Competitive Advantages of Clustering and Agglomeration on a Regional Level

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Bastien Létang A01296290 Competitive intelligence Topic: Competitive advantages of clustering and agglomeration on a regional level Introducion: Regionalization is increasingly viewed as one important aspect of the globalization process. The principal empirical sign of the trend towards regionalization is the apparent grow by the importance of industrial clusters over the past few decades. Since the 1970s, different types of industrial clusters have established a strong position in world markets for both traditional products and high technology products (e.g. Silicon Valley). This has leading researchers and policymakers to observe that in a global economy which boasts rapid transportation, high-speed communication and accessible markets, one would expect location to diminish in importance. But the opposite is also true. The enduring competitive advantages in a global economy are often local, arising from concentrations of highly specialized skills and knowledge, institutions, rivals, related businesses, and sophisticated customers (Porter 1998). Thus, today’s economic map of the world is dominated by cluster: critical masses in one place of unusual competitive success in particular field. Therefore, despite economic pressures for globalization, many industrial clusters are still tightly connected with localized geographical features. Porter explains how clusters affect competition, in three ways: first, by increasing the productivity of companies based in the area; second, by driving the direction and pace of innovation; and third, by stimulating the formation of new businesses within the cluster. Geographic, cultural, and institutional proximity provides companies with special access, closer relationships, better information, powerful incentives, and other advantages that are difficult to tap from a distance. Competitive advantage lies increasingly in
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