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This study investigates the influence of informal knowledge sharing on the innovative performance of individual firms in an industrial cluster. By informal knowledge sharing, we mean to imply the knowledge that is shared automatically, indirectly, accidentally and unknowingly by firms in a geographically bounded area as part of the know-how common to all members in the cluster. To capture this ‘informality.’, we investigate the impact of trust-based knowledge sharing. In this respect, we associate trust-based knowledge sharing between furniture manufacturers and furniture retailers to their innovative performance. While doing this, we make use of both qualitative and quantitative methods. Data from 220 manufacturers and 137 retailers suggest no association between informal knowledge sharing and innovative performance. We discuss our findings with respect to the interaction between contextual specifics and innovative effectiveness of knowledge sharing. Further, we try to identify those elements in the institutional environment of the cluster that are unfavorable to the production of innovation.

Does Informal Knowledge Sharing Breed Innovation in Industrial Clusters?