Public-Private Networks as Sources of Knowledge and Upgrading Capabilities: A Parametric Stroll through Argentine Vineyards

Abstract

This article uses a unique research design to statistically analyze how a firm's public-private network can shape its upgrading capabilities. Such a network includes a firm's ties to other firms as well as to associations, cooperatives, schools, and publicly supported institutions that aim to help firms innovate. We develop our argument through an examination of the transformation of the Argentine wine industry in two provinces that uses data from a unique field survey we designed and implemented in 2004-05 to statistically analyze the relative impact of firm level factors, inter-firm networks, and ties to non-firm organizations and institutions. While inter-firm networks are vital to upgrading, institutions bring value to firms in helping reconfigure socio-economic relationships. First, they can help firms improve process and product upgrading capabilities and graduate them to more sophisticated inter-firm networks. Second, linkages to institutions appear especially helpful to the extent they help the firm gain access to a variety of knowledge in different communities of producers. Governments can aid upgrading and competitiveness, especially in emerging markets, by building public-private institutions that not only offer supply-side resources to firms but also act as bridges across regions.

Keywords: Upgrading, networks, institutions, South America, agriculture

JEL Classification: O17, L52, O30, O54, P52, Q16