Performance gains and losses from network centrality in cluster located firms: a longitudinal study

This paper develops and tests theoretically derived arguments on the performance trade-offs that arise when firms located inside geographical clusters broaden their cluster networks and increase their centrality. Using three-year longitudinal data gathered on a sample of 89 small media firms located in a geographical cluster of Northern Italy, we model growth in revenues and in employees as a function of their centrality in different types of networks. We find an inverted U-shaped effect of centrality across all types of networks. We also find strong evidence of negative interactivity between network types in predicting sales and employee growth. This result not only concurs with the view that centrality brings tangible and intangible benefits, but also provides empirical support for the contention that centrality fosters dispositions and disturbances that undermine performance.