Porter's Cluster Theory

Topics: Michael Porter, Strategic management, Economics Pages: 17 (3806 words) Published: October 8, 2014


TABLE OF CONTENTS

TABLE OF CONTENTS…………………………………………………………………...p.2 INTRODUCTION…………………………………………………………………………..p.3 A Brief Summary of Porter’s Article………………………………………………………p.4 THE ORIGINS OF PORTER’S CLUSTER THEORY…………………………………….p.6 EXTERNAL CRITICISM…………………………………………………………………..p.8 Theoretical Gaps…………………………………………………………………………....p.8 Clusters and Their Practical Implications…………………………………………………p.9 FUTURE DIRECTIONS…………………………………………………………………...p.12 CONCLUSION……………………………………………………………………………..p.13 APPENDICES……………………………………………………………………………...p.14 REFERENCES……………………………………………………………………………..p.15

INTRODUCTION
Over the past two decades there has been an increasing popularity among academics of the development and expansion of cluster theory, its effects on productivity and economic growth, and the implications for public policies. Undisputedly, Michael Porter is a prominent practitioner in the field and also contributed to the proliferation of the definition and the basic assumptions and characteristics of cluster theory as well as to the promotion and manifestation of the beneficial effect an efficient organization of clusters can have on the economy hosting those clusters. The paper by Porter (2000) evaluated in this critical review represents a comprehensive summary of the existent knowledge and information on clusters and feeds directly from his primary research on cluster theory – The Competitive Advantage of Nations, which will be examined in more detail in the following sections. Porter’s work provides some meaningful insights into the practical side of cluster theory and potential positive outcomes in the presence of effort, knowledge and resources optimization – ‘In a cluster, the whole is greater than the sum of its parts’. However, there are certain drawbacks of this study as being predominantly descriptive, lacking rigour and substantial empirical evidence. Furthermore, the author relies mainly on his own former studies on clustering, omitting the presence of external information sources and researches, which in turn leads to subjectivity and bias. These and more gaps in the main points of Porter’s study will be juxtaposed with other scholars and researchers in the field in order to achieve a certain degree of objectivity about the validity and applicability of cluster theory. The structure of this review is as follows: (1) Presentation of the origins of cluster theory and how this might have influenced Porter’s work and in what ways; (2) Supposition of Porter’s work to other relative studies; (3) Critique of the paper supported by external sources in order to conduct an unbiased evaluation; (4) Recommendations for future improvement of cluster theory; and (5) A summary of the main points. A Brief Summary of Porter’s Article

In his article, Porter (2000) proposes a comprehensive definition of clusters in relation to the decreasing significance of location in relation to competition on a global scale. In addition, as stated in the definition, clustering represents a complex phenomenon predominantly inherent to advanced nations (Porter, 1998). This is a very important point which will be discussed in more detail in the critique section. Furthermore, Porter expands the definition and incorporates his knowledge about clusters in order to offer a comprehensive description of those geographic concentrations and state reasons why should economies divide into clusters instead of industries and be analysed on the basis of cluster theory instead of using other analytical approaches. According to Porter (2000), the traditional view of competition (prior to cluster theory development) was concentrated on the static side of competition, location and cost minimization. However, the author takes the view that presently with the development of clusters, competition is dynamic and location is related to productivity and productivity growth (p.19). Thus, productivity and competitive advantage result from how...

References: A Brief Summary of Porter’s Article
In his article, Porter (2000) proposes a comprehensive definition of clusters in relation to the decreasing significance of location in relation to competition on a global scale
THE ORIGINS OF PORTER’S CLUSTER THEORY
Undoubtedly, Porter’s work on clustering has been greatly influenced by Marshall (1920) and his study on the ancestors of clusters
Theoretical Gaps
In his book, The Competitive Advantage of Nations, Porter (1990) uses descriptive methods and tools in order to establish, develop and expand basic assumptions, characteristics, definitions and concepts in regard to cluster theory
Clusters and Their Practical Implications
According to Porter (2000), constraints to clustering and competitiveness exist
Etzkowitz (2000)
The triple Helix model
N/A
Gordon and McCann (2000)
Kotels (2003)
Cluster classification based on the type of product/service they provide, the stage of development they have achieved, and the locational dynamics they are subject to
Markusen (1996)
Markusen cluster model
Sölvell (2008)
Cluster factors model
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