Assessing Centralized Governance in a Software Cluster

Increasing attention has been paid to the creation of spatially concentrated environments (industrial agglomerations or clusters) that aim at fostering firm-level competitiveness. However, while much has been said about clusters in general, less attention has been paid to structural governance within these agglomerations. This paper discusses the economic dynamics of clusters in the presence of centralized formal body of governance regarding internal and external relationships. We have carried out a case study of the key players in the software industry of Ribeirão Preto, which relies on an institutional arrangement called PISO. PISO arises as an economic institution in the context of Ribeirão Preto’s software cluster that structures collective action within the system, interfering in the regional policymaking processes and fostering an environment that improves overall capabilities that allow firms to take full advantage of the externalities in order to create and consolidate competitive local advantages.