Chapter 13: Social capital and the development of industrial clusters: the northwest Ohio greenhouse cluster
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Much has been written about how social capital enhances economic activity. The literature credits social capital with reducing transaction costs, enhancing trust, and aiding knowledge diffusion. Unfortunately, most of the literature simply takes the theoretical underpinnings of social capital as given. Little attention is paid to the levels on which social capital operates, for example, individual, organizational, or regional – it is not uncommon to see social capital characteristics identified between individuals and then automatically extended to firm-to-firm interactions, for example. This chapter examines the theoretical underpinnings of social capital as it relates to local economic development. In particular it looks at how social capital can be and has been used to facilitate the growth of an industrial cluster. The chapter is divided as follows. Section 13.2 provides a brief overview of the social capital literature and defines the concept. Section 13.3 examines the cognitive limits of individual actors and how these limits influence the optimal size and composition of a social capital network. Section 13.4 utilizes the case study of the northwest Ohio greenhouse cluster to demonstrate how the concept of social capital was used to facilitate the growth and development of that cluster. In the final section we discuss the ways in which the theoretical ideas presented in the earlier sections are relevant to the development of the greenhouse cluster.

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