Cluster Development in the Innovation Economy
Defining Clusters or Sectors
The Innovation Institute uses a collaborative, cluster development-based approach to identify and address opportunities and unmet needs for economic growth.
We define clusters as “a geographic concentrations of interconnected companies, specialized suppliers, service providers, and associated institutions in a particular field that are present in a nation or region” (Harvard Business School).
Clusters represent an important organizing principle for economic development organizations and offer a framework and a context for policy makers to identify and understand opportunities and ‘unmet needs’ for economic growth. The focus and emphasis on cluster-level analysis for understanding and evaluating outcomes and impacts is at the core of Innovation Institute investments and interventions.
Cluster members tend to share common resources – such as talent and infrastructure, common market growth opportunities, and common barriers to growth. This allows industry leaders and policy makers to identify and engage key stakeholders, and to develop, implement, and assess the outcomes and impacts resulting from policy interventions.
Massachusetts’ clusters are extraordinarily dynamic entities, particularly those where growth is driven by innovation. Innovation is the process of continually translating new knowledge into socially and economically beneficial products, processes, and services with an associated expansion of business opportunities, jobs and income.
Today many clusters are segmenting, with nascent and emerging sub-sectors evolving, often driven by new technologies, new market opportunities, and new growth dynamics. Examples include the emergence of robotics as a dynamic outgrowth of the defense electronics and aerospace clusters, the emergence of mobile communications as an outgrowth of the telecommunications and software applications clusters, and the emergence of big data from the data computer hardware, software, financial services, and health care delivery clusters.
This dynamic reorganization and regeneration of existing innovation clusters is an essential element of Massachusetts’ competitive advantage. However, it often falls outside of conventional cluster-level analysis. Accordingly, we address these emerging sectors through a variety of cross-cluster initiatives focused on talent, entrepreneurship, R&D, and manufacturing, as well as targeted efforts to convene stakeholders to better understand emerging sector dynamics and opportunities for policy interventions.
“Economic geography during an era of global competition involves a paradox. It is widely recognized that changes in technology and competition have diminished many of the traditional roles of location. Yet clusters, or geographic concentrations of interconnected companies, are a striking feature of virtually every national, regional, state, and even metropolitan economy, especially in more advanced nations. The prevalence of clusters reveals important insights about the microeconomics of competition and the role of location in competitive advantage. Even as old reasons for clustering have diminished in importance with globalization, new influences of clusters on competition have taken on growing importance in an increasingly complex, knowledge-based, and dynamic economy. Clusters represent a new way of thinking about national, state, and local economies, and they necessitate new roles for companies, government, and other institutions in enhancing competitiveness.” – Michael E. Porter, Harvard Business School