Doeringer and Terkla (1995) found that benefits of agglomeration economies are one of the important factors that lead to the development of cluster. According to them firms that locate to a specific region can benefit from pool of skilled labour, lower transaction cost and lower transportation cost. Agglomeration economies help increasing competition which encourages transfer of information and technology among the firms. The transfer of technology and information in turn leads to the growth of the cluster. Apart from above factors, authors explain that face to face interaction between the firms also helps in the promotion of a cluster. In the process of interaction, firms share information, technology, infrastructure and collaborate to provide specialized services. This collaboration increases the strengths of the cluster and promotes its growth.
Stuart Rosenfeld (1997) explains various factors that affect the success of cluster. These factors are research and development capacity, labour force knowledge and skills, proximity to suppliers, capital availability, human resource development, access to specialized services, access and proximity to machine and tool builders, intensity of networking, social infrastructure, entrepreneurial energy, innovation and shared vision and leadership. He argues that if these factors are strengthened a cluster will have a greater success rate.
Based on above factors, Rosenfeld also provides actions which are required to be taken to strengthen clusters. He explains that region should improve support services to provide specialized education, training, research and development facilities and other industry specific services. Incentives should be given to local businesses to create associations, inert firm collaborations and multi firm sponsorship. In order to improve buyer seller relationships and linkages, there should be development of supply chain associations.
Porter (1999) argues that success of a firm or a specific region is a result of four factors; first the nature of firm's strategy including attitude towards competition. Second set of factors are input conditions such as capital and human resources, natural and physical inputs, technology, and infrastructure. Third set of factors are demand conditions i.e. need and wants of consumers. Fourth set of factors are presence of related or supported industries such as suppliers and competitors. Porter explains that when all these factors are met, firms located in the cluster have a competitive advantage.
Lagendijk (1999) explains various factors affecting the growth of clusters. These factors are the role of the labour market, the existence of specialist suppliers and spillovers between firms, especially in the areas of technology.
Luigi Orsenigo (2001) discusses the development of the biotechnology industry in an Lombardy. The author discusses what kind of factors might explain the lagging behind of the Italian biotechnology industry and the United States. It is found that policies can effect the working of the cluster. Further, the development of a strong research base and of strong technology competencies helps in the growth of cluster.
Luigi Orsenigo (2001) explains various factors affecting the development of new firms in biotechnology cluster of United States. These factors are strong scientific, technological and industrial base, interaction between industrial and academic institutions, favourable financial climate, strong regulatory environment and protection of intellectual properties.
Rosella Nicolini (2001) conducted a study in the industrial district in Lombardia to investigate the factors affecting the size and performance of clustered firms. The author found that effect of home market, transportation cost and cooperation among various cluster actors directly affect the performance of firms located in the cluster.
Berry et al (2002) study the role of subcontracting in the growth and development of cluster of various small and medium enterprises in Indonesia. The author found that various firms in furniture industry and garment industry have become successful because of subcontractors. It is found that the clustered firms are more able to adopt innovations as compared to firms not working in cluster.
Sanjoy Chakravorty, Jun Koo and Somik V. Lall (2003) study the industrial location of Mumbai, Kolkata and Chennai. The authors aim to find out the reason of location of industries within a metropolitan area. Further, to find out the extent to which localization economies influence the clustering process. It is found that there are a number of factors that are considered while selecting location. These factors are occurrence of any event in the past, expansion of metropolitan area, rules and regulations of state government and features of industry.
Borrelli et al (2005) emphasized the importance of economic and social factors in determining the competitiveness of the firms in the cluster. By applying an agent-based simulation model, the authors analyze the influence of informal social factors on clusters performance in comparison to different competitive environment. It is found that in turbulent scenario, the best performer firms are those in which competition, cooperation and trust is there.
