VERTICAL AND HORIZONTAL RELATIONSHIPS IN AN INDUSTRIAL CLUSTER: IMPLICATIONS FOR FIRMS’ ACCESS TO GLOBAL MARKETS LUIZ F. MESQUITA* School of Global Management and Leadership Arizona State University 4701 West Thunderbird Rd. FAB N130. Phoenix, AZ. 85306-4908 SERGIO G. LAZZARINI Ibmec São Paulo INTRODUCTION A growing literature has underscored the importance of collaboration among small and medium enterprises (‘SMEs’ or ‘firms’) gathered in “industrial clusters” (i.e. sectoral and geographical concentrations of firms - Schmitz & Nadvi, 1999: 1503). Within this literature, scholars assert that collective action enables SMEs to achieve greater competitiveness (e.g. Canina, Enz, & Harrison, 2005); collaborative SMEs can support better exploitation of complementary skills, greater sharing of resources and technologies, and faster joint advances in production and exchange systems (Pouder & St.John, 1996). Such collaboration efforts are said to be at the heart of a cluster’s international success (Saxenian, 1994). The question we seek to answer is: how does the coordination of specific forms of clustered-firms interdependencies affect these firms’ success in entering global markets? In answering this question, we argue that the coordination of specific forms of interdependency (which we denominate pooled, sequential and reciprocal interdependencies) creates specific forms of collective efficiencies (respectively greater sourcing of collective inputs, higher production efficiencies and superior innovation rates); each of such collective efficiencies in turn add competitive currency for SMEs to effectively access global markets (figure 2). The joint management of different interdependencies seems to be particularly important for clusters in developing economies (Schmitz & Nadvi, 1999; Wong-Gonzalez, 1992). There, firms are urged to become internationally competitive, but are often deprived from the institutional support that enables such coordination, as observed in more developed countries (North, 1990). We thus model the coordination of interdependencies among clustered SMEs based on their leveraging inter firm informal mechanisms of relational governance, such as implicit commitments and understandings as well as social norms (Goldberg, 1976; Macneil, 1980). We empirically test and find support for our model from a sample of 232 small wood furniture makers, clustered in the province of Buenos Aires, Argentina. INTERDEPENDENCIES COORDINATION, COLLECTIVE EFFICIENCIES, AND ACCESS TO GLOBAL MARKETS To develop our model and propositions, we begin by defining and identifying interdependencies. We rely on a typology by Thompson (1967). Thompson’s interdependencies refer to the extent of complexity firms face in decomposing tasks among partners, and the degree to which firms would have to engage in ongoing mutual adjustment and adaptation to complete such joint tasks. Thompson (1967) defined three forms of interdependencies. Pooled