Industry Clusters FAQ

Industry clusters are groups of similar and related firms in a defined geographic area that share common markets, technologies, worker skill needs, and which are often linked by buyer-seller relationships.

Firms and workers in an industry cluster draw competitive advantage from their proximity to competitors, to a skilled workforce, to specialized suppliers and a shared base of sophisticated knowledge about their industry.

How do clusters work?

Clusters illustrate why place still matters in the global economy. Businesses thrive in particular locations because their network of local connections to a specially skilled local workforce and the availability of strong local suppliers in proximity to one another generates business advantages that can not easily be imitated or competed away by low cost competitors.

Why are clusters important to the economy?

The importance of clustering seems like a paradox in the age of the Internet. While many people have assumed that the emergence of the global economy has somehow diminished or reversed the importance of place –“in an information economy, anything can be anywhere,” it is asserted — careful studies have shown the reverse is true. Harvard Business School’s Michael Porter documented that the creation and maintenance of competitive advantage hinges most critically on clusters of highly competitive firms in a wide variety of industries in every developed country.

What is the theory behind clusters’ competitive advantage?

Harvard Business School’s Michael Porter defines clusters as groups of similar and related firms concentrated in a small geographic area (Porter, 1998). A cluster must consist of interconnected firms in the same fields, specialized suppliers, service providers, firms in related industries, and associated institutions (such as trade associations, universities, technology transfer centers, etc.). Through their competitive and cooperative dynamics, industry clusters are successful in creating competitive advantages for their member firms.

What are the common misconceptions about clusters?

The term clusters has come into common use in the last few years, and in many cases there is some confusion about what it does and doesn’t mean. Because clusters are often discussed as part of public sector-led economic development efforts, some people assume that clusters are just some new kind of government led economic development program, and one that might involve favoring some parts of the economy over others. There are four common misconceptions about clusters.

What can be done to develop clusters in Oregon?

In its December 2003 Leadership Summit discussion paper, the Oregon Business Plan outlines three general recommendations for the improvement and development of Oregon’s clusters.

How can I get involved in cluster development?

Find out about clusters in your industry by clicking on the category that best describes your business under Oregon Clusters. In industries where a successful cluster development effort is already under way, the cluster page provides contact info and links to more detailed information.

If you don’t see your industry listed, contact us to get involved.

Are there any events that will better help me understand how clusters relate to my industry?

Business Oregon, the State’s Economic Development Department, maintains a calendar of economic development and industry cluster events.

How can I learn more about the needs of industry clusters in Oregon?

Read the industry cluster pages on this website to learn about Oregon’s industry clusters and their challenges and opportunities for growth in Oregon.

Who do I contact if I have questions about clusters?

Still have more questions? Contact us

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