Why Are Clusters Beneficial?

A Review of the Literature

Karla Paola Jiménez1 and Beatriz Junquera2
1 Becaria de la Universidad Autónoma de Tamaulipas y Promep, Tampico, Mexico
2 Facultad de Ciencias Económicas y Empresariales, Oviedo, Spain

Abstract
The aim of this work is to shed some light on the origin of some of the more important advantages
of clusters. To do so, we will address the heterogeneity of the advantages of clusters by analyzing the
different contributions found in the literature. Following our analysis of the literature, we can see that,
first of all, different advantages are derived from the region where the cluster is located and, second, the
cluster provides the businesses that comprise it with important advantages. Among the first advantages
we can identify are trust, access to infrastructures, and incentives and performance quantification. The
second group of advantages consists of access to information and specialized resources at a lower cost,
improvement of human capital, flexibility, creation of new businesses, and innovation. C 2010 Wiley
Periodicals, Inc.
Keywords: Cluster; Trust; Infrastructures; Innovation; Agglomeration economies; Collective effi-
ciency; Externalities

1. INTRODUCTION One way or another, the phenomenon of clusters

In recent years, much of the literature devoted to eco-
nomic issues has focused on the study of the conditions
that lead to the spatial grouping of certain economic
activities. For more than two decades, the clear trend
toward the agglomeration of industrial activities in cer-
tain geographical areas has been a substantial focal
point of studies conducted by economists and geogra-
phers (Fujita, Krugman, & Venables, 1999; Marshall,
1920; Scott, 1988a; Smith, 2003; Storper, 1995, 1997).
Many of these studies have dealt with the nature of
regional agglomerations, better known as clusters, and
have focused on the factors involved in the achieve-
ment of competitive advantages by the businesses that
belong to the cluster (Zander, 2004).
Correspondence to: Beatriz Junquera, Facultad de Ciencias
Económicas y Empresariales, Avda. del Cristo, s/n 33071
Oviedo, Spain. Phone: 985104972; e-mail: beatrizj@uniovi.es
Received: 15 January 2008; revised 7 July 2008; accepted 1 June
2009
Published online in Wiley InterScience
(www.interscience.wiley.com).
DOI: 10.1002/hfm.20207
has been widely considered and analyzed in different
research studies. Clusters cannot be fully understood
as yet, however, because of the differences these studies
present. Despite the conceptual and empirical achieve-
ments provided by the literature to date, we still know
relatively little about their true contribution to eco-
nomic development because the literature suffers cer-
tain limitations. One of the most important constraints
is the lack of consensus regarding the benefits a clus-
ter provides to the economic region where it is located
and to the elements that comprise it. In part, said lack
of consensus is derived from the confusion that arises
from the different terms that have been used in the lit-
erature to refer to the positive effects brought about
by clusters: agglomeration economies (Beardsell &
Henderson, 1999; Beaudry & Breschi, 2003; Fan &
Scott, 2003; Scott, 1988a; Swann, 1998), collective
efficiency (Caniëls & Romijn, 2003), and external-
ities (Suarez-Villa & Walrod, 1997), among others.
These terms denote different realities: “Agglomeration
economies” refers to the benefits obtained from the
geographical proximity of different businesses, such
as better cost control, the creation of alliances, and
innovation. In contrast, “collective efficiency” is the

Human Factors and Ergonomics in Manufacturing & Service Industries 20 (2) 161–173 (2010) 
c 2010 Wiley Periodicals, Inc. 161

