Industries share resources utilizing similar inputs that feed and strengthen multiple industries. Because these are shared input factors one can enhance them and improve the health of more than one industry at a time. That ability to map these spill over effects and linkage type connections to understand when and where to enhance resources rapidly improves the economic climate and fundamentals. When industries collaborate to further strengthen each other through these shared complementaries they also help each other succeed even though they may be in essentially different markets that don't appear on the surface to relate. Within the cluster they interact constantly based on the many microtransactions that occur between the various businesses and infrastructure entities.
Nothing happens in a vacuum and a cluster helps create an environment where companies can feed and support each other to push businesses stronger as well as improve the lives of local residents. The economics of the area becomes more stable and resistant to market cycles because the elements have the ability to adjust and change to market needs quickly to foster adaptability. They change faster than oher locations because they have focused resources that have created synergy with industry, other businesses and infrastructure (rapid innovation system).
Let us look at two examples of how understanding the needs of industries can help support the strengthening of a cluster's fundamentals.
Example 1: A trades college might attract talent to an area and feed many different industries such as ship building, paper products, entrepreneurship, land fill, etc.
Example 2: New internet/data development leads to increases in virtual businesses and those virtual services draw wealth and resources into the area.
In both of these examples multiple industries can be serviced by trade colleges and improved data infrastrucure. Some of that will depend on the type of industries involved as well as what type of supports help create competitive advantages. The ability of various actors to coordinate to ensure they are supporting each other in a way that forms a type of complementary system where resources flow where and when they are needed as freely as possible. The nimbleness of the business to meet local industry needs improves adaptability rapidly because of this localized connectivity.
Understanding what the cluster needs for development will impact the policy approach and investment opportunities. Those supports that will find immediate local clients for their services (local industries in various markets) are the most beneficial for entrepreneurs and investors. Such supportive businesses can be created through enhancing the entrepreneurial environment. This is where we can go more deeply into best business practices and quality of life factors that can be enhanced through recreational activities, arts, tourism, etc.
Let us say these supplier services do well and they maximize their contributions by being helping feed local industries. They could then become exporters because they have a solid base to operate from. They can expand to new markets and draw in additional resources and investments. Where there is need for complementing services new entrepreneurship could be helpful in launching these new businesses quickly to improve cluster strength through new ideas and services.
Key Points:
-Industries can complement each other.
-Industries share services
-Businesses that can feed multiple local industries have a solid base for growth.
-Businesses that supply local industries can help create adaptability.
-Supplier businesses that do well may end up exporting and drawing in more wealth.
Porter, M. (1998). Clusters and the New Economics of Competition. Harvard Business Review. https://hbr.org/1998/11/clusters-and-the-new-economics-of-competition#:~:text=Better%20Motivation%20and%20Measurement.,be%20used%20to%20monitor%20performance.
No comments:
Post a Comment