They are ‘competitive clusters’ and, over the past decade, have been the creed of many European economic development agencies.

It was the economist Alfred Marshall who, in 1890, identified clustering in industrial districts in England. One hundred years later, the Harvard professor Michael Porter, in his book The Competitive Advantage of Nations, talked about groups of interconnected firms, suppliers, related industries and institutions arising in particular locations. Mr Porter’s work helped set off the current clusters boom.

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In 2001, the UK government mapped 154 clusters across the UK; in France there are 71 designated clusters. At the Stockholm School of Economics, the European Cluster Observatory has produced a directory which lists 1101 cluster organisations across 203 regions in 30 European countries. The largest number are active in information and communication technologies; biotechnology; the automotive industry; and environmental technology. Funding and support for clusters tends to come mainly from governments, with less than 20% of clusters primarily funded by the private sector. Governments try to use clusters to attract FDI.

Mr Porter’s tome says that companies are the stars of competitive clusters, while governments should act as catalysts to push and challenge the cluster to secure higher productivity and promote competitive advantage. From my perspective, it seems that the stars are not really part of the cluster circus. When I ask a client company what cluster they are in, they usually don’t know. They tend to define themselves by which industry they are in, or which customers they serve. Cluster is a word rarely heard in conversations with businesses, but it is a word too often spoken by investment promotion agencies.

Douglas Clark is director of Tenon techlocate, a site search and location marketing consultancy, which is part of the Tenon Group plc, a top 10 firm of accountants and business advisers.

Email: douglas.clark@tenongroup.com