Network dynamics in regional clusters: The perspective of an emerging economy

Regional clusters are spatial agglomerations of firms operating in the same or connected industries, which enable innovation and economic performance for firms. A wealth of empirical literature shows that one of key elements of the success of regional clusters is that they facilitate the formation of local inter-organizational networks, which act as conduits of knowledge and innovation. While most studies analyze the benefits and characteristics of regional cluster networks and focus on advanced economies and high tech Ôhot spotsÕ, this paper advances with the existing literature by analyzing network dynamics and taking an emerging economyÕs perspective. Using longitudinal data of a wine cluster in Chile and stochastic actor-oriented models for network dynamics, this paper examines what micro-level effects influence the formation of new knowledge ties among wineries. It finds that the coexistence of cohesion effects (reciprocity and transitivity) and the presence of inter-firm knowledge base heterogeneity contribute to the stability of an informal hierarchical network structure over time. Empirical results have interesting implications for cluster competitiveness and network studies, and for the burgeoning literature on corporate behavior in emerging economies.