| Summary: | The co-location and networking of firms and institutions, also known as clustering, positively influences the innovativeness of firms. The cluster literature provides a single-sided understanding of how clusters function due to an overemphasis in the literature on clusters in high-tech and developed economies at the expense of clusters in low-tech industries in less-developed regions. Applying social network analysis (SNA), this paper studies two furniture clusters in the Wielkopolska region of Poland. The findings demonstrate that: (1) the critical factor is the impact of institutionalization on the mechanisms of knowledge flows, Marshall’s externalities and, in consequence, innovativeness of firms; and (2) the underlining clusters do not show a tendency to build cluster-external linkages, opposing the dominant premise in the cluster literature. In the absence of national and international relations, managers of small and medium-sized firms and local institutions are the main sources of novelty for the clusters at the sustaining stage of their life cycle. The findings pave the way for initiatives aiming at creating and developing knowledge networks in lagging and catching-up regions in Europe, particularly those specialized in low-tech sectors.
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