Final answer:
A network cooperative strategy is particularly effective for firms that are geographically clustered, as it allows them to enjoy economies of agglomeration and collaborate in ways such as forming lobbying associations.
Step-by-step explanation:
A network cooperative strategy is particularly effective when it is formed by firms that are geographically clustered. When firms are located close to each other, they can benefit from the economies of agglomeration, which means that they can achieve cost savings and efficiencies due to their proximity. This includes access to a shared labor pool, shared amenities, and the possibility for knowledge and technology transfer. However, such a network might become less effective when firms find cooperation difficult to achieve due to large group sizes, leading to potential splits. In international trade scenarios, small firms may lack the pressure to improve goods and services due to the absence of many competitive firms within their economy, which can be mitigated through cooperation. Additionally, firms within the same industry may join forces to form lobbying associations, where competitors cooperate to shape policies that benefit their industry as a whole. Therefore, the effectiveness of a network cooperative strategy is influenced by how well firms can leverage the benefits of being geographically close while navigating the challenges that arise from such proximity.