

“…For firms, co-locating with related companies has the advantage of boosting a collective learning process, enabling the acquisition of resources that otherwise could not be obtained [59]. Regarding the role played by networks, several recent studies suggest that the establishment of such interactions is the key to the success of industrial clusters [11,12,[60][61][62].…”

“…The powerful instruments that explore the entire network of an industrial cluster remain relatively unexplored [9][10][11][12] and the research, to date, has failed to provide clear guidance on how specific network interactions influence foreign expansion [13,14]. In the literature, there is a general assumption that the establishment of network relationships has a positive effect on the speed of internationalisation [4,13,[15][16][17].…”

“…None of the studies have nevertheless fully documented the mechanisms by which clustered firms can use their networks to be internationally successful and, consequently, improve their performance. Several authors [9][10][11][12][13][14] have highlighted the lack of empirical studies assessing how variations in the speed of internationalisation affect not only their ability to benefit from the knowledge and learning provided by the clustered networks but also their performance, therefore calling for the development of theory in this field. As variations on the speed of internationalisation, as well as the level of organisational experience on foreign markets are likely to have a bearing on clustered firms' performance, several authors have called for the incorporation of this temporal dimension into performance models [1,19,23,26].…”

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“…Regarding digital strategy, governments have formulated various strategic plans for the digital development of creative industries [76][77][78], which include accelerating the construction of new infrastructure, encouraging digital innovation in creative enterprises, and stimulating online creative consumption, all of which provide opportunities for the creative industry's virtual agglomeration. Regarding network supervision, the government has improved laws and regulations related to online transactions for creative products, safeguarded subjects' legitimate interests [79], and created a suitable environment for creative production and trading activity on virtual platforms [80].…”

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“…On the direct path, the government encourages the construction of new infrastructure, and formulates targeted financial subsidies and tax relief policies to guide the formation and development of the virtual agglomeration of creative industries [34]. On the trust guarantee mechanism path, the government takes various measures to effectively manage the illegal creative activities, protect the legitimate interests of creative participants, and create a good atmosphere of trust guarantee for online business [35]. Therefore, establishing a trust guarantee relationship between creative participants can accelerate the efficient flow of capital, information, and other elements in the virtual space [36] and greatly promote the formation of the virtual agglomeration of creative industries.…”