Why a Cluster?

A cluster is a geographically proximate group of interconnected companies and associated institutions in a particular field, linked by commonalities and complementarities. Because of the shared proximity – both in terms of geography and of activities – cluster constituents enjoy the economic benefits of several types of positive location-specific externalities. These externalities include access to specialised human resources and suppliers, knowledge spillovers, pressure for higher performance in head-to-head competition and learning from the close interaction with specialised customers and suppliers.

Clusters are important because they create tangible economic benefits. The benefits of a cluster come in three dimensions Firstly, companies can operate with a higher level of efficiency, drawing on more specialised assets and suppliers with shorter reaction times than they would be able to in isolation. Secondly, companies and research institutions can achieve higher levels of innovation. Knowledge spillovers and the close interaction with customers and other companies create more new ideas and provide intense pressure to innovate while the cluster environment lowers the cost of experimenting. Thirdly, the level of business formations tends to be higher in clusters. Start-ups are more reliant on external suppliers and partners, all of which they find in a cluster. Clusters also reduce the costs of failure, as entrepreneurs can fall back on local employment opportunities in the many other companies in the same field.

Source: www.clusterobservatory.eu/system/modules/com.gridnine.opencms.modules.ec...