The benefits of company clusters: evidence obtained from the production arrangement of the semi-precious jewelry industry in Limeira

Abstract

Studies indicate that the clustering of local firms in the same line of business produces externalities arising from the specialization of labor, the emergence of infrastructure and the exchange of information. These externalities affect the performance of these firms. Thus, this study aimed to show the benefits of the clustering of firms, by investigating the production of semi-precious jewelry in the city of Limeira. In-depth interviews with authorities and executives of the local productive arrangement were explored using content analysis. This was crosschecked with secondary data, to analyze the local economic activity. There is cooperative action only among small groups of firms that create value for individual companies that cooperate. The coordinated actions of the association of manufacturers to improve their image via communication, exploring the positive aspects of the local product, have also been relevant for the performance of the firms. The availability of skilled labor is a factor that reduces costs, but quality gains are yet to be achieved. Informal transmission of knowledge about production process improvements and the presence of suppliers helping to develop design are relevant aspects for the product category, which is strongly related to fashion. The support of universities and research centers in the training of skilled labor also benefits the businesses. There are, however, some negative effects of proximity, of which the most obvious is the lack of product differentiation and the consequent price-based competition.