Interfirm Co-operation in Rafaela and in the Central Valley

Abstract

Competitive forces in global markets generate pressures on firms to improve production: lower prices, higher quality, newer products and better service. Diffused entrepreneurship in the DPSs provides creativity in the form of numerous individuals who are willing to subject their production to the demands of the market, as was discussed in Chapter 3. Chapter 4 showed how R&D institutions in dynamic systems offer firms access to the technologies and skills they need to upgrade their production processes permanently in competing successfully in world markets. The small size of most firms in DPSs is an integral part of their dynamism because, as SMEs, they do not face the same constraints to change and adapt that the bureaucratic structures of large firms encounter. Economies of scale, however, allow large firms to have easy access to crucial resources such as long-term credit, market information, buying power in the purchase of inputs, product promotion, and new technologies and management techniques. It is in this regard that interfirm co-operation becomes crucial in a DPS by allowing SMEs to maintain their flexibility and dynamism while helping them to realize necessary economies of scale in key issues by joining forces. Interfirm co-operation arrangements have taken different forms in the numerous DPSs of the world and cover such activities as credit consortiums, joint marketing strategies, collective commercial missions to foreign markets, information-sharing on a diverse set of issues, quality control, joint R&D departments, and ad hoc cooperatives to share expensive machinery or provide accounting services for several firms.