Why Are Clusters Beneficial?
competitive advantage, efficiency, and flexibility de-
rived from the advantages provided by the cluster, for
instance, joint investment in technological projects and
human capital training. Finally, “externalities” refers to
the external effects that are induced by agglomeration
and that are both endogenous and exogenous to the
cluster, for instance, access to services and public facil-
ities and access to highly skilled personnel.
In this context, the aim of this work is to shed some
light on the origin of some of the more important
advantages of clusters. To do so, we will address the
heterogeneity of the advantages of clusters by analyz-
ing the different contributions found in the literature.
We end up our work by discussing the relevance of an-
alyzing the suitability of creating a cluster for a region
or industrial activity.
2. ADVANTAGES OF CLUSTERS
The advantages of clusters have become the focus
of attention of both scholars and politicians. Previ-
ously, only economic geographers and regional sci-
entists (Krugman, 1991; Porter, 1990) had stimulated
widespread interest in regions and regional develop-
ment. They have ignored an already extensive, so-
phisticated literature dealing with the dynamics of
industrial localization (Saxenian, 1995; Scott, 1988a,b;
Storper, 1989; Vernon, 1960). Thus, the analysis of
advantages derived from clusters is not recent in the
literature. Marshall (1920) introduced the term “ex-
ternal economies” to refer to the sources of increases
in productivity that are found outside of individual
businesses (Porter, 1998; Saxenian, 1995; Sengenberger
& Pyke, 1992). Marshall used the term “external
economies” to denote the external benefits that busi-
nesses obtain by sharing the fixed costs of common re-
sources (infrastructure, services, a stock of specialized
labor, specialized suppliers, or a common knowledge
base). This term clearly fails, however, to emphasize
the geographical concentration to acquire such bene-
fits. Instead, it only indicates that they are benefits that
are external to the businesses themselves.
In light of the globalization of markets, technologies,
and supply sources, increased mobility and decreased
communication and transportation costs, geographi-
cal concentration (cluster) emerged as a key strategy
for national and international competition. Conse-
quently, Marshall moved on to consider the advantages
of the cluster as “agglomeration economies.”1 This
term alludes to the (external) benefits obtained from
the geographical concentration of different businesses
162 Human Factors and Ergonomics in Manufacturing & Service Industries
15206564, 2010, 2, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/hfm.20207 by Tsinghua University Library, Wiley Online Library on [04/12/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
Jiménez and Junquera
(Arthur, 1990; Krugman, 1991; Saxenian, 1995; Scott,
1988b; Storper, 1989), thereby arising the agglomer-
ation economies as benefits provided by the cluster.
As we can see, the term “agglomeration economies”
emphasizes the external benefits that are gained by
sharing different production factors. Agglomeration
economies, unlike the previous external economies,
stress the importance of geographical proximity of the
businesses involved to obtain said benefits, in part be-
cause transaction costs are lower2 and, in part because
many different factors enhance the positive local exter-
nalities. In recent decades, agglomeration economies
have been transformed in the classification of cluster-
derived advantages. Marshall (1920) initially consid-
ered cluster-derived advantages as the presence of spe-
cialized labor, the supply of specific inputs, and greater
information flow. Nevertheless, more recent classifica-
tions of agglomeration economies (Fan & Scott, 2003;
Swann, 1998) contain more highly developed aspects,
such as the creation of alliances or building of infras-
tructures (Gordon & McCann, 2000; Krugman, 1991).
Thus, the external economies, initially developed by
Marshall (1920), evolve and are termed “agglomera-
tion economies,” that not only cover the advantages
outside each individual business, but also those ob-
tained from the mutual proximity of each business.
On the basis of the aforementioned external
economies (Marshall, 1920), Schmitz (1995, 2000) and
Suarez-Villa and Walrod (1997) derived two branches
that, despite the fact that they differ widely from the
previous branch, refer to the positive effects gener-
ated by the cluster: collective efficiency and exter-
nalities. Although these branches, like agglomeration
economies, arise from the external economies and
consider the actual advantages derived from the ge-
ographical proximity of the businesses, said exter-
nal economies differ considerably from agglomeration
economies. First of all, collective efficiency3 highlights
the effects derived from the advantages of the cluster:
productivity, efficiency, and flexibility. Taken all to-
gether, collective efficiency is defined as the advantage
that is derived from the local external economies and
joint action (Schmitz, 1995, 2000; Schmitz & Nadvi,
1999). The local external economies, also known as
“passive collective efficiency,” are benefits that the busi-
nesses obtain without making any kind of deliber-
ate effort to obtain them (Schmitz & Nadvi, 1999).
That is, they are advantages that arise from the clus-
ter and that the businesses enjoy automatically, with-
out carrying out any kind of cooperation (for in-
stance, economies of scale, informal communication,
DOI: 10.1002/hfm

