Cluster or Diversify? A Dilemma for Sustainable Local Techno-Economic Development

Abstract

By highlighting the efficiencies gained from regional specialization, the cluster concept has distracted economic development officials from their traditional role of diversifying regional and local economies. Clustering was a viable strategy for much of the 18 years following its original appearance in the literature. Now, two events cast doubt on the continued viability of cluster-based specialization. First, the digital convergence has blurred the boundaries that once separated one industry from another. An industry cluster strategy becomes difficult when the industry cannot be defined. Second, many cluster initiatives fail. Combining literature search with the system-theoretic notions of efficiency and redundancy, we find many factors moderate cluster success. This implies regions facing uncertain success in their cluster-building efforts should thoroughly understand their unique circumstances and build upon them. Regions with successful clusters are advised to aim for multiple related clusters or superclusters.