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

Chapter 6 – Cluster Governance 67
‘diminishing returns’ applies here. For instance, more voice is especially likely to contribute
to the quality of governance when voice is hardly raised. Theoretically speaking, at some
moment the decreasing returns can become negative returns: when a substantial number of
firms already raise their voice, additional voice might have a negative effect. Such
possibilities cannot be ruled out, but unless there are reasonable theoretical arguments, why
‘more’ could lead to a worse performance, such eventualities cannot be incorporated in the
theoretical framework in a meaningful way. We claim no convincing arguments support the
negative influence of any of the four variables.
More trust lowers coordination costs as well as the scope of coordination. Trust in clusters
can be an entry barrier, because ‘outsider firms’ are not trusted and as a consequence,
entry is difficult. However, there is no convincing argument why new firms could not build a
reputation, for instance by hiring trustworthy managers.
There is also no convincing argument to claim that leader firm behavior has a negative effect
on governance. Leader firms can have dominant positions in clusters and strive to maintain
those positions. Thus, they might try to prevent entry of competitors. However, such efforts
cannot be regarded as leader firm behavior as defined in this study; in fact, all firms strive to
reduce competition. A lack of internal competition is incorporated in the framework. It may
be that dominant firms do not face internal competitors. This has a negative effect on the
performance of the cluster, but it is not related to leader firm behavior.
The presence of intermediaries has positive effects since they enable cooperation and
reduce transaction costs. Arguments for the negative effects of intermediaries on
governance are also lacking: intermediaries have to serve a market, when there is no
demand they will cease to exist. The argument that intermediaries can add transaction
costs, because they somehow manage to occupy a position between supply and demand,
does not apply in general: whenever firms can ‘cut costs’ by by-passing intermediaries they
will do so.
Finally, with regard to the variables of the quality of a collective action regime, similar
arguments apply: the positive effect of the variables is based on arguments that apply in
general. It can be questioned whether this general positive relationship also applies in
‘extreme situations’, but a basis for arguing that the variables have a negative effect is
lacking.