Innovation is triggered by the market and by new rules and regulations. Especially environmental regulation forces firms to change raw materials. This includes using environmental friendly glue, paint and other materials, changing the treatment of wood and better quality control on electrical equipment such as lamps. But there are no large investments in capital-intensive mass production. This is not only considered risky in volatile markets, but also not in line with the growing demand for hand-made products. Radical shifts in production processes are rare but do occur. In silverware, for instance, market demand shifted from crafted silver – the traditional skills of Yogyakarta - to filigree. This requires a radically different production technique. Most exporters were able to absorb these market dynamics by relocating production from the cluster Katogede to the nearby city Wonosari