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

Chapter 6 – Cluster Governance 57
least three reasons, coordination beyond price (in this section coordination is used for
coordination beyond price) does not develop ‘spontaneously’ even when the overall benefits
of coordination are higher than the overall costs (Olson, 1971). First, an unequal distribution
of benefits can prevent coordination. If one or a few firms are worse off they will obstruct
efforts to increase the scope of coordination. Second, opportunistic behavior, such as ‘free
riders’ can obstruct coordination (Olson, 1971). Third, uncertain benefits prevent
coordination, because firms are risk-averse when confronted with uncertainty.
These three reasons explain why the scope of coordination in clusters is generally speaking
too limited, assuming that collusion is prevented by regulation 36 . The performance of
clusters where firms manage to enlarge the scope of coordination will increase. Figure 10
shows four variables that both reduce the level of coordination costs and enlarge the scope
of coordination beyond price. The four variables are discussed in the following sections.
6.2 Trust
The level of trust influences the level of transaction costs. In clusters where the level of trust
is high, (average) transaction costs are relatively low, because of low costs to specify
contracts and low monitoring costs 37 . Many cluster studies argue that clusters are ‘high trust
environments’ and that this contributes to the performance of clusters (see Harrison, 1994).
Williamson (1993) claims that ‘blind trust’, in the sense of non-rational trust, is not likely to
survive and that therefore the notion of trust is not relevant for transaction cost economics.
Nooteboom (2000) rejects this argument by claiming that trust can be based on experience,
36 The question whether the scope of coordination can be too large perhaps deserves more
attention. We acknowledge that cooperative arrangements can become obsolete and reduce
rather than increase the performance of a cluster. Such arrangements can be hard to dismantle,
because of vested interests and routines developed over time. However, this does not imply the
scope of coordination is too high, it shows cooperation is not effective, or in other words,
cooperation costs are too high.
37 An additional positive effect of trust is that specific investments are viable when partners trust
each other but not viable when the risk of opportunistic behavior is high. Thus, specific
investments for partners are more likely to occur in ‘high trust clusters’.