Although locations remain important to competition, it has changed vastly from a generation ago. Competition in todays economy is far more dynamic. Competitive advantage today lies in making more productive use of inputs which require continuous innovation.
What is a cluster:
Geographic concentrations of interconnected companies and institutions in a particular field.
Mainly highly specialized.
A clusters boundaries are defined by the links and complement across industries and institutions. They do not conform to industrial classification systems. They promote competition and cooperation. Competition can coexist with cooperation because they occur on different dimensions and among different players.
Why clusters are critical to competition:
they affect competition by 3 ways:
1. increasing the productivity of companies in the area.
2. driving the direction and pace of innovation which underpins future productivity growth.
3. stimulating the formation of new businesses which strengthens the cluster itself.
Clusters and productivity
companies that are in a cluster can operate more productively in sourcing inputs, accessing information, technology and institutions.
Why:
- Better access to employees and suppliers.
- Access to specialized information
- Complementarities
- Access to Institutions and Public goods
- Better motivation and measurement (local rivals share general circumstances)
Clusters and innovation
same reasons for productivity can have a more dramatic effect on innovation.
? provide capacity and flexibility to act rapidly
? can experiment at lower costs
? competitive pressure/peer pressure/constant comparison
Clusters and New Business f ...