Growing small firms networks from the bottom-up: a computational model

This paper explores how structural properties of small firms networks emerge from the ways firms exchange knowledge. In particular we are interested in analyzing if and under which conditions the need for knowledge exchange within a set of co-located small firms is able to generate a more or less stable structure of links among firms. The general research question we intend to answer is the following: is there any correlation between the determinants of firms knowledge exchange in a cluster and the structural characteristics of the network? More specifically, we focus on a specific kind of small firms networks called industrial districts (IDs). One of the peculiar characteristics of IDs is flexible specialization: small firms specialize in given phases of the production processes and join up production chains in a flexible and dynamic way depending on market opportunities. Consequently knowledge exchange is mainly related to the matching of complementary know-how and competencies. Our specific research question is related to the relation between knowledge complementariness and network structure: can knowledge complementariness explain the emergence of a stable networks of firms and under which conditions?