Cluster_Theory_&_Competition

Cluster Theory & Competition Cluster Theory & Competition An examination of Porter’s cluster theory in the context of a firm’s, region’s and nation’s competitive advantage. INTRODUCTION The age old adage about the three keys to success for operating a business “location, location and location” still holds true despite the reduced effect time and space barriers have on our life following the advent of transport and communication technologies. Porter has referred to this phenomenon as a paradox. The growing global movement of goods, information, capital, and technology in recent decades has led to a tendency to see geography as diminishing in importance to competition. (Porter, 1998b, p.11) The notion of location has influenced business in a major way from the loca gas station to the multinational corporation’s offshore activities. In today’s economy, more than ever, we see a conflicting set of pressures toward globalisation and localization, which has been coupled with a shift in perspective from economic theory to business theory. It is this notion that underlies in Porter’s literature on the competitive advantage of nations. The following paragraphs, 90 years apart, discuss the nature of a cluster, the subject which is the underlying focus of this paper. British auctioneers are all within a few blocks in London. Basel is porter, industry, firms, industries, cluster, competitive, advantage, innovation, factors, clusters, economic, 1990, porter’s, local, factor, notion, model, 1998b, diamond, competition, theory, related, one, new, inputs, economics, role, information, elements, demand, companies, clustering, between, 1998a, trade