Cluster Dynamics

Abstract

Abstract Focuses on business organization including inter‐firm relations, as they relate to technological change, regional specialization, and growth. The idea of an industrial district or cluster is extended to that of cluster dynamics driven by entrepreneurial firms and open‐system networks. The entrepreneurial, or learning, firm is defined in terms of an endless dynamic between technology capability and market opportunity. The internal dynamic of the entrepreneurial firm is seen as the driver of a set of regional growth or cluster dynamics based on processes of technological differentiation and horizontal integration across networked groups of specialist business enterprises. Collectively and cumulatively, entrepreneurial firms advance a region's unique technological capabilities and potential for industrial speciation. Open‐system networks, in turn, are shown to decentralize and diffuse design capabilities, foster a new firm‐creation process, multiply the number of design experiments, act as a collective experimental laboratory, and enhance the potential for unplanned technological combinations, all of which enhance regional techno‐diversification and innovation.

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