Abstract The focus of this chapter is clearly defined regional clusters of firms, and how the characteristics of these help to shape the strategy of individual firms. An extensive review leads to the conclusion that this link has largely been ignored in the mainstream literature on the subjects of clusters and of firm strategy. The author observes that critical resources and capabilities are more often found to be spatially determined rather than simply existing within any single firm, and that moreover, activities are shared across firms, and this leads to interdependence among firms in a given cluster. Apart from strategic interdependence, the tendencies for rapid information flows and a unique mix of competition and cooperation existing within clusters have important implications for firm strategy and the study thereof. The author demonstrates how events in clusters highlight significant issues such as the scope of the firm, levels of cooperation and competition, and external sources of firm advantage.
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