Coping with economic crisis: Cluster associations and firm performance in the Basque country

Abstract

Economic crises, such as that which started in 2007, increased business turbulence and threaten firms’ survival in many different ways. Economic instability plays a role akin to a natural selection mechanism, allowing the best performing and most competitive firms to survive. The aim of this work is to analyse to what extent firms belonging to cluster associations can “shelter” from adverse economic scenarios, and promote a better recovery, when economic conditions begin to improve. The paper analyses the performance of 405 firms that operate in key sectors, covered by five cluster associations in the Basque Country region of Spain, during the years 2011–2014. We employ seven performance ratios commonly used to measure firms’ economic and financial conditions to check if operating performance, during a period of economic instability, presents significant differences between affiliated and non-affiliated firms that may result in higher adaptation, and resilience, of the former ones. The results suggest that associationism does indeed provide certain advantages in periods of economic growth in the wake of a recession. There is a positive and significant relationship between membership of a cluster association and certain performance indicators, mainly sales growth. The affiliated companies perform better even in adverse economic environments, retaining their ability for differentiation, compared to non-affiliates, and, furthermore, this capability would be bolstered when the recovery begins.