Indian Journal of Industrial Relations: Economics & Social Dev.

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What Gives Industrial Clusters a Sustained Growth?


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1 Assistant Professor, Indian Institute of Management Amritsar, India
     

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This article analyzes the sustainable practices and operations of firms belonging to industrial clusters. The effective functioning of an industrial cluster is explored and argued from two prominent paradigms of organizational theory, the network paradigm, and the resource dependence paradigm. From the net work theory perspective, embedded relations, trust-based relations, and matching theory explanations are argued to discourage opportunistic behavior. Resource dependence theory focuses on the firm’s ability to establish relationships to access resources, creating dependencies, power imbalances, and uncertainty among firms. In the case of the industrial cluster, social proximity acts as a source of strength. The inter- organizational relationships depend on trust, embeddedness, and informality of relationships.
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  • What Gives Industrial Clusters a Sustained Growth?

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Authors

Sweta Singh
Assistant Professor, Indian Institute of Management Amritsar, India

Abstract


This article analyzes the sustainable practices and operations of firms belonging to industrial clusters. The effective functioning of an industrial cluster is explored and argued from two prominent paradigms of organizational theory, the network paradigm, and the resource dependence paradigm. From the net work theory perspective, embedded relations, trust-based relations, and matching theory explanations are argued to discourage opportunistic behavior. Resource dependence theory focuses on the firm’s ability to establish relationships to access resources, creating dependencies, power imbalances, and uncertainty among firms. In the case of the industrial cluster, social proximity acts as a source of strength. The inter- organizational relationships depend on trust, embeddedness, and informality of relationships.

References