The Development of Trust-based Relationships
Similarly to facilitating knowledge creation and its flow, the aspects of reducing uncertainty, improving communication among entities and increasing trust in partners also relate to various dimensions of agents’ activities, and thus are illustrated by means of different dimensions of proximity.
What deserves special attention in the analyses herein is social proximity, which not only enhances the production and transfer of knowledge, but also reduces the risk of opportunistic behavior (Boschma, 2005a) as well as the probability of a conflict among cooperating organizations (Boschma et al., 2014). Although social proximity should rather not be seen as the key factor for running a business, it can significantly facilitate or hinder the achievement of its goals. Social proximity is a specific “grease” which, when applied in moderation, effectively reduces friction that naturally occurs in relations among agents that differ from one another.
Organizational proximity is essential for increasing the competitive potential of cluster companies (in a natural manner, although, to a varying degree, it is produced in clusters). One of the key tasks that the organizational dimension of proximity has to fulfill is to reduce uncertainty and minimize the risk of opportunistic actions by one of the partners (Boschma et al., 2014). This function is particularly important in the case of cooperative activities focused on the exchange and production of knowledge because seizing intellectual property is simpler and less risky to perform (due to numerous legal imperfections related to the protection of this type of resources) than stealing material goods. Such a control over the process and effects of knowledge creation and flow can be exercised by organizational connections existing among cooperating agents (creation of a clear hierarchy within one organization or organizational linking of hitherto autonomous structures).
Acting in conditions of institutional proximity is also crucial. Strengthening the institutional proximity of cooperating entities is a factor that significantly facilitates the management of cooperation relations among partners and increases their competitiveness. The main tool for institutionalizing this collaboration is exchanges among the partners. Their repetitiveness combined with the achievement of satisfying effects for all the parties is the basis for shaping the sphere of common goals, values and the code of ethics (Balland et al., 2015), which in turn paves the way for further exchange processes carried out with even greater ease. Boschma (2005a) claims that an effective institutional structure must maintain balance among three main components: stability, openness and flexibility. Caring for stability will translate into providing the structure with certainty of existence and correct operation by reducing uncertainty and the risk of taking opportunistic actions. Ensuring openness will create an opportunity for new elements in the structure. As far as flexibility is concerned, it allows for experiments with such institutions (and regulations that follow them) which have yet to be included the structure but could increase its efficiency. COs are examples of structures for which stability, openness and flexibility are almost constitutive features: they provide a relatively constant environment and conditions for cooperation, being at the same time open to new members and opportunities generated by the CO environment. Moreover, owing to its relatively small size and, on the one hand, homogeneity, but, on the other hand, complementarity of their members, they quickly adapt to dynamically changing external conditions.
What also matters is the cooperation of the enterprises located in one area. Hansen’s research conducted on a sample of Danish enterprises of the clean technology sector allowed to conclude that common location translated (in this case) into an increased capacity of developing cooperative relationships based, to a certain extent, on trust relations. This was facilitated by easiness in making further acts of exchange among the entities, low communication costs and clearly reduced anonymity of the partners (Hansen, 2015). The shorter the distance among the agents, the lower the costs of exchanging knowledge and information and more efficient communication among them (Doloreux, 2002). In addition, strengthening the trust among the partners of a particular cooperative relationship requires frequent interaction, which is much easier to complete in a situation of physical (geographical) proximity. What acts as an additional reinforcement of such interactions located in one area is anchoring them in a uniform system of values and socio-cultural norms known to all the participants (Simmie, 2003).