Industrial Dynamics and Clusters: A Survey

Abstract

We review the literature on clusters and their effects on entry, exit and growth of firms as well on the evolutionary dynamics underlying the process of cluster formation. Our extensive review shows that there is strong evidence that clusters promote entry, but little evidence that clusters enhance firm growth and firm survival. The emergence of clusters is best understood as an evolutionary process of capability transmission between parent firms and their spinoffs, rather than as an outcome of localisation economies that would increase the performance firms in clusters compared to firms outside clusters. From a number of open questions we distil various future research avenues stressing the importance of understanding firm heterogeneity and the exact mechanisms underlying localisation economies.

Network position and firm performance – the mediating role of innovation

“…Firms may be co-located but not be in contact with each other and thus fail to exchange knowledge and experience -network contacts do not emerge as a matter of course (Dolfsma et al 2009). This may explain why a recent review of the effect of regional clustering of firms does not seem to promote firm growth (Frenken et al 2014). …”

“…Differentiation by these related firms may allow a firm to obtain the offering that best fits with its own strategic choice. Firms located in a cluster may benefit from knowledge spill-overs and thus be more innovative (Frenken et al 2014;Van der Panne 2004;Arkhan 2009). …”

Variety, economic growth and knowledge intensity of European regions: a spatial panel analysis

“…This breaks down the usual diversity conceptualization in two distinctive elements that have marked different outcomes. Regional specialization and clustering remain traditionally hypothesized to be attached to productivity growth (Kemeny and Storper 2014;Frenken et al 2014).…”

Introduction to the 50th Volume

“…However, if firms collaborate but are not located in proximity, they may at some point move closer together. FRENKEN et al (2015) provide a valuable review of research on the relationship between industrial clusters and the entry, growth and exit of firms. They suggest that firms in the same industry can lose knowledge and talent to rivals if they are located in proximity, whereas firms in related industries are more likely to benefit from co-location and less likely to suffer.…”