Collective Learning in Global Diffusion: Spreading Quality Standards in a Developing Country Cluster

This 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.