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date: 31 May 2020

Summary and Keywords

A substantial volume of research in economic geography, organization theory, and strategy examines the geographic concentration of interconnected firms, industries, and institutions. Theoretical and empirical work has named a host of agglomeration advantages (and disadvantages) with much agreement on the significance of clusters for firms, innovation, and regional growth. The core assertion of this vein of research is that geographically concentrated factors of production create self-reinforcing benefits, yielding increasing returns over time. The types of externalities (or agglomeration economies) generally fall into four categories: specialized labor or inputs, knowledge spillovers, diversity of actors and activity, and localized competition. Arising from multiple sources, each of these externalities attracts new and established firms and skilled workers.

Along with recent advancements in evolution economics, newer research embraces the idea that the agglomeration mechanisms that benefit clusters may evolve over time. While some have considered industry and cluster life-cycle approaches, the complex adaptive systems (CAS) theory provides a well-founded framework for developing a theory of cluster evolution for several reasons. In particular, the content and stages of complex adaptive systems directly connect with those of a cluster, comprising its multiple, evolving dimensions and their interplay over time. Importantly, this view emphasizes that the externalities associated with agglomeration may not have stable effects, and thus, what fosters advantage in a cluster will change as the cluster evolves. Furthermore, by including a cluster’s degree of resilience and ability for renewal, the CAS lens addresses two significant attributes absent from cyclical approaches.

Related research in various disciplines may further contribute to our understanding of cluster evolution. Studies of regional resilience (usually focused on a specific spatial unit rather than its industrial sectors) may correspond to the reorganization phase associated with clusters viewed as complex adaptive systems. In a similar vein, examining the shifting temporal dynamics and development trajectories resulting from discontinuous shocks may explain a cluster’s emergence and ultimate long-term renewal. Finally, the strain of research examining the relationship between policy initiatives and cluster development remains sparse. To offer the greatest theoretical and empirical traction, future research should examine policy outcomes aligned with specific stages of cluster evolution and include the relevant levels and scope of analysis. In sum, there is ample opportunity to further explore the complexities and interactions among firms, industries, networks, and institutions evident across the whole of a cluster’s evolution.

Keywords: cluster, evolution, dynamics, agglomeration, regions, life cycle, policy

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