Porter, M. E. (1998). Clusters and the new economics of competition. Harvard Business

4 important questions on Porter, M. E. (1998). Clusters and the new economics of competition. Harvard Business

What are the three cluster elements that influence the level of competition?


  1. Increasing productivity
  2. Driving innovation
  3. Stimulating new business creation

What are the arguments of increasing productivity?

  1. Recruiting employees is easier in clusters where a pool of experienced people is available
  2. Specialized information is accumulated within a cluster, where because of personal relationships the information is more transferable
  3. The whole being more than the sum of ones parts -> complementing of different products, the reputations of a product for a certain location, or simply the attractiveness for customers to shop where supply is numerous
  4. Investments are for the whole cluster

What are the arguments for driving innovation?

  1. Same reasons of productivity
  2. Visibility of evolving technology, component and machinery availability
  3. Experimentation with innovation is easier when having to deal with the challenge of coordinating with other organizations
  4. Pressure within the cluster
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What are the arguments of stimulating new business creation

  1. Individuals working in the cluster spot market gaps more easier
  2. Resources are often already available in the cluster
  3. Financial institutions will be more familiar with the cluster
  4. Because of the concentration of consumers locally, the risk of entering is lower.

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