Feldman et al (2005) provides a model for cluster development. The authors explain that entrepreneurs are an important factor in the cluster formation and they play an important role in the development of a cluster. He argues that in order to fulfill their individual interest, entrepreneurs act in collaboration with other firms and leads to formulation of an environment which is the best for all the firms located in the cluster. In this way, entrepreneurs help in formulation of innovative industrial cluster.
Ciapper and Simoni (2005) conducted a study in sports shoe cluster of Montebelluna to analyse the factors affecting the development of new product. Karl Pearsons cooefficient is used to study the relationship. It is found that three factors positively affect the development of product which are customer orientation, team approach and use of advance technology. The authors suggests that the firms should develop closer relationships with their customers before developing any new product.
Antonia R. Gurrieri and Luca Petruzzelis (2006) conducted a study to analyze the factors influencing the cooperation between the firms present in the cluster. The research was conducted in pottery cluster of Grottaglie, Italy. It is found that social networking, open technological system and flow of information among firms increase the level of cooperation between the firms located in the cluster.
Gulshan Kumar (2006) has conducted a study to analyze the factors affecting the sports goods industry of Punjab. Factor analysis has been applied to find out various variables affecting the growth. It was found various variables which affects the growth. These are: location, technology, government policy, degree of mechanization, raw material availability, bank finance, product diversification, business tours by entrepreneurs, advertising, brand image, research and development, protection against foreign competition, technical literacy, quality control measures, awareness of changing world demand, awards and incentives, training programs and power supply.
Ibrahim et al (2006) investigates the impact of environment on the creativity of inventors working in the cluster. The authors study the innovators in telecommunication industry who have filed for the patents. Samples of 810 international patent applications were taken. The study shows that localized clusters influence inventor's creativity. The author presents the result of the study identifying three categories of influences namely direct local factors, local situations presenting themselves to inventors locally, and local stimuli found in cluster environment. The authors find that respondents in localized clusters rate these influences significantly higher than respondents in non-cluster areas, indicating a local advantage.
Visser and Langen (2006) conducted a study in Chilean wine industry to analyze the factors affecting the growth of cluster in terms of export performance, collective activities and investment. The authors found that quality of governance in cluster directly affect the growth of exports. The co location has increased the growth and reduces the problem of competitiveness. It is seen that in the cluster under study, business associations play a key role. Cooperation and trust is present among the firms.
Soumya Roy and Shantanu Biswas (2007) conducted a study to find out the reasons for under performance of various Indian clusters. The authors found that major reason for underperformance of Indian clusters is lack of cooperation among various actors in the cluster. The authors argue that there are many factors responsible for the above problems as lack of knowledge sharing, informal communication, lack of initiative in developing collective goods and services absence of understanding of benefits of mutual cooperation and trust.
Karl Wennberg and Goran Lindqvist (2007) investigate the effect of firms located in cluster on the growth and survival of new firms. The study was carried out in telecom and consumer electronics, information technology, financial services, pharmaceutical and biotech sectors of Sweden. The authors found that the firms located within cluster positively affect the existence of new firms as these firms provide more taxes, more wages and more employees in comparison to firms located outside cluster.
R.P. Bharadwaj and Gulshan Kumar (2007) examine the growth and prospects of sports goods industry in Punjab. Four variables are used to determine the growth of industry. These variables are foreign demand, capital intensity, capital-output ratio and productivity. The effect of liberalization on the growth of industry is also studied. To forecast the prospects of industry, the double exponential smoothing model is used. For the purpose of study, data for 24 years i.e. 1980-81 to 2003-04 is collected. It is found that liberalization has increased the foreign demand, increase factor productivities and reduced capital output ratio. The authors expected that in future, there will be increase in degree of mechanization, increase in foreign demand along with slow growth in capital output ratio.
Kurt A. Hafner (2008) investigates the impact of agglomeration economies on various firms in German cluster. The author found that knowledge spillover is important for German low tech firms where as Marshall's externalities such as hiring skilled labour and technological spillover are applied for various departments like research & development human resource and not on production.
