Clusters Essaydoc Notes
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Are clusters still a relevant analytical concept?
Over the last two decades research on regional agglomeration has been dominated by a discourse on so-called clusters stemming from the work of Porter (1990, 1998). However, this body of cluster theories has often been met with scepticism by geographers who accuse the concept of lacking analytical thoroughness. This essay considers whether clusters are still a relevant analytical concept in light of subsequent research. It argues that while early cluster theories were problematic and often misapplied, the discourse has grown beyond its origins and can be an effective way of explaining agglomerations of linked firms in conjunction with other factors.
Recognition and analysis of the tendency for industries to agglomerate in regions has a long history before clusters. Alfred E. Marshall in 1890 put this tendency down to the cost-reduction advantages of collocation and the power of inertia, while also recognising the impacts of a shared socio-cultural milieu. His work informed empirical studies such as those of Perroux (writing on Sao Paolo) and Italian economists describing the small-firm manufacturing regions of the ‘Third Italy’. Piore and Sabel (1984) argued that industrial changes and the trend towards ‘flexible specialisation’ would give prominence to regional agglomerations of linked firms. This work was continued by geographers in the 1990s who argued the importance of regional agglomerations in the new economy (Castells & Hall 1994; Storper & Scott 1995; Scott 1997).
Recently, however, the field has been dominated by the cluster concept originating from the work of business strategy writer Michael Porter (1990, 1998). Porter’s work combines the Marshallian tradition of regional research with a Schumpeterian focus on the role of competition and innovation. Stemming from his earlier work on national competitiveness, Porter focuses on the impact of the
‘competitive diamond’ of input, demand, strategy and supporting industries, whose effectiveness is enhanced by geographical proximity. This is argued to increase the rate of innovation in clusters, giving them an edge in productivity and hence competitiveness over unclustered firms.
This emphasis on innovation and competitiveness is supported by theories of knowledge transfer and ‘regional innovation systems’. Productivity-enhancing business knowledge (whether scientific, technical or procedural) can be of either a
‘codified’ or ‘tacit’ nature. Proximity is argued to facilitate the sharing and generation of both kinds of knowledge but the effect on informal ‘tacit’ knowledge is thought to be particularly strong (Andersson & Karlsson 2004; Asheim & Coenen 2005). Knowledge transfer occurs both within clusters and through the interaction of clusters with one and other (Bathelt et. al. 2002). Hence, innovation in all kinds of business knowledge is increased in clusters.
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