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T his research analyzes how foreign organizational practices diffuse among indigenous enterprises in a developing economy. It highlights the collective knowledge-building process as central for understanding diffusion. Based on a longitudinal case study of a cluster of dairy producers in Nicaragua, a representative low-income country, it looks at cross-border diffusion in conditions that differ significantly from advanced economies. The current literature that highlights institutional pressures driving global spread of practices has limits for capturing a significant dynamic caused by increased integration of markets and production. By focusing on production organization and practices in a late developing context, this paper explains the intertwined process of spreading new standards and changing existing local practices by elaborating the relationship among building collective capabilities, learning, and standards diffusion. This study enriches current views on institutional effects and adds to the practice-based literature, as well as to the work on developing economy firms in organizational research.

research focused on established clusters and enriches recent studies on their development dynamics. The analysis of two successful clusters in Chile, one in agroindustry and the other in salmon aquaculture, highlights interactions between the state, local firms and multinationals, and the conditions enhancing collective firm learning. The argument is that the emergence of dynamic clusters depends on building institutions that enable coordinated learning among firms to improve capabilities, processes and products.

Local knowledge building is a crucial factor for upgrading small producers and improving their market competitiveness and livelihoods. The rise of global standards affecting food safety and environmental sustainability in agriculture sparks debates on the impact on smallholders in developing countries. This article presents a perspective on the links of international standards to knowledge and institution building for developing the capabilities of small producers. Interacting with global practices, indigenous private and public actors create local institutions to develop capabilities for product and process innovations that contribute to economic development and enhance food security. Local innovation depends on collective strategic efforts through increasing networks among small producers and other organizations, including firms, nongovernmental organizations, and government, that foster knowledge circulation and bring diverse resources and support to build local capabilities.

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