Cluster

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Clusters are geographic concentrations of interconnected companies, specialized suppliers, services, companies operating in related industries and associated institutions (universities, research, standardization and trade associations) in specific areas, competing or cooperating.

Companies forming the cluster are focused on strengthening the competitiveness of the cluster, by growth of specialization of cooperating companies and institutions to achieve economies of scale and scope. It results in the division of labour and the creation of specialized factors of production.

Other names used for clusters include: industrial districts, local production systems, agglomerations of enterprises. Industrial cluster concept was formulated by American economist Michael Porter, and its precursor was British economist Alfred Marshall.

Types of clusters

There are three types of clusters:

  • Industrial District model - small and medium enterprises with a high degree of specialization, a strong rivalry, relations based on trust (e.g. Silicon Valley)
  • Leading company model - large hierarchically related corporations with extensive group of small and medium businesses (e.g. Seattle-Boeing)
  • Satellite model - a group of small and medium businesses dependent on external companies (e.g. the region of Manaus in Brazil)

Cluster and innovation

A cluster is a structure that because of the ability to use innovation and organizational capabilities of the regional environment and the ability to accumulate intellectual capital and its efficient use, fits perfectly in the modern paradigm of innovation, its systemic, holistic, and interactive approach. Cluster combines the flexibility of small firms in innovation and global scale of large companies. Local environment cooperates with companies e.g.: state institutions, research and development organizations, standards bodies, quality control laboratories and universities, and even professional, political and cultural organizations.

Benefits and risks

Clusters are formed in virtually all economic sectors in many countries. A growing number of clusters indicates the country's economic upturn. Clusters enhance the innovation environment, increase the export and attract foreign investment.

Participation in clusters can sometimes inhibit innovation. This happens when the management uses schematic thinking and companies strive to maintain the existing, well-known and safe standards

References

  • Kozuch, M. A., Ryan, M. P., Gass, R., Schlosser, S. W., O'Hallaron, D., Cipar, J., ... & Ganger, G. R. (2009, June). Tashi: location-aware cluster management. In Proceedings of the 1st workshop on Automated control for datacenters and clouds (pp. 43-48). ACM.