Know Thy Clusters

About the Author

Jonathan Morgan

Jonathan Morgan is a School of Government faculty member.

The concept of industry clusters has significantly influenced our thinking about economic development in the last 15 years. It’s the idea that having a concentration of related industries in a location can benefit firms and regions in ways that enhance their competitive advantage. When firms in related industries locate in close proximity and reach critical mass they will often attract supplier firms and enjoy lower transaction costs as a result. The host region can support the “cluster” by using its local organizations to ensure that a skilled labor force exists and to provide specialized talent, services, technologies, and infrastructure for firms. As I discuss here, the linkages and interdependencies among firms, industries, and supporting organizations we observe in many high-performing regional clusters are thought to be essential. So, how can a region identify its clusters and assess their strength and performance?

The data collection and analysis needed to size up a region’s industry clusters have typically required hiring an external consultant to conduct a costly study. In recent years, web-based tools have come online that can help local officials at least get started with a cluster analysis. I discussed one such tool here in an earlier post. In late 2014, Harvard Business School Professor Michael Porter launched the U.S. Cluster Mapping site to provide “open data on regional clusters and economies to support U.S. business, innovation and policy”.

The U.S. Cluster Mapping tool is the culmination of a four-year effort led by Harvard Business School’s Institute for Strategy and Competitiveness that was funded by the U.S. Department of Commerce Economic Development Administration. Public officials and economic developers in North Carolina now have access to another robust source of data for gaining insight into their local and regional clusters.

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