Learning objective

After reading this component you will have learnt the importance of clustering nowadays. Although the component has an economic approach it has much to do with innovation because the presence of clusters in a region can be an indicator of how innovative it is. You will learn what a cluster is, the different stages involved in its development, why clusters are created, the characterisation of European clusters and an example of a Spanish cluster. It will take you about 30-40 minutes to go through this module. 


Since the 1960s interest in small enterprise promotion has grown as a way of generating economic growth and employment. Small producers tend to use technology developed or available in their regions and they operate on a scale more appropriate to the size of their local markets and institutional capabilities. Besides, expansion of the SMEs sector has long-term benefits in terms of developing entrepreneurial and management capacities; and increasing opportunities for training and human resource development at a lower cost than otherwise available through formal institutions or large firms1.

In theory, SMEs might enjoy some advantages over large competitors such as, greater flexibility in a changing environment, or the ability to serve small and specialised markets. Nevertheless, much of the research carried out in the past thirty years suggests that in general SMEs are either marginalised by large-scale business or subordinated in ways which excludes them from appropriating the profits of technical changes. Unable to accumulate, they were squeezed into tightening economic spaces where competition weakens any option for developing their human or technological resources2.

Under these conditions, it is not surprising that huge interest was raised when examples of internationally competitive industries composed predominantly of SMEs began to be brought to light in the 1980s. The examples were linked to localisation of production; that is to say with sectorial agglomerations or clusters of firms.3

1 Albu, Michael. Technological learning and Innovation in Industrial Clusters in the South. Electronic Working Paper Series. Paper No 7.
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