Jiménez and Junquera
technological transfer, or availability of specialized sup-
pliers). In contrast, joint action, also known as “ac-
tive collective efficiency,” includes benefits originating
from the useful actions aimed at generating coopera-
tion and networks. Therefore, these benefits arise from
the search for cooperation with other businesses with
the aim of learning (technological, managerial, and
business knowledge) and innovating (products, pro-
cesses, and organization). Active collective efficiency
comes from the competitive forces that foster busi-
nesses to improve their linkages with suppliers, clients,
competitors, banks, and research institutes with the
aim of remedying resource deficits. Active collective ef-
ficiency includes such advantages as reduction of costs,
improvement in quality and design, and innovation.
These advantages originate from the level of networks
between businesses that are functionally interdepen-
dent and, subsequently, spread throughout the entire
cluster (Caniëls & Romijn, 2003; Visser, 1999).
In contrast, the externalities, alternative advantages
to collective efficiency and created by Suarez-Villa and
Walrod (1997), refer to the effects provoked by the spa-
tial agglomeration of businesses. They pool the advan-
tages obtained from the agglomeration of businesses.
This branch, however, subdivides the advantages ac-
cording to source: the region (static externalities) and
the cluster (dynamic externalities). Generally speaking,
static externalities are considered to be part of the ad-
vantages of a metropolitan area, but they also encom-
pass traditional factors that are usually associated with
localization economies (resulting from the agglomer-
ation of businesses belonging to the same industry)
that involve industrial activities. In contrast, dynamic
externalities are those that tend to be obtained as a
result of geographic proximity and may contain qual-
itative aspects, such as providing an environment that
is conducive to cooperative relationships with subcon-
tractors and suppliers (Suarez-Villa & Walrod, 1997).
As we can see in Table 1, several different classifica-
tions of the advantages that emanate from the cluster
have emerged based on the three previously described
branches (agglomeration economies, collective effi-
ciency, and externalities). The most widespread branch
in the literature is that of agglomeration economies,
which offers five different classifications: Two of them
are based on market forces to describe the advan-
tages of the cluster (Beaudry & Breschi, 2003; Swann,
1998); another one is based on the nature of the advan-
tages (pecuniary and technological) (Scott, 1988a); the
third is based on the diversity of industries found in
Human Factors and Ergonomics in Manufacturing & Service Industries
15206564, 2010, 2, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/hfm.20207 by Tsinghua University Library, Wiley Online Library on [04/12/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
Why Are Clusters Beneficial?
the cluster (localization and urbanization) (Beardsell
& Henderson, 1999); and, finally, there is one classi-
fication of this branch that underscores specific ad-
vantages. Likewise, in the branch of externalities, we
find the one established by Suarez-Villa and Walrod
(1997) that focuses on the sources of the advan-
tages (region and cluster). Finally, from the branch
of collective efficiency, we can make mention of the
one forged by Caniëls and Romijn (2003) who, like
Scott (1988a), base their branch on the nature of
the advantages that emerge from the cluster: pecu-
niary (economies of scale, economies of scope, and
economies of transaction) and technological advan-
tages (technological and knowledge). Following an in-
depth analysis of the previous classifications, we have
detected that they can be classified into two subcate-
gories: those that are source-based and those that are
based on consequences. In the first category, we find the
one by Swann (1998), Beardsell and Henderson (1999),
and Beaudry and Breschi (2003) (belonging to the
branch of agglomeration economies) and the one es-
tablished by Suarez-Villa and Walrod (1997) (from the
branch of externalities). At the same time, we see that
these classifications have different bases upon which
to classify the sources of advantages. Whereas some
classifications are based on market forces (Beaudry
& Breschi, 2003; Swann, 1998), another one is based
on the diversity of industries4 contemplated in the
cluster (localization and urbanization) (Beardsell &
Henderson, 1999), and one last one is based on two
specific sources: the region (static) and the cluster
(dynamic) (Suarez-Villa & Walrod, 1997).
Within the second category (based on conse-
quences), we point to the ones set forth by Scott
(1988a), Fan and Scott (2003) (belonging to the branch
of agglomeration economies), and Caniëls and Romijn
(2003) (of the collective efficiency branch). The first
(Scott, 1988a) is based on the nature of the advantages
that arise from a cluster: on the one hand, pecuniary ad-
vantages and, on the other hand, technological advan-
tages. The second classification, developed by Fan and
Scott (2003), maintains more specific advantages than
the others and, like Beardsell and Henderson’s classifi-
cation (1999), is based on the economies of localization
and urbanization. The first emanate from the presence
of a single industry in the cluster, and the second set
of advantages from the diversity of the industries in-
volved. Finally, the classification developed by Caniëls
and Romijn (2003), based on collective efficiency and
unlike most of the classifications belonging to the
DOI: 10.1002/hfm 163
 164
TABLE 1. Classifications of Cluster Advantages

