ABSTRACT
At the very foundation of the cluster concept is the idea that proximity matters. The literature suggests that this is manifest in a number of important ways. First, the geographical clustering of economic actors facilitates the exchange of knowledge between them, through both traded and untraded means. The interaction that supports this is formal and planned as well as informal or unplanned, with spatial concentration facilitating both forms of contact. Common conventions and norms, and readily available knowledge about the reliability and trustworthiness of individual economic actors, further support the local flow of knowledge – both tacit and codified – within local industry clusters (Storper and Leamer 2001; Storper and Venables 2004). The same conditions enrich close, collaborative vertical interaction with local customers and suppliers, in which learning-through-interacting generates mutual benefits for technology users and producers alike (Lundvall 1988; Gertler 1995). Finally, the geographical clustering of firms in the same industries accentuates competition – and the innovative dynamism arising from it – by enhancing firms’ ability to learn from one another through observation and monitoring (Porter 2000; Malmberg and Maskell 2002).
