Institutions, social ties and productive collaborations: Lessons from the information and communication technologies cluster in Costa Rica.

Firms located in industrial clusters benefit from economies of agglomeration and collaboration, which help them overcome their resource constraints and acquire new technological capabilities. Developing countries promote industrial clusters expecting them to foster collaborations that will benefit local enterprises. This research analyses the emergence and impact of a variety of productive collaborations that domestic producers established in the Costa Rican Information and Communication Technologies (ICT) cluster with other local firms, investors, universities, multinationals' subsidiaries and actors located outside of the cluster. The findings show that some collaborations promote the capabilities of local firms, while others bring them into technological and transactional dependence. To explain how developmental and non-developmental collaborations emerge, this work combines the principles of new institutional economics with theories of the social embeddedness of economic action. When deciding whether to collaborate and how to do so, actors evaluate the information available to them and respond to the incentives generated by the institutions that regulate their behaviour. Actors use their social ties to access filtered information, and to circulate and enforce social incentives. Thus, actors operating under the same institutional framework who have different social ties may opt for different, even opposite, collaborative outcomes. In the Costa Rican ICT cluster the two key obstacles for the formation of developmental collaborations are lack of institutional incentives and information failure, which hampers the coordination of actors' economic actions. Social ties that bridge divided communities, such as MNCs' managers and local entrepreneurs, compensate for information failure, introducing incentives to establish developmental collaborations. Social ties that link actors within closed communities hamper the formation of developmental collaborations, circulating redundant information and diffusing anti- collaborative behavioural norms. The study shows that actors' embeddedness in social networks is a significant factor in understanding the emergence of productive collaborations, which affect the development of local firms