Found at: http://www.competitiveness.org/article/articleprint/14/-1/5/

What is a cluster? (*)

Regional clusters: Some definitions

Many terms have been used to describe geographic agglomerations of firms in an industry or related industries. Terms with somewhat different meanings are sometimes used interchangeably, creating confusion and a need for more precise definitions.In particular, it is important to distinguish between:

• An industrial cluster (see Porter 1990) is a set of industries related through buyer-supplier and supplier-buyer relationships, or by common technologies, common buyers or distribution channels, or common labor pools.
• A regional cluster (see Enright 1992, 1993) is an industrial cluster in which member firms are in close geographic proximity to each other. A more inclusive definition would be: regional clusters are geographic agglomerations of firms in the same or closely related industries
• Industrial districts (such as the Italian industrial districts described in Brusco 1992; Piore and Sabel 1984; Becattini 1987, 1989; Goodman and Bamford 1990; and Pyke, Becattini, and Sengenberger 1992) are concentrations of firms involved in interdependent production processes, often in the same industry or industry segment, that are embedded in the local community and delimited by daily travel to work distances (Sforzi 1992).
• A business network consists of several firms that have ongoing communication and interaction, and might have a certain level of interdependence, but that need not operate in related industries or be geographically concentrated in space (see Staber 1996 and Sydow 1996 for discussions of business networks).

Regional clusters, as defined here, include industrial districts of small and medium sized craft firms, concentrations of high technology firms related through the development and use of common technologies, and production systems that contain large hub firms and their local suppliers and spinoffs.

Regional clusters also subsume the spatial manifestations of the "production channels" of Doeringer and Terkla (1995), the "flexible production complexes" of Scott and Storper (1989), and the "innovative milieu" of Maillat (1991). Given the extensive literature on industrial districts, the distinction between regional clusters and industrial districts (a subset of regional clusters) is worth highlighting. Whereas the focal point of an industrial district is often a single industry or even a single industry segment, regional clusters generally involve a range of related industries.

The rationale for using the relatively broad term, regional cluster, is that all of the terms alluded to describe geographic agglomerations of firms in the same or related industries and as such are used to describe aspects of the same broad phenomenon. In addition, there are distinct similarities in the explanations for the development and persistence of the differently named agglomerations in the literature, particularly in the reliance on externalities and localized information flows. This is not to say that we should ignore the differences between different types of regional clusters, but rather that we should explore in detail both their similarities and differences.

(*) text adapted from Michael J. Enright, "Regional Clusters and Economic Development: A Research Agenda," in U. Staber, N. V. Schaefer, and B. Sharma, editors, Business Networks: Prospects for Regional Development (New York: De Gruyter, 1996).

References

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Brusco, S. (1992)
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Doeringer, P. and D. Terkla (1995)
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World Link, 5, July/August, 24-25.

Enright, M. J. (1993)
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Staber, U. (1996)
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Scott, A. J. and M. Storper (1989)
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Sforzi, F. (1992)
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