The influences of geographical co-location and social networking in inter-firm cooperation in marketing : a cross country analysis
The role of regional clusters in the development and growth of firms has been a key research theme within the management and entrepreneurship literature over the past two decades. The main focus of this research has been to consider issues relating to economic externalities: economies of scale or scope and the effects of knowledge diffusion or, as Krugman (1991) defined them, knowledge spillovers. While the idea of firm-level marketing externalities has been mooted as a potential benefit arising from geographic agglomeration (Bell and Brown, 2001), there has been, as yet, little research undertaken which can support such claims. This thesis investigates the benefits from regional industry clusters by exploring the role of geographic co-location and the influence of social networks in the development of firm-level marketing externalities. Specifically, the following research propositions were examined: Proposition 1: Social networking has a greater influence than geographic pro ximity in facilitating inter-firm cooperation in marketing activities. Proposition 2: The social elements of networking are positively correlated to the development of inter-firm cooperation in marketing activities. Proposition 3: Compared to formal relationships, informal networks are positively correlated with the development of inter-firm cooperation in marketing activities. Proposition 4: Multinational Enterprises positively influence the development of inter-firm co-operation in marketing activities within regional clusters. Proposition 5: Countries and regions in which there is a high level of social collectivism will demonstrate higher levels of inter-firm cooperation in marketing activities. Data for this thesis was collected in two main stages. Stage one entailed semistructured personal interviews (during July 2003 and January 2004), based on a purposive sample of twenty-two companies in two regions in Scotland (Northwest Scotland and Shetland Isles) and two regions in Chile (IX and X regions). The firms were drawn from a single industry, salmon farming, a sector that makes substantial contribution to the remote rural and regional economies of both Scotland and Chile. Stage two involved a postal questionairre survey and follow-up process during 2004, to the total population of companies (N=229) involved in the main value chain activities of this industry in the two participant counties. The results reveal that `close proximity' is not a key issue for the development of inter-firm cooperation in marketing. Co-location is, however, beneficial for the development of `social glue' (Porter, 1998), building trust among entrepreneurs within the specific industry and building a common knowledge base and culture. Close proximity also enhances face-to-face communication, helping the development of relational ties that are special for inter-firm interactions. In addition, co-location is generally perceived to be useful for sharing general ideas with other people, rather than for sharing strategic information. The results also suggest that elements of networking are important for inter-firm cooperation. They highlight the potential role of `communication and social networks' (Szarka, 1990; Johannisson, 1995; Mackinnonn et al., 2004) as well as `extra local networks' (Mackinnon et al., 2004) as relevant in providing information to firms in local and regional clusters. Thus, the concept of `proximity' needs to be considered as being not only spatial but also social, assuming organisational and relational forms in which firms and entrepreneurs relate to each other. The evidence also emphasizes the use of electronic communication as a mechanism to facilitate inter-firm collaboration with partners irrespective of location, being an effective means of transmitting technical knowledge including marketing information. The marketing collaboration process apears to be led by small innovative companies. As smaller companies increase in size and stronger competition for similar markets and customers becomes an increasingly important factor, the creation of individualistic-competitive strategies becomes the norm. Multinational companies were not found to influence marketing collaboration activities. Inter-firm cooperation in marketing activities is not only affected by company size or company structure. Both the general business culture of the country and the `special' characteristics of specific regions within countries affect cooperative behaviour. In the Shetland Isles, for example, the local culture appeared to emphasize more cohesive - collectivistic behaviour, an embedded part of the `local industrial atmosphere' (Marshall, 1919), creating a special environment which manifested a complex mix of cooperation and competition within the industry.