Clusters-Apa Format

Topics: European Union, Business cluster, Small business Pages: 12 (4199 words) Published: June 20, 2013
The Advantages of Industrial Clusters
in Prolonged Economic Recession

Dr. Ninko Kostovski
University American College Skopje

Industrial clusters have various forms and in their essence, are very dynamic concepts. According to Porter, they are spatial concentrations of interrelated enterprises, suppliers, knowledge workers, universities and research and development institutions, that establishing and maintaining intense linkages between them, create their competitive advantages in relation with the enterprises that are out of the agglomeration (Porter, 1989). In Europe, industrial clusters draw much from the economic and cultural tradition of the regions. In some cases, the advantage comes from the natural resources of the regions, and there are many examples of agglomerations of knowledge based industry clusters around notable university centers or regions like that around the University of Cambridge in England. (Wissema, 2008). Industrial clusters allow the companies to be more productive and more innovative. The Industrial clusters develop unique knowledge and skills difficult to be replicated. Thus, the Industrial Clusters contribute to the competitive advantage of the region in which they exist, and this seems to be case even in the situation of a prolonged recession and economic crisis. In this paper we explore the most probable behavior of the members of the clusters in the situation of prolonged economic crisis, and especially the level of their readiness to trade off the conducive climate of the cluster with a pursue of other regions that offer significant tax reductions. In other words, we argue that the advantages of being a member of a cluster, in fact are crucial for survival and even a relative growth and that the members of the successful clusters will not be ready to swop these advantages with the tax incentives offered by various regional or state authorities elsewhere.

The Advantages of Industrial Clusters in Prolonged Economic Recession

What are the Clusters?
Clusters are defined as spatial concentrations of interrelated enterprises, specialized vendors, universities and research development institutions that are interrelated and closely cooperate, thus contributing significantly to the competitiveness of their offer and to the competiveness of the regions and states in which they operate (Porter, 1989). Clusters allow companies to be more productive and more innovative then in the case when they operate isolated. Clusters develop unique knowledge and skills combinations that are difficult to be copied and replicated. They allow the companies, regions and states in which they operate to develop sustainable competitive advantages and even to develop despite the overall recession. Several fundamental conditions have to meet for a successful cluster. However, it seems that the following are crucial: clear and shared mission and perception of the value to locate the operations within a particular cluster, clear leadership and agile management of the key actors in the cluster, clear support (spontaneous, or organized) by all relevant stakeholders, and certainly a high level of trust among the participants in the particular agglomeration. According to Alberto Pezzi, the Head of competitiveness analysis and foresight at the Observatory for Industrial Foresight of the Catalan Government: “the trust is the glue of clusters.”(Pezzi, 2009). However, it does not mean that everybody in cluster trusts each other, uncritically and clusters are not incarnation of the “imaginary perfect world” (Pezzi, 2009). Simply, in the cluster environment, information and knowledge share, including the tacit knowledge, circulate in a more effective way. This allows “all agents to react quicker and eventually, to punish those who infringed the ethical and business rules”. Nevertheless, clusters are among the main drivers of the innovation and the...

References: Boari,C Industrial Clusters, Focal Firms, and Economic Dynamism: A Perspective from Italy, IBRD & Worldbank, 2001
European Cluster memorandum 2008
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