Industry cluster and performance sensitivity

Michaël Dewally () and Yingying Shao

Journal of Economics and Finance, 2015, vol. 39, issue 4, 824-844

Abstract: Firms strategically achieve competitiveness through either operational efficiency or superior asset utilization, thereby impacting their responsiveness to innovations in profit margin or in asset turnover. We show that firms specializing in operating efficiency react more positively to shocks in profit margin than firms specializing in asset utilization. Firms may also decide to co-locate in an industry cluster, hoping to capture the positive externalities of input sharing, labor pooling and knowledge spill-over. We show that co-located firms are in a better position to benefit from innovations in asset turnover as they benefit from input sharing and labor pooling. Copyright Springer Science+Business Media New York 2015

Keywords: Industry cluster; Performance; Strategic management; Marginal rate of substitution; G30; G31 (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1007/s12197-014-9288-0

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