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What is a Cluster?

Michael Porter is considered today “Spiritus Rector” of economical policies based on cluster development, and the one that defined the concept of clusters in the following way:

Clusters are geographic concentrations of interconnected companies and institutions, in a particular field. Clusters include a group of related industries and other important entities from a competitive   point of view. These include, for example, suppliers of specialized inputs such as components, machinery and services, or specialized infrastructure providers. Often, clusters extend downstream to various distribution channels and customers and laterally to manufacturers of complementary products and related industries through skills, technologies or common inputs. Finally, some clusters include governmental institutions and other kinds of institutions – such as universities, agencies, think tanks, vocational training providers and employers – that provide specialized training, education, information, research and technical support. (Porter, M., 1998).

The Cluster Effect

THE CLUSTER EFFECT can be easily perceived in any urban agglomeration, where most types of commercial establishments will spontaneously tend to group into categories. For example, shoe stores (or clothing stores) are rarely isolated from their competition. In fact, it often happens that they populate entire streets.

The cluster effect is similar to (but not the same as) the network effect. The similarity is that independent price preferences of both the market and its participants is based on their perception of each other, rather than the idea that the market is simply the sum of the actions of all its participants, as it usually happens. So, being an effect greater than the sum of its causes, and as it spontaneously occurs, the cluster effect is a noticeable example of the appearance of development.

The Cluster Theory

The cluster theory is based on the notion that clusters have certain characteristics, which contribute to enhance innovation, growth and competitiveness of regions and the companies which are part of clusters. However, some of the synergies within a cluster are latent, and in order to fulfill and exploit these synergies, a cluster initiative can be established.

“Cluster initiatives are organized efforts to increase the growth and competitiveness of a cluster within a region, involving cluster firms, government and/or the research community.” (Örjan Sölvell, Göran Lindqvist and Christian Ketels, The Cluster Initiative Greenbook, Ivory Tower AB, 2003).

A cluster initiative is led by a cluster organization, which initiates and strengthens joint activities among its members related to:

  • Increased innovation and technology capacity
  • Cluster networking and trust-building
  • Human resources upgrading
  • Expanding the scale and scope of the cluster
  • Business development
  • Business environment