Agglomeration Agglomeration
Agglomeration Agglomeration Economies Economies Agglomeration Externalities Collective Efficiency
Economies Economies (Beardsell & (Beaudry & Economies (Suarez-Villa & (Caniëls & Romijn,
(Scott, 1988a) (Swann, 1998) Henderson, 1999) Breschi, 2003) (Fan & Scott, 2003) Walrod, 1997) 2003)

1) Pecuniary Demand 1) Localization Demand 1) A stronger cost 1) Static 1) Economies of

external 1) Strong local economies (or 1) Sophisticated control and externalities scale, economies
Why Are Clusters Beneficial?

economies: They demand MAR): Cluster users downsizing of • Access to of scope, and
depend on 2) Dowsizing of advantages stem 2) User-supplier failure risk infrastructures economies of
market size or costs due to from sectorial interaction during the • Access to public transaction:
other factors, search for clients specialization. 3) Informative inter-firm services • Economies of
such as stock of 3) Informative This happens externalities contact • Access to a wide scale
specialized externalities when there are Supply 2) Dense labor market • Perceptive local
manpower, and about market knowledge 4) Knowledge manpower local • Access to public competence
a specialized trends and externalities, spillovers market facilities • Investment in
supplier base characteristics although they 5) Manpower and 3) Knowledge 2) Dynamic technological
2) Technological Supply are limited specialized spillovers externalities effort
external 4) Manpower, between inputs 4) Alliances and • Specialization • Specialized
economies: They supplier, businesses in the 6) Informative business opportunity by suppliers
involve inter-firm infrastructure, same industry. externalities organization outsourcing • Low local costs
knowledge and specialized 2) Urbanization 5) Out-of- • Access to R&D of transaction
spillover. institution economies (or proportion information and • Joint investment

Human Factors and Ergonomics in Manufacturing & Service Industries

development Jacobs): building of specialized in high
with lower costs Businesses dense and rich inputs technological
5) Innovation and benefit from infrastructures • Access to highly projects
learning innovative ideas, qualified 2) Technological
skills, know- personnel and knowledge
how, and human spillovers:
capital stemming • Informal

DOI: 10.1002/hfm
from different, communication
although related, • Human capital
industries. training by
informal
learning-by-
doing
• Technological
transference
Jiménez and Junquera

15206564, 2010, 2, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/hfm.20207 by Tsinghua University Library, Wiley Online Library on [04/12/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License

