Page - (000083) - in Knowledge and Networks

74 were from a local clan whose members shared a rare family name (Li et al., 2012). Both cases suggest that cluster development in developing economies can be pro- moted by family ties of entrepreneurs. Indeed, industrial communities in developing countries rely more heavily on family ties than clusters in developed contexts, which are embedded in networks of friends, alumni, and ethnic groups. A key question, then, is why family networks matter in industrial communities in developing regions? Particularly, what is the structure of family networks that can give rise to knowledge diffusion to sustain local industrial development? Before theoretical and empirical exploration of these questions, it should be recognized that communities with a single kind of tie are imaginary. Local busi- ness communities actually consist of different kinds of relations encompassing both families and friends, both strong and weak ties. Figure 4.2 shows a theoreti- cal social network in an industrial community of entrepreneurs, for whose inter- connections family bridges are pivotal. This social network has four components. Entrepreneur H, who has three family bridges and one friendship bridge, occupies a central position linking the four components of the local business community. Now suppose H learns new technology or business know-how from the outside of the community. Through family and friendship bridges, this knowledge can quickly spread across the whole local community (through eight steps in Fig. 4.2), suggesting that entrepreneurs in closely connected communities can rapidly learn new knowledge through family networks. This family-based learning may explain why many industrial clusters in Asia have been able to develop swiftly over the past decades, even in areas with poor industrial bases. For example, most of the entrepreneurs in the aluminum extrusion cluster in China did not initially know how to extrude the metal, but technical know-how was soon shared with them by an engineer who, just like H in Fig. 4.2, established family bridges in the local business community (Li et al., 2012). Family-based localized learning can be paramount in the development of indus- trial clusters in developing economies. Given the increasing global brain drain, it is, with few exceptions, hard for most developing regions to attract highly skilled peo- ple worldwide. A dynamic learning community of educated immigrants and profes- sionals tends to be beyond the capacity of many developing areas, at least for the time being. People thus often believe it is almost impossible for traditional com- munities to generate and support a learning economy. Family-based learning sug- gests that this conviction may not be true. In developing regions, family networks are usually social structures that exist before local industrial development. Channeled by family bridges, business and technical knowledge can be quickly shared in well- connected traditional communities. That dissemination is conducive to entrepre- neurship and endogenous economic growth. From a knowledge perspective, theoretical and empirical investigation affords evidence that family ties can encour- age economic development and suggests that the chances of successful industrial- ization will substantially increase if it is compatible with local social structures such as family networks (Woolcock & Narayan, 2000). P. Li