The importance and quality of cluster governance in the Chilean wine industry

The central theme of this paper is the issue of the governance of cooperation within the Chilean wine industry. The effects of the internationalization of this industry for the importance and the quality of governance of intra-cluster cooperation involving firms and other actors are analysed. Two questions stand central. First, what has been the relative importance of external and internal factors in improving the export performance of the Chilean wine industry over the past 20 years? Second, to what extent have collective actions and investments played a part in this growth, and what has been the quality of the various governance regimes dealing with the associated collective action problems? Empirical evidence suggests that world-market developments and upgrading efforts by individual wineries largely explain the good export performance of the Chilean wine industry until the year 2000. The evidence also shows that the industry’s success in world markets is stimulating cooperation between firms and other actors in areas where the industry needs to improve: marketing and promotion, internationalization, innovation and training. The enhanced cooperation has not only stimulated cluster development, but has also turned the quality of cluster governance into a central variable for future export growth. Nevertheless, several collective action problems await resolution before essential intra-cluster cooperation can develop. Overall, the evidence suggests that, in the case of the Chilean wine industry, industrial and cluster development do not automatically follow enhanced integration in world markets, but depend on the strategic skills of actors within the industry, in particular their ability to identify, prioritize, and realize collective investments while effectively managing the associated collective action problems. Internationalization stimulates firms to consider such investments, however, and provides them with an incentive to upgrade strategic skills at the local level as new opportunities arise and the pressure is there to exploit them in world markets