Jiménez and Junquera
agglomeration economies branch (except for Scott’s
classification, 1988a), clearly distinguishes between the
nature of the advantages: economic (economies of
scale, economies of scope, and economies of trans-
action) and technological advantages (technology and
knowledge).
Likewise, through the preceding analysis we have
discovered that said classifications contain certain de-
ficiencies. First of all, we can say that, although they
display certain similarities, the advantages pointed
out in the different classifications vary enormously,
which causes great confusion with respect to the true
contribution made by the clusters. Second, by being
based solely on sources (Beardsell & Henderson, 1999;
Beaudry & Breschi, 2003; Suarez-Villa & Walrod; 1997;
Swann, 1998) or exclusively on consequences (Caniëls
& Romijn, 2003; Fan & Scott, 2003; Scott, 1988a),
some of these classifications omit those advantages that
might respond to both criteria, such as trust.5 Third,
whereas some classifications are broad (Beardsell &
Henderson, 1999; Scott, 1988a) and only specify the
possible origin of the advantages, others are specific
(Beaudry & Breschi, 2003; Caniëls & Romijn, 2003;
Fan & Scott, 2003; Suarez-Villa & Walrod, 1997; Swann,
1998) and leave aside highly relevant advantages, such
as the creation of new businesses.
Thus, in this work we seek to focus on both the
sources and the consequences of the advantages and
avoid reflecting on limited guidelines. Instead, we hope
to contemplate the advantages of belonging to the clus-
ter, as well as those that stem from sources of increases
in productivity that are found outside of individual
businesses. Because we aim to underpin the previously
analyzed deficits, our classification has fundamental
differences with respect to those found in the liter-
ature. Precisely because our purpose is to resolve the
restrictive trends of the classifications analyzed thus far,
our classification consists of two categories: “regional
advantages” and “business advantages.” Regional ad-
vantages are those that are derived from the location of
the cluster and from the people who comprise it. These
advantages generally occur in a city or metropolitan
region that provides local advantages, such as access
to infrastructures or public facilities. We contemplate
within this category advantages such as access to infras-
tructures, trust and incentives, and performance quan-
tification. Business advantages, in contrast, are those
that occur at the business level and originate directly
from the cluster. These advantages are the most com-
mon and include qualitative advantages because they
Human Factors and Ergonomics in Manufacturing & Service Industries
15206564, 2010, 2, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/hfm.20207 by Tsinghua University Library, Wiley Online Library on [04/12/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
Why Are Clusters Beneficial?
provide an environment that fosters cooperation-based
relations. This category considers advantages such as
access to information and to specialized resources, im-
provement of human capital, flexibility, creation of new
businesses, and innovation.
As we have already mentioned, our classification dif-
fers substantially from those found in the literature
(Table 2). First of all, if we compare it with the clas-
sification developed by Scott (1988a), we can see that,
unlike our classification, based on the source of the
advantages, Scott bases his classification on the na-
ture of the advantages (pecuniary and technological)
and on the consequences of these advantages. Like-
wise, the author does not point out specific advan-
tages; instead he only makes mention of the fact that
the pecuniary advantages depend on market size or
on factors such as the stock of specialized labor and
a base of special suppliers and that the technological
advantages involve knowledge spillover among busi-
nesses. As we can see, in contrast with our classification,
Scott (1988a) avoids being restrictive, although he fails
to make clear the advantages that originate from the
cluster.
Likewise, the classification found in Swann (1998)
is based on two sources that are different from those
of our classification: supply and demand as market
forces. Like the previous classification, the content of
this classification is highly restrictive in that it overlooks
the advantages that could stem from both factors (e.g.,
trust). In contrast, we can see that the classification by
Beardsell and Henderson (1999) divides cluster advan-
tages on the basis of sources different from those used
in our classification. These authors base their classifi-
cation on the diversity of the industries incorporated in
the cluster (localization and urbanization economies).
Localization economies arise from the presence of a
single industry in the cluster and from the resulting
specialization of the members of the cluster. Urbaniza-
tion economies, in contrast, emanate from the presence
of different, albeit related industries. Our classification,
unlike that of these authors, also contains the advan-
tages that can emerge from the presence of one or
several industries, such as trust and the creation of new
businesses.
Likewise, when comparing our classification with
the one established by Beaudry and Breschi (2003), we
can indicate certain contrasts. First of all, this classifi-
cation, like that of Swann (1998), bases its categories
on sources that are different from ours: market forces.
Second, the advantages contemplated in its categories
DOI: 10.1002/hfm 165

