A Comparative Study of Technology and Industry Clusters of SMEs in India

Abstract

This article attempts to compare the Small and Medium Enterprises (SMEs) belonging to industry and technology clusters in India. They are compared in terms of the technological efforts, nature of competition, competitive strategy, outward orientation, research and development intensity and export intensity. First part of the article gives the economics of clustering and the second part analyses the inter-cluster differences, if any, between the firms belonging to 13 clusters drawn from Mumbai and Thiruvananthapuram. The analysis reveals that the firms in the technology cluster are more outward oriented and R and D intensive compared to their counterparts in the industry cluster. They also differ in terms of the type of competitors and the competitive strategies. While the firms in the technology cluster face competition from established foreign firms, those in the industry cluster from established local firms. Process innovations are used by firms in the technology cluster whereas productivity improvements are used by firms in the industry cluster for sustaining competitive advantage. In the regression analysis, the nature of cluster, use of technology/business collaboration (Networking) and market share emerge as significant variables in explaining the R and D intensity of firms. Export intensity is explained by the R and D intensity and scale of operation.