Policy and Strategy Perspectives
The McGill International Entrepreneurship series
Edited by Hamid Etemad and Richard Wright
Chapter 6: Cluster Development Programmes: Panacea or Placebo for Promoting SME Growth and Internationalization?
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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