ABSTRACT
This chapter begins with the description of Porter's concept and extensions of his ideas of cluster and discusses processes at work 'inside' clusters. It outlines different models of regional industrial organisation, which provide an overview on the geographic reach of cluster structures. From the range of new regionalism paradigms available, the example of the 'local innovative milieu' focuses on the response capacity in particular. Using a number of case studies from different countries, Porter developed the core concept of the 'diamond of national advantage'. Regarding the material aspects, in a nutshell, clusters might be defined as industries or companies with formal input-output or buyer-supplier linkages, which are geographically co-located, which share business-related local institutions, and show evidence of informal cooperative competition. The national and regional context is decisive in the application of cluster policies. However, the arena for the social engineering approach continues to be the 'region'.
