From integrated enterprises to regional clusters: the changing basis of competition

Abstract

As manufacturing becomes a truly global affair, the basis of competition will no longer be between individual companies and their supply chains but between regional industrial clusters. Large multi-nationals can relocate operations to any part of the world, with significant impact on the regions into and out of which they move. This has significant implications for economic development in any regional economy. A new form of competition has come into being, namely, that between different regions of the world seeking to attract and retain manufacturing bases of multi-national companies. The strengths of the regional clusters — networks of interrelated businesses and other organisations — influence the multi-nationals in their location and sourcing decisions. This paper discusses the nature of clusters, giving illustrative examples from several parts of the world. Nevertheless, the cluster concept is only partially understood. Many questions concerning cluster development need to be examined. A brief discussion of the operations management and IT issues within clusters, as opposed to within individual member companies, is given. The paper presents a research agenda.