The Involvement of Firms in Industrial Clusters: A Conceptual Analysis

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					International Journal of Management           Vol. 26 No. 3     December 2009         445


The Involvement of Firms in Industrial Clusters:
A Conceptual Analysis
Keui-Hsien Niu
California State University, Sacramento

An industrial cluster is defined as a geographical and sectoral concentration and
combination of firms. The worldwide emergence of industrial clusters has increasingly
attracted attentions in research fields such as strategic management and international
business. It is argued that the development of regional industrial clusters promotes
tighter inter-firm coordination and frequent collaboration which help participating
firms in pursuing competitive positions in global market. As such, a number of firms may
quickly rise to global prominence due to the benefits of their involvement in an industrial
cluster. Industrial cluster related research, however, are limited to qualitative studies
due to the lack of the attempts of measuring and operationalizing a firm’s involvement
in an industrial cluster. This study attempts to incorporate several related theories and
categorizes a firm’s involvement in an industrial cluster into two measurable components:
traded interdependences, which are more transactional based factors, and non-traded
interdependences, which are more socio-cultural based factors, in hope of facilitating
researchers to conduct quantitative research in the future.

                                     Introduction
While globalization and the continuing technological revolution provide a number of
challenges for firms today, they have also combined to provide many opportunities.
This is particularly true for companies in smaller countries that may lack the domestic
market necessary for growth, and for companies in developing countries with weak
infrastructures and limited supporting industries. Recognizing this, many countries have
promoted the development of regional clusters where firms can develop their competences
and competitive advantages against the world’s best competitors by sharing resources,
innovative capabilities, and knowledge. Many have acknowledged the value of clusters
in high technology industries (e.g. Bresnahan et al., 2001; Porter, 1998; Saxenian, 1994;
Zucker et al. 1998), which illustrates the advantages they provide for the development,
transfer, and application of knowledge necessary for continual innovation.
Successful development of such clusters, however, may prove problematic in many
countries. Porter (1990) highlighted four attributes necessary for the development of
an industry within a country: factor conditions, demand, supporting industries, and
competition. Porter (1990) has posited that the foundation for creating and sustaining
r
				
DOCUMENT INFO
Description: An industrial cluster is defined as a geographical and sectoral concentration and combination of firms. The worldwide emergence of industrial clusters has increasingly attracted attentions in research fields such as strategic management and international business. It is argued that the development of regional industrial clusters promotes tighter inter-firm coordination and frequent collaboration which help participating firms in pursuing competitive positions in global market. As such, a number of firms may quickly rise to global prominence due to the benefits of their involvement in an industrial cluster. Industrial cluster related research, however, are limited to qualitative studies due to the lack of the attempts of measuring and operationalizing a firm's involvement in an industrial cluster. This study attempts to incorporate several related theories and categorizes a firm's involvement in an industrial cluster into two measurable components: traded interdependences, which are more transactional based factors, and non-traded interdependences, which are more socio-cultural based factors, in hope of facilitating researchers to conduct quantitative research in the future. [PUBLICATION ABSTRACT]
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