What is a cluster

Professor Michael E. Porter defines (1998, p. 213)1 a cluster as 'a geographic concentration of interconnected companies, specialized suppliers, service providers, firms in related industries, and associated institutions (for example, universities, standards agencies, and trade associations) in particular fields that compete but also cooperate.'

Clusters are defined as groups of firms, related economic actors, and institutions that are located near each other and have reached a sufficient scale to develop specialised expertise, services, resources, suppliers and skills. Clusters are referred to both as a concept and a real economic phenomenon, such as the Silicon Valley, the effects of which, such as employment concentration, can be measured – as is done by the cluster mapping of the European Cluster Observatory. Clusters cannot be understood as fitting into the narrow sectoral view that most industrial policies have, but should be considered as regional ecosystems of related industries and competences featuring a broad array of inter-industry  interdependencies (Smart Guide to Cluster Policy, European Union 2016, p.11).

Cluster initiatives are organised efforts to support the competitiveness of a cluster and thus consist of practical actions related to the capacity of these clusters to self-organise and increasingly to pro-actively shape the future of the cluster. They usually follow a bottom-up approach, are implemented through a competitive process, and are often managed by specialised SME intermediaries, such as cluster organisations.

Cluster organisations are the legal entities that support the strengthening of collaboration, networking and learning in innovation clusters and act as innovation support providers by providing or channelling specialised and customised business support services to stimulate innovation activities, especially in SMEs.6 They are usually the actors that facilitate strategic partnering across clusters (Smart Guide to Cluster Policy, European Union 2016, p.12).