Globalization and Entrepreneurship

Globalization and Entrepreneurship

Policy and Strategy Perspectives

The McGill International Entrepreneurship series

Edited by Hamid Etemad and Richard Wright

The contributors to this collection provide a wealth of new analyses of both traditional and emerging aspects of entrepreneurship, from a variety of national perspectives and from a variety of disciplines. Globalization has begun to dismantle the barriers that traditionally segregated local business opportunities and local firms from their international counterparts. Local markets are becoming integral parts of broader, global markets. As globalization proceeds apace, entrepreneurs and small businesses will play a more prominent role on the global business arena. The volume is divided into three sections. The first looks at the internationalization process itself while the second focuses on factors facilitating this process in small and medium-sized firms. The last section examines emerging dimensions in management policy.

Chapter 6: Cluster Development Programmes: Panacea or Placebo for Promoting SME Growth and Internationalization?

Peter Brown and Rod McNaughton

Subjects: business and management, entrepreneurship, international business


Peter Brown and Rod McNaughton INTRODUCTION Regional cluster development is the latest panacea in government initiatives to encourage home-based competitive advantage for small firms trying to operate in an international market. Where governments once focused on general network strategies to address issues of growth, competitiveness and internationalization (McNaughton and Bell, 1999), they now embrace the concept of localized networks. These clusters of similar firms, found in distinct geographical regions, apparently derive support and competitive advantage through highly localized inter-firm relationships, place-specific history, economic factors, values and culture. Drawing on a range of research – including that related to industrial districts (Marshall, 1910), economic geography (Weber, 1929; Krugman, 1991), localized competitive advantage (Porter, 1990, 1998), local milieu (Aydalot and Keeble, 1988; Camagni, 1991), location-specific knowledge and innovation (Maskell and Malmberg, 1999; Feldman, 1994) – the concept of dynamic SME development through inter-firm relationships and spatial proximity has achieved international currency. Underlining the intrinsic developmental advantages of location is the frequently cited evidence that clusters result in dynamic regional economic development. Areas like Northern Italy (Putnam, 1993), Baden-Wurttemberg (Staber, 1998), Silicon Valley and Boston’s Route 128 (Saxenian, 1990, 1994) have been held up as proof that economic and competitive advantages accrue where similar firms cluster together. There should be little surprise that government agencies in at least 35 different instances (Porter, 1998) have focused on policy implementation designed to stimulate and encourage the development of dynamic clusters of industrial activity within specific regional economies. This championing of clusters...

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