Clusters and the New Economics of Competition Essay

Words: 7465
Pages: 30

Clusters and the new economics of competition
Harvard Business Review; Boston; Nov/Dec 1998; Michael E. Porter; Volume: 76
Issue: 6
Start Page: 77-90
ISSN: 00178012

Today's economic map of the world is dominated by what are called clusters: critical masses - in one place - of unusual competitive success in particular fields. Clusters are not unique, however; they are highly typical - and therein lies a paradox: the enduring competitive advantages in a global economy lie increasingly in local things - knowledge, relationships, motivation - that distant rivals cannot match. Untangling the paradox of location in a global economy reveals a number of key insights about how companies continually create competitive
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A host of local institutions is involved with wine, such as the world-renowned viticulture and enology program at the University of California at Davis, the Wine Institute, and special committees of the California senate and assembly. The cluster also enjoys weaker linkages to other California clusters in agriculture, food and restaurants, and wine-country tourism.

Consider also the Italian leather fashion cluster, which contains well-known shoe companies such as Ferragamo and Gucci as well as a host of specialized suppliers of footwear components, machinery, molds, design services, and tanned leather. (See the exhibit "Mapping the Italian Leather Fashion Cluster.") It also consists of several chains of related industries, including those producing different types of leather goods (linked by common inputs and technologies) and different types of footwear (linked by overlapping channels and technologies). These industries employ common marketing media and compete with similar images in similar customer segments. A related Italian cluster in textile fashion, including clothing, scarves, and accessories, produces complementary products that often