The term business cluster, also known as an industry cluster, competitive cluster, or Porterian cluster, was introduced and popularized by Michael Porter in The Competitive Advantage of Nations (1990). The importance of economic geography, or more correctly geographical economics, was also brought to attention by Paul Krugman in Geography and Trade (1991). Cluster development has since become a focus for many government programs. The underlying concept, which economists have referred to as agglomeration economies, dates back to 1890, and the work of Alfred Marshall.
Michael Porter claims that clusters have the potential to affect competition in three ways: by increasing the productivity of the companies in the cluster, by driving innovation in the field, and by stimulating new businesses in the field. According to Porter, in the modern global economy, comparative advantage—how certain locations have special endowments (i.e., harbor, cheap labor) to overcome heavy input costs—is less relevant. Now, competitive advantage—how companies make productive use of inputs, requiring continual innovation—is more important. Porter argues that economic activities are embedded in social activities; that 'social glue binds clusters together'. This is supported by recent research showing that particularly in regional and rural areas, significantly more innovation takes place in communities which have stronger inter-personal networks.
Put in another way, a business cluster is a geographical location where enough resources and competences amass to reach a critical threshold, giving it a key position in a given economic branch of activity, and with a decisive sustainable competitive advantage over other places, or even a world supremacy in that field (e.g. Silicon Valley and Hollywood).
Wikipedia Article: Business Clusters
Pune today has become a technology start up cluster in the true sense of the word. IIM Ahmedabad's Center for Innovation, Incubation and Entrepreneurship has taken the lead in preparing a report on how the eco system in Pune has come up to foster such business clusters. Pune has become a hot-bed for product companies across sectors including Financial Technologies, Payments, Security, PLM, Big Data/Analytics, Gaming, EdTech, Internet of Things, etc. [Reference: THiNK PUNE]
Read the report at CIIE website on what ingredients have made Pune into the <b>"START UP CITY OF INDIA"</b>.
THiNK PUNE: Download the full report here
Michael Porter claims that clusters have the potential to affect competition in three ways: by increasing the productivity of the companies in the cluster, by driving innovation in the field, and by stimulating new businesses in the field. According to Porter, in the modern global economy, comparative advantage—how certain locations have special endowments (i.e., harbor, cheap labor) to overcome heavy input costs—is less relevant. Now, competitive advantage—how companies make productive use of inputs, requiring continual innovation—is more important. Porter argues that economic activities are embedded in social activities; that 'social glue binds clusters together'. This is supported by recent research showing that particularly in regional and rural areas, significantly more innovation takes place in communities which have stronger inter-personal networks.
Put in another way, a business cluster is a geographical location where enough resources and competences amass to reach a critical threshold, giving it a key position in a given economic branch of activity, and with a decisive sustainable competitive advantage over other places, or even a world supremacy in that field (e.g. Silicon Valley and Hollywood).
Wikipedia Article: Business Clusters
Pune today has become a technology start up cluster in the true sense of the word. IIM Ahmedabad's Center for Innovation, Incubation and Entrepreneurship has taken the lead in preparing a report on how the eco system in Pune has come up to foster such business clusters. Pune has become a hot-bed for product companies across sectors including Financial Technologies, Payments, Security, PLM, Big Data/Analytics, Gaming, EdTech, Internet of Things, etc. [Reference: THiNK PUNE]
Read the report at CIIE website on what ingredients have made Pune into the <b>"START UP CITY OF INDIA"</b>.
THiNK PUNE: Download the full report here
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