Inter Firm Relationships In The Silicon Fen Economics Essay

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The attention that ‘clusters’ have received from policy makers and academics has substantially increased in the last 20 years. Since Porter´s seminal work on The Competitive Advantage of Nations (1990) presented ‘clusters’ as one of the determinants of the international competitiveness of nations and regions, many scholars have adopted and further developed his approach. Porter bases his arguments on what he describes as the globalization paradox, pointing out that despite the logical implications that the globalisation process might have in dismissing the relevance of regional factors, the most competitive firms in world are located in groups geographically concentrated in specific locations.

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That perspective contributed to attracting attention to the existence of characteristics tied to a local context that could not be accessed by firms positioned elsewhere, and more, to the positive effects that the concentration and the geographic proximity could exert on the firm´s competitiveness.

However influential, Porter´s ideas were not the precursor to discussing the competitive outcomes originating from the geographic concentration of firms (Martin and Sunley, 2003). The roots of cluster theory go back to the industrial districts identified by Marshall (1890), who offered the first detailed description about the economic and social systems created as a result of the spacial concentrations of industrial activities. The Marshallian industrial districts were arrangements of small firms interconnected by commercial operations (buyers and sellers) and other firms engaged in the same or similar activities, that shared productive factors, such as the labour market, infrastructure and tacit knowledge (Becattini, 2004, p. 68). According to Marshal’s descriptions, a group of firms operating in one specific sector within a well-defined, concentrated and relatively small geographic area would experience higher levels of productivity and innovation, indeed the emergence of a fertile environment for technical and organisational developments. Thus the local characteristics would enable the emergence of an ‘industrial atmosphere’ that would increase the firms’ potential to acquire (especially tacit) knowledge, and create positive external economies accessible only to the firms located within the district (Asheim, 2003, p. 416). That perspective tried to evidence that firms geographically concentrated could accesses restricted positive exogenous benefits (exogenous to firms, but endogenous to the district), which would be an alternative to the scale economies achieved by a single (integrated) firm.

Additionally, following some of the seminal ideas proposed by Marshall, it is possible to observe a significant number of economic geographers that also explored regional development using the spatial economic agglomeration to support their ideas. Some examples of concepts emerging from that theoretical trend are ‘regional innovation milieux’ (Crevoisier, 2004), ‘neo-Marshallian nodes’ (Amin and Thrift, 1992) and ‘learning regions’ (Asheim, 1995). More examples can be found in Markusen (1996, p. 297), in which another three different types of industrial districts are described according to the firms configurations,

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