ABSTRACT
This chapter examines the importance of local embeddedness as it has changed through the phases of development of three industrial districts in Turkey – Denizli, Gaziantep, and Corum. It explores the dynamics and motivations of critical actors during the phases of emergence, take-off, upsurge and crisis in these industrial clusters, identifying the temporariness of some locally embedded relations and their inability to generate positive change during periods of economic downturn. In addition, locally embedded relations have contributed significantly to the creation of local innovative attitudes. The chapter shows how both rapid growth and stagnation create power struggles and new coalitions, resulting in fragmentation and exclusion among local producers and the loss of economic coherence in the areas. When localities face recession it is particularly difficult to sustain collaborative networks and to avoid power struggles. Small enterprises with competitive power formed several cooperative institutions to allow them to compete with the networks dominated by the leading larger firms.
