Moderating Effect of Cluster on Firm's Innovation Capability and Business Performance: A Conceptual Framework

Abstract

This paper tries to conceive a conceptual framework for analysing cluster effect on firm's innovation capability and firm's business performance. This paper is written as part of the research on information and communication technology (ICT) innovation cluster in West Java, Indonesia. Analysis on the firm's innovation capability including its factors will be elaborated and followed by the discussion on firm's business performance. The relationship of firm's innovation capability and business performance will be discussed while considering the effect of clusters in terms of cluster's effect as a value chain cluster, as a coopetition cluster and as a resource-shared cluster. Cluster is hypothesized to have moderating effect on the relationship between firm's innovation capability and business performance.Conceptual framework from this paper will be used at preliminary stage of the research on ICT innovation cluster that can be expected to contribute into the development of ICT cluster in West Java in particular and Indonesia in general.