【文章內(nèi)容簡介】 n can vary, affecting their ability to determine the parameters of production –including what is produced, how, when, and at what price (Humphrey and Schmitz 2020). Coordinating interfirm relationships can involve work arrangements between relatively equal partners who share plementary skills and abilities。 quasihierarchical ties in which one actor has disproportionately more power over other independent actors。 or hierarchical vertical integration (Humphrey and Schmitz 2020). These distinct forms of chain governance explain how a chain is structured, and where and how value is added and appropriated. Chain governance also impact on the scope for local actors to promote upgrading and growth. These studies highlight the significance of external links to cluster dynamics. They point to the differing ways in which global chain ties can effect local cluster upgrading. However, they do not address the role of intercluster ties, nor how production and knowledge flows between clusters influence cluster dynamics. The global surgical instruments industry and local clusters Historically, handheld steel surgical instruments were manufactured in regions known for traditional artisanal metalworking. The distinct production tasks promoted a division of labor whereby small firms flourished and local clusters emerged. Thus, in the early twentieth century, clusters of surgical instrument production were found in Sheffield (UK), NogentsurMarne (France), and Solingen and Tuttlingen (Germany). With the exception of Tuttlingen, none of these locations survive as significant centres for surgical instrument manufacture today. Instead, the last quarter of the twentieth century has seen a number of new actors, such as Pakistan, Malaysia, Poland and Hungary, emerge as important producers of traditional surgical instruments. In sum, there are three important distinctions to note in the nature of global value chain ties between Tuttlingen and Penang on the one hand, and Sialkot on the other. First, the range of producers and traders who have either direct or indirect ties to Sialkot is large. It includes large firms as well as small producers unable to pete against Sialkot. In contrast, ties with Malaysia are restricted to two of Tuttlingen’s biggest firms. Second, Pakistani capital has established a trading foothold in Tuttlingen. Third, these patterns suggest very different forms of governance relations. Whereas ties between Tuttlingen and Penang are hierarchical, those between Sialkot producers and Tuttlingen buyers range from armslength to quasihierarchical. Upgrading in the Sialkot and Tuttlingen clusters The global surgical instruments industry faces three distinct challenges: reduce costs, adopt global standards, and develop new products. These call for distinct forms of process, product and functional upgrading, leading to a repositioning of firms, and clusters, within global value chains. As Humphrey and Schmitz (2020) argue, the potential for upgrading is influenced by governance within the local cluster and the global value chain. The subsequent discussion, structured around the three challenges, unravels patterns of upgrading in Sialkot and Tuttlingen and considers how this is associated to internal linkages within the cluster and external ties within the value chain. As we have seen, Tuttlingen’s large firms tend to concentrate on endoscopes and implants, leaving production of minimal invasive instruments to the medium and small firm sector. This differentiation points to the distinct knowledge requirements of these product groups, and to knowledge flows within the cluster. The Sialkot cluster, however, lacking either the technical capabilities to manufacture the new products or access