There have been numerous studies on how innovative technology clusters develop. Some papers have argued that clusters with high performance and innovative activities benefit from knowledge flows generated by informal contacts within the cluster. The Dahl and Pedersen study provides empirical evidence that informal contacts do facilitate knowledge flows in clusters. Their study of engineers in a communications' cluster shows that valuable knowledge does flow through informal contacts. This can be advantageous to firms within the cluster in developing innovative technologies.

First, the study looks at prior studies that were criticized for not studying in detail how knowledge flows within a cluster. This study confronts criticisms of prior studies that only general knowledge flows through local contacts. The paper examines informal networks of contacts between employees in the NorCOM cluster and assesses that these networks act as important channels of valuable and specific knowledge exchange between firms. Informal contact relationship development is investigated. Studying engineers rather than managers, as was done in prior studies, helps reveal the extent and importance of networks.

This study uses a prior questionnaire study of a communications' cluster in Northern Denmark, (NorCOM) which stated that employees are highly related at the personal level, and that there are many relations of a cooperative as well as competitive nature. This established the view that informal networks within the cluster were one of the main reasons for its fast growth in the 1990s.

This new study of engineers at NorCOM found:

Engineers with longer working experience are more likely to have at least one informal contact. The percentage of these more experienced engineers who value the knowledge as high or average is also larger than the less experienced. This indicates that the greater the experience the engineers have, the better they are at acquiring useful knowledge from their contacts.

Initial contact between engineers from two firms could be created by a joint formalized project. If they work together on a limited joint project, there is a possibility that their relationship will last longer than the project itself. Management culture in firms might thus have influence on how and to what extent the employees share their knowledge with others.

In the study, 16.2% of the engineers had competition clauses or non-compete covenants of various contents included in their employment contracts. These contracts can limit the employee's possibility of taking a job in a competing firm or involvement in any venture producing the same products immediately after breaking a contract. Engineers with competition clauses were less likely to have at least one informal contact than engineers without a competition clause.

Informal networks can play an important role for local development and the emergence of clusters. Informal contacts are an important source of knowledge for the engineer in this particular cluster. General information, such as rumors about individuals or firms, future job openings, and other such information and knowledge, are also likely to be part of an informal relationship. This channel is likely to be used as a way to establish the reputation of the individual in the local environment. An engineer with a good reputation might be a valuable partner in facilitating future, more formal cooperative efforts between firms or as a future employee in another firm.

Emerging technology clients of Small Business Development Centers and the Missouri Federal and State Technology programs need to be aware of cluster benefits. They also need to consider how their management policies on partnerships and employment contracts may enhance or limit their potential for innovative growth. Participation in such communities requires a high level of technical knowledge and skill, which is needed to take advantage of developments within the communities. Employee relationships, reputations, and the expectation of reciprocity are part of participating in a high performing technology cluster.

Link to full study