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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. Image File history File links Please see the file description page for further information. ... The cluster effect is the effect of buyers and sellers of a particular good or service congregating in a certain place and hence inducing other buyers and sellers to relocate there as well. ... Wall Street, Manhattan is the location of the New York Stock Exchange and is often used as a symbol for the world of business. ... The term cluster refers to the grouping together of elements within a domain - usually spatial. ...

This concept, also known as a competitive cluster, industry cluster or Porter's cluster, was first developed by Michael Porter in 1990. Cluster development has since become a focus for many government programs. Michael E. Porter (born 1947) is the Bishop William Lawrence University Professor, based at Harvard Business School where he leads the Institute for Strategy and Competitiveness. ...

Objectives

Michael Porter claims that clusters have the potential to affect competition in three ways:

• by increasing the productivity of the companies in the cluster,
• by driving innovation in the field
• by stimulating new businesses in the field

Traits

A business cluster is a geographical location where:

• enough resources and competences amass and reach a critical threshold,
• giving it a key position in a given economic branch of activity,
• with a decisive sustainable competitive advantage over others places, or even a world supremacy in that field.

Critical threshold, a notion derived from the percolation theory, refers to a threshold, that summons up to a critical mass. ... Companies that compete by selling similar products (or even substitutes) to the same group of customers constitute an industry. ...

Types

Generally two types of business clusters, based on different kinds of knowledge, are recognized:

• Techno clusters - These clusters are high technology-oriented, well adapted to the knowledge economy, and typically have as a core renowned universities and research centers like the Silicon Valley.
• Historic knowhow-based clusters - These are based on more traditional activities that maintain their advantage in know-how over the years, and for some of them, over the centuries. They are often industry specific.

A Techno cluster referes to a science and high tech oriented Porters cluster like the Silicon Valley or AMD chip-plants, FAB s, in Dresden, F.R. Germany, Silicon Saxony. ... High tech refers to high technology, technology that is at the cutting-edge and the most advanced currently available. ... A knowledge economy or a knowledged-based economy is a phrase that refers to the use of knowledge to produce economic benefits. ... A view of downtown San Jose, the self-proclaimed Capital of Silicon Valley. ... Procedural knowledge or know-how is the knowledge of how to perform some task. ...

Process

The process of identifying, defining, and describing a cluster is not standardized. Individual economic consultants and researchers develop their own methodologies. All cluster analysis relies on evaluation of local and regional employment patterns, based on SIC codes. The Standard Industrial Classification was a United States government system for classifying industries by a four-digit code. ...

An alternative to clusters, reflecting the distributed nature of business operations in the wake of globalization is Hubs and Nodes. Hubs and Nodes is a geographic model, explaining how linked regions can cooperate to fulfill elements of an industrys value chain, and collectively gain sufficent mass to drive innovation growth. ...

Examples

Well known examples are

• The Silicon valley, in California in the field of computer technology
• The Napa Valley wine-producing region in California
• Bangalore, in India, for software outsourcing
• Paris, in France, for Haute couture
• Toulouse, in France, for aerospace
• The Silicon Fen in Cambridge, UK, for biotechnology and computer technology
• Antwerp, the diamond center
• Rotterdam, the main container port
• Albany Tech Valley, in New York State, in nano technology
• The Finnish Maritime Cluster

A view of downtown San Jose, the self-proclaimed Capital of Silicon Valley. ... A Lego RCX Computer is an example of an embedded computer used to control mechanical devices. ... Napa County is in north-central California Napa Valley is most famous for its wine. ... Bangalore evolved into a manufacturing hub for heavy industries such as Hindustan Aeronautics Limited, Indian Telephone Industries (ITI), Hindustan Machine Tools and Bharat Electronics Limited (BEL) after India gained independence from Great Britain in 1947. ... Computer software (or simply software) refers to one or more computer programs and data held in the storage of a computer for some purpose. ... City flag City coat of arms Motto: Fluctuat nec mergitur Tossed by the waves, she does not founder Coordinates : , Time Zone : CET (GMT +1) Administration Subdivisions 20 arrondissements Département Paris (75) Région ÃŽle-de-France Mayor Bertrand Delanoë (PS) City (commune) Characteristics Land Area 86. ... Haute couture (French for high sewing or high dressmaking; IPA: ) refers to the creation of exclusive fashions. ... The Capitole, the 18th century city hall of Toulouse and best known landmark in the city; in the foreground is the Place du Capitole, a hub of urban life at the very center of the city Toulouse (pronounced in standard French, and in local Toulouse accent) (Occitan: Tolosa, pronounced ) is... Look up aerospace in Wiktionary, the free dictionary. ... Silicon Fen is the name given to the region around Cambridge, England, which is home to a large number of high-tech businesses. ... Map of the Cambridgeshire area (1904) The city of Cambridge is an old English university town and the administrative centre of the county of Cambridgeshire. ... The structure of insulin Biotechnology is a technology based on biology, especially when used in agriculture, food science, and medicine. ... A Lego RCX Computer is an example of an embedded computer used to control mechanical devices. ... The Cathedral of our Lady (Onze-Lieve-Vrouwekathedraal, Antwerp) in the Handschoenmarkt, in the old quarter of Antwerp is the largest cathedral in the Low Countries and home to several triptychs by Baroque painter Rubens. ... For other uses, including the shape â—Š, see Diamond (disambiguation). ... Rotterdam Location Flag Country The Netherlands Province South Holland Population 588,718 (2006) Coordinates 51° 55 N.; 4° 30 E. Website www. ... Containers in the port of Kotka (Finland) on the Baltic Sea. ... Seaport, a painting by Claude Lorrain, 1638 The Port of Wellington at night. ... The Finnish Maritime Cluster is a cluster of companies in maritime industries in Finland. ...

External links

• Emerging Economic Clusters of the Muslim World

See also

• Cluster effect
• Spatial economics