Business cluster

Objectives

Michael Porter claims that clusters have the potential to affect competition in three ways:

    * by increasing the productivity of the companies in the cluster,

    * by driving innovation in the field

    * by stimulating new businesses in the field

Traits

A business cluster is a geographical location where:

    * enough resources and competences amass and reach a critical threshold,

    * giving it a key position in a given economic branch of activity,

    * with a decisive sustainable competitive advantage over others places, or even a world supremacy in that field.

Types

Generally two types of business clusters, based on different kinds of knowledge, are recognized:

* Techno clusters - These clusters are high technology-oriented, well adapted to the knowledge economy, and typically have as a core renowned universities and research centers like the Silicon Valley.

* Historic knowhow-based clusters - These are based on more traditional activities that maintain their advantage in know-how over the years, and for some of them, over the centuries. They are often industry specific.

Process

The process of identifying, defining, and describing a cluster is not standardized. Individual economic consultants and researchers develop their own methodologies. All cluster analysis relies on evaluation of local and regional employment patterns, based on SIC codes.

An alternative to clusters, reflecting the distributed nature of business operations in the wake of globalization is Hubs and Nodes.

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