Business Clusters
Business Clusters Defined
 The term ‘business clusters’ is defined in Wikipedia as:
"A business cluster is a geographic concentration of interconnected businesses, suppliers, and associated institutions in a particular field. Clusters are considered to increase the productivity with which companies can compete, nationally and globally."
The terms ‘cluster’ and ‘business cluster’ are regarded as having been first introduced by Michael Porter in his book, The Competitive Advantage of Nations (1990).
Harvard Business defines ‘business clusters’ in this way:
“Clusters are geographic concentrations of interconnected companies, specialized suppliers, service providers, and associated institutions in a particular field that are present in a nation or region. Clusters arise because they increase the productivity with which companies can compete.”
They go on to point out that clusters should be an important agenda for governments, companies, and other institutions.
Some people consider ‘clusters’ as only arising where there is a certain concentration or ‘critical mass’ of business in a particular area. (Possibly the best known example of that is Silicon Valley).
The NSW State Government, on the other hand, recognises the broader importance of collaboration in general saying:
“Industry and business collaboration has long been recognised as one of the most practical and strategic options for successfully negotiating today's increasingly competitive and global market place. Working together for growth helps overcome the scale and capability limits inherent in operating an individual enterprise.”
The Benefits of Business Clusters
The NSW State Government points out that clusters can:
- facilitate new ideas and ways of doing things,
- creating momentum,
- productively tackle obstacles and barriers, and
- open up new and successful commercial opportunities.
Others have stated that the benefits of clustering can be summarised as:
- increasing productivity,
- driving innovation, and
- building new business.
In short, no matter what industry and region you are in, you should take a look at the idea of collaborating with your competitors. (More on this idea and how to do it in future blogs).
Allied information on Business Clusters:
Business Cluster & Economic Development Examples and Case Studies
Our Process for Business Cluster Development
The First Step in Cluster Development
More Thoughts on the Definition of Clusters
The Evolution of Business Clusters
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