The proximity paradox: how localisation influences relational exchange and innovation diffusion. Evidences from a cluster-level analysis

Despite mounting claims for globalisation, local proximity is indeed fundamental in order to gain competitive advantage. As competitive environments are fast changing, and with information becoming a focal source of competitive advantage, localization has gained new worthy implications. In fact, the higher the number of firms localized in the same area, the greater the likelihood that contacts and relations among them occur. Thus, co-localization facilitates contacts among actors and, thus, flows of relevant information. According to this consideration, several studies about firm theory and management strategy have focused the attention to the role of intangible resources in order to explain the development and the success of firms. Particularly, the attention has been directed towards a specific type of intangible assets: interfirm relationships, maintaining that competitive and sustainable advantage may stem from the set of relations that connect the firm with other actors. This idea finds a good framework of application inside geographically limited places, where the existence of stable relations among local actors is favoured by a phenomenon of local proximity. This is the case of the classical topic of industrial districts, or of the more recent concept of clusters. Therefore, a value chain can be drawn, starting from the evidence that geographical proximity impacts on the value of contacts among firms, which in turn raises the likelihood that relevant information can be accessed. On the other side, firms’ sets of relationships can be considered as firm-specific intangible assets, which cannot easily be imitated, and therefore may result in sustainable competitive advantage. Paradoxically enough, in the era of long distance telecommunications, these considerations about the role of information in explaining the process of creation of firm’s competitive advantage show that localization is still crucial to gain success over competitors. The paradox is even stronger when it comes to consider high technology clusters. In fact, in those business contexts, it may be forecast that information technology withdraws long distances. Indeed, even in highly innovative sectors, such as the telecommunication one, figures show that enterprises award geographical proximity. Based on the idea that relational capital is driven by the exchange of information, we sought for an empirical setting characterized by a high level of knowledge, thus leading us to consider the high tech field, especially referred to the Italian mobile industry. In our model we identify an explanatory function of the link between relational capital (the independent variable) and the performance and the growth of the firm (the dependent variables). The latter has been measured by: turnover, firm’s age, length of cooperation with customers. The number of employees and customers has been used as a control variable. In order to demonstrate that localization plays an important role for a firm’s competitive advantage, we have measured the correlations between independent and dependent variables with respect to actors, both inside and outside the cluster. Our final aim is to show how profitability of customers which are localised in the same cluster is higher than those which are not, ought to the consideration that local proximity improves the development of relational capital.