Foundations of the Knowledge Economy
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Foundations of the Knowledge Economy

Innovation, Learning and Clusters

Edited by Knut Ingar Westeren

This book presents new evidence concerning the influential role of context and institutions on the relations between knowledge, innovation, clusters and learning. From a truly international perspective, the expert contributors capture the most interesting and relevant aspects of knowledge economy.
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Chapter 13: International Virtual Industry Clusters and SMEs: Early Process Policy Recommendations

Meir Russ and Jeannette K. Jones


Meir Russ and Jeannette K. Jones Introduction The new knowledge-based economy puts forward distinctive contests to individual entrepreneurs, companies, regions (e.g., Statistics Canada, 2005), and industry clusters (e.g. Russ and Jones, 2011). One of the more intriguing challenges encases the complex nature of tacit knowledge. On one hand, the importance of tacit knowledge as an endogenous foundation of growth by business strategists at the individual/entrepreneur and company levels (e.g. Audretsch, 2003) and as the exogenous source of economic growth is now widely received by economists for the regions and nations (e.g. Statistics Canada, 2005). At the same time, the importance of the stickiness of tacit knowledge is increasing (e.g. Audretsch, 2003). This tacitness and the stickiness of knowledge enforce new characteristics on public policy toward economic development (e.g. Johansson et al., 2001). Can the new information and communication technologies (ICTs) help in resolving this challenge? Counter-intuitively, until recently this was not the situation. The shortened half-life and sticky nature of knowledge greatly enhanced the weight of face-to-face (F2F) interactions which played a major role in business success and wealth creation (e.g. Dohse, 2003), and the importance of learning in regional networks for knowledge development purposes (e.g. Fedderke and Klitgaard, 1998). In addition, the increased pace of new knowledge creation resulted in a higher concentration of industry clusters in major urban areas (Florida et al., 2007), as well as increasing the income gap between the munificent regions and the poor, rural areas (e.g. Russ and Jones, 2011). This chapter will propose...

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