'Flexible specialisation' happens when clusters of smaller firms co-op
erate in production, marketing, and product development. This requires
trust, and/or collective provision of 'real services.' Bangalore's sm
aller engineering and electronic firms work for larger firms, but some
develop their own products. Engineers and workers are quality-conscio
us; innovation is market-led. Entrepreneurs are often too suspicious t
o co-operate or share information, but there are productive friendship
s and consortia. Firms benefit from 'real services.' What are the base
s and limits of trust? Can 'real services' make up for lack of trust?
This study is relevant to other countries with large labour surpluses.