Chia- Lin Chang and Les Oxley (2008) investigate the effect of innovation by the clustered firms on total factor productivity in Taiwan. The authors apply Krugman's Gini coefficients and location Herfindahl index to measure the effect. It is found that the geographic innovation positively effect the total factor productivity.
Cristina Boari, Guido Fioretti and Vincenza Odorici (2008) analyze the effect of rivalry on the performance of various firms located in the cluster. The authors use an agent based model where rival firms design their strategy according to the behaviour of competitors and their learning process. It is found that the firms located within clusters are more innovative and learn new things rather than firms located outside the cluster.
Manish K. Srivastava and Devi.R. Gnyawali (2008) conducted a study to analyze whether the availability of resources to the firms effect their ability to obtain benefits from clusters and networks technological resources. The research was conducted in semiconductor firms in U.S. It is found that firms who are having plenty of resources obtain more benefits from network technological resources while the firms who have less resources don't get benefits from technological resources present in the cluster.
Hans-Dieter Evers (2008) conducted a study to find answer to question that in spite of globalization, why firms still establish their plant within the cluster area. The author found that minimization of transportation cost is the main factor influencing the existence of clusters even in the era of globalization.
Ewa Bojar, Matylda Bojar and Tomasz Zminda (2008) analyses the role of foreign direct investment in clusters and the impact of clusters and foreign direct investment on the development of cluster. It is found that foreign direct investments are conducive to the process of concentration of new companies around the foreign investors and this makes the structure of cluster stronger. It is found that foreign direct investment brings new technologies and make the firms more innovative.
Gao, Zheng and Hu (2008) study the effect of local factors related to development zones and of technology promotion on firm's performance. The study is conducted in the development zones in Jiangsu Province along the Yangtze river. The results show that the primary reasons for the location of firms in to development zones are not clustering benefits but are attraction of policy rents and infrastructure brought by governments policy. Once located in the zone, the clustering effects may emerge.
Jianqing Ruan, Zhejiang University and Xiaobo Zhang (2008) emphasizes the role of finance in promotion of industrial growth. The authors conducted study in a cashmere sweater cluster in China. The authors found that rural industrial clustering lowers down the entry barriers of initial capital investment through division of labour. Within the clusters, enterprises can acquire credits from firms or can obtain informal finance from friends and relatives.
Bahlmann et al (2008) investigates whether clustering of firms helps in innovation of new ideas. The study was conducted in Amsterdam Media cluster. It is found that linkages between the entrepreneurs within the cluster help in generation of new ideas and knowledge.
Burress, Cook and Klein (2008) conducted a study to investigate the factors affecting the competitiveness of cluster in the global market. The authors have studied the case of Renville Country, Minnesota It is found that organizational innovation, in addition to technological innovation, plays an important role in enabling farmers to remain competitive in the global market place.
Christian Felzensztein and Eli Gimmon (2009) conducted a study to analyze the factors affecting the development of marketing cooperation among various firms located in the cluster. The study was conducted in Salmon farming cluster of Scotland and Chile. It is found that the presence of trust and respect can enhance the inter firm market cooperation. Social networking helps in improving the cooperation between the firms in marketing activities.
Bettina Riedel (2009) conducted a study in Germany, Italy and Spain to analyze factors which help the producers of vegetables to gain competitive advantage in the global market. It is found that producers become competitive due to their integration within local market, by creating new networks and by exchange of information within firms.
Mohammad Hosein Tavassoli (2009) conducted a study to identify various critical success factors which affects the growth of SMIL knowledge cluster of Sweden. These factors are vision / strategy, actors, network, resources and critical mass. Vision/ strategy include factors like existence of clear vision, development of cluster brand, existence of cluster policy and proper political setting. Actors include companies, government, research community, financial institutions, institution for collaboration and media. Network depicts the existence of proper communication network and knowledge integration and linkage to international market/ environment. Resources include availability of infrastructural and financial resources and soft resources i.e. human related resources. Critical mass includes capacity for innovation and research and development, presence of entrepreneurial spirit.
