Abstract
The globalization of the value chain puts older regional clusters characterized by local, vertical value chains across multiple connected sectors, at a significant risk. Firms operating within the local regional clusters need to develop new generic strategies and new bases of competitive advantage in response to the growing outsourcing within the regional cluster. We review Krugman's geography, Porter's diamond, and European regional innovation system perspectives, as well as three extensions of those perspectives, to identify relevant generic strategies and bases of competitive advantage in regional clusters. A seventh transnational value chain perspective is also discussed. Then, we contextually analyze the historical furniture cluster of the Greater Grand Rapids region, Michigan, USA, and highlight the shifts in the generic strategies and the bases of competitive advantage in response to globalization. The findings have critical implications for the theory of regional clustering, and for the policy decisions.
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