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1.5 Clusters

 

What is a Cluster?
Firms and institutions in related industries tend to cluster together, no matter how mature or high-tech they are, because they gain advantages from doing so. They can exploit local specialized suppliers, services and human resources; to locally available formal and informal information flows and spillovers; and to the increased innovation stimulated by local rivalry and imitation effects. This produces a paradox: in an increasingly globalized world, businesses tend to cluster together in order to be more competitive and to profit from localized conditions that support their standalone competitive advantages.
Clusters are not associations of firms that group together to achieve common objectives. Rather, they are unplanned features of socioeconomic reality in most regions. Therefore, there are a variety of advantages found in working on competitiveness reinforcement at the cluster level, including:
• Economies of scale, in terms of analysis, as companies in a cluster tend to follow similar strategies, operate within the same or related value chains, and have similar structures.
• Small and Medium Enterprises (SMEs) in clusters benefit from high-level strategic analysis to which they would otherwise not have access.
• Additionally, by working together, firms can exploit their geographical proximity through collective manipulation of the local conditions on which their strategies and competitive advantages depend. This may involve the development of specialized infrastructure, support institutions (technical centres, logistic centres, etc.), advanced knowledge and skills, specialized financial products, and improved access to critical suppliers and service providers.
• Finally, working on competitiveness reinforcement at a cluster level in a region or a relatively small national territory improves targeted industrial policies from a government perspective.

Of course, belonging to a cluster does not guarantee a company’s success. The basis for a firm’s success is the successful implementation of a differentiated strategy that will offer a unique value proposition to the market. With the acceleration of global economic change in areas such as deregulation, free trade, value chain fragmentation, firms must frequently reassess their strategies. Many firms, especially small and medium enterprises, lack the information and skills necessary to revise their strategies alone.

Cluster Initiatives
Cluster initiatives are the basis for a cluster-based industrial or economic development policy. They are the tool that helps governments understand industry needs and define market-guided support policies. Not only do they provide a better perspective of the territory’s economic reality and particular industry needs, but they also enable governments to design tailor-made support policies with private sector participation in their financing and management.

How SMEs can collaborate in clusters?
Due to the limited market power, SMEs can innovate and compete through interaction with other firms. Their competitiveness can be raised by sharing resources and processes of interactive learning. Through vertical collaboration, firms cooperate with suppliers and customers throughout the value chain. Through horizontal collaboration, firms develop arrangements with competitors. One of the most important features of clustered firms is the ability to combine competition and collaboration.

To get a better idea about the cluster collaboration please follow the links:
• The Competitiveness business cases on cluster initiatives
www.competitiveness.com

– watch the video abut collaboration in Oregon Food Processing Cluster – where collaboration allowed to develop new, energy efficient production techniques