Why Are Clusters Beneficial?
are limiting and exclude those that can stem from both
criteria, such as improvement of human capital.
We can also see that the classification developed by
Fan and Scott (2003) is different from ours. These au-
thors base their classification on the consequences of
agglomeration. In contrast, they fail to divide the ad-
vantages of the cluster into categories. In turn, the ad-
vantages considered in these authors’ classification are
highly specific and omit current advantages, such as
the creation of new businesses.
Suarez-Villa and Walrod (1997) divide the advan-
tages into two categories: static externalities and dy-
namic externalities. The authors refer to those advan-
tages that arise from the people and environment where
the cluster is located as “static externalities” and the ad-
vantages that more frequently emanate from the busi-
nesses that are embedded in the cluster as “dynamic
externalities.” Nevertheless, our classification has two
different categories. We use the term “regional advan-
tages” to refer to the advantages that stem directly from
the region and “business advantages” to refer to those
that are derived from the cluster itself. Our classifi-
cation might initially appear to be similar to the one
put forth by these authors; however, there are rele-
vant differences between the classifications. The most
important ones are the nature of the advantages, the
designation of the categories, and advantages pointed
out. It is also important to highlight some deficits of
the classification. First, the advantages that Suarez-Villa
and Walrod (1997) term “static” are not always static:
Instead, they can be dynamic, for instance, because
there is a greater demand for certain factors (such as
infrastructures, services, or public facilities). This oc-
curs when the number of businesses that make up the
cluster, and hence benefit from it, increases. Likewise,
we consider that the name given to the second group of
advantages is limiting because the advantages contem-
plated by this second group are not only dynamic. In-
stead, they stem directly from the concurrence of busi-
nesses in the cluster and from the relations that prevail
among them. We consider the content of the classifi-
cation of said authors to be restrictive compared with
our classification. These authors only consider material
advantages within the category of static externalities,
whereas, in our case within regional advantages, in ad-
dition to access to infrastructures, we also contemplate
advantages embedded in society, such as trust, incen-
tives, and performance quantification. Likewise, in the
second subgroup of our classification, unlike that of
the authors previously mentioned, as well as access to
166 Human Factors and Ergonomics in Manufacturing & Service Industries
15206564, 2010, 2, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/hfm.20207 by Tsinghua University Library, Wiley Online Library on [04/12/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
Jiménez and Junquera
information and specialized resources, we also include
aspects related to the progress of the cluster, such as
improvement of human capital, flexibility, the creation
of new businesses, and innovation.
Finally, we can see that Caniëls and Romijn (2003)
base their classification on the nature of the advantages:
economies of scale, economies of scope, economies
of transaction, and technological and knowledge
spillovers. Likewise, the advantages contained in their
categories are based on the consequences of agglomer-
ation, although they are restrictive and omit those that
can stem from both categories, such as trust.
Thus, with the purpose of focusing on the advan-
tages that stem from the cluster, we have broadened
the scope of the categories in our classification. First,
the group of regional advantages encompasses those
advantages that arise from where the cluster is located
and from the people that comprise it. These advantages
tend to occur in a city or metropolitan region that pro-
vides local advantages, such as access to infrastructures
or public facilities. Within this category, in addition
to access to infrastructures, we also contemplate the
advantages embedded in society such as trust, incen-
tives, and performance quantification. Likewise, the
second subgroup, business advantages, is composed of
those that occur at the business level and stem directly
from the cluster. These advantages are the most com-
mon ones and include qualitative advantages, given
that they provide an environment that fosters coop-
erative relationships. In this subgroup, in addition to
access to information and specialized resources, we in-
clude aspects regarding the progress of the cluster: im-
provement of human capital, flexibility, creation of new
businesses, and innovation. Clearly, we have developed
this classification because it covers the advantages con-
templated in the classifications found in the literature
to a certain degree and, furthermore, because it avoids
excluding those advantages that stem directly from the
environment (regional advantages) insofar as possible,
thereby attempting to make up for some of the deficits
observed in them. These subgroups of advantages are
developed in the next section.
2.1. Regional Advantages
These advantages stem from the location of the cluster,
both from the region as well as the people in the region,
and, by coming together in the cluster, these advantages
are strengthened more collectively. They arise when the
cluster is created. Within this group of advantages we
DOI: 10.1002/hfm

Jiménez and Junquera
TABLE 2. Comparison between Classifications Derived from the Literature and the Classification Shown in this Work
Own classification
• Regional advantages
– Trust
– Access to public infrastructures
– Incentives and performance measurement
• Business advantages
– Access to information and specialized resources with lower costs
– Improvement of human capital
– Flexibility
– New businesses
– Innovation
Agglomeration economies
• Scott (1988a)
– Pecuniary external economies
– Technological external economies
• Swann (1998)
– Demand
– Supply
• Beardsell & Henderson (1999)
– Localization economies (stem
from the same industry)
– Urbanization economies (stem
from the diversity of industries)
• Beaudry & Breschi (2003)
– Demand
– Supply
• Fan & Scott (2003)
Specific advantages
Externalities
• Suarez-Villa & Walrod (1997)
– Static externalities
– Dynamic externalities
Collective efficiency
• Caniëls & Romijn (2003)
– Economies of scale, economies
of scope, and economies of
transaