The Performance of Seaport Clusters - RePub - Erasmus Universiteit ...

Chapter 5 – Cluster Structure 47
firms are ‘sticky’ to their location: their spatial exit barriers are high. Factors that increase
such stickiness to a location are the immobility of their labor force, the immobility of
investments (such as plants) and the presence of a huge supplier and client base in a
certain place. Thus, these factors are cluster exit barriers.
One effect of the presence of high exit barriers is that they reduce uncertainty: firms with
high exit barriers are unlikely to leave. The presence of firms strongly tied to the cluster
increases the durability of cluster and reduces the uncertainty about the development of a
cluster. For this reason, firms are more likely to make (further) cluster specific investments in
clusters where considerable cluster specific investments have already been made. Thus,
exit barriers increase the performance of a cluster.
This argument does not imply that barriers for firms to invest outside the cluster would be
beneficial for the cluster. There is a huge difference between investing elsewhere and
ending business activities in the cluster. Investments outside the cluster, for instance to
relocate activities to locations with a lower cost level, are in many cases beneficial for the
cluster performance, because they increase the competitiveness of firms in the cluster.
Three exit barriers can be identified. First ‘immobile assets’ (such as plants, buildings and
specialized local knowledge) are exit barriers. Second, ‘sticky labor’ (see Markusen, 1996) is
an exit barrier. Labor is not perfectly mobile. The ‘stickiness’ of labor varies between
clusters. Entry barriers are high in clusters where labor is relatively sticky. Third, the
presence of a strong local base of suppliers and clients is an exit barrier, because relocating
outside the cluster implies that trade costs (including transport costs and transaction costs)
with firms in the cluster will increase.
5.4 Cluster heterogeneity
The central argument in this section is that variety 25 of firms in a cluster adds to
performance. Arguments to substantiate the positive effects of variety on performance are
discussed first, followed by a discussion of relevant dimensions of variety. We finalize with a
brief discussion of the issue of resource variety.
25 The terms heterogeneity, diversity and variety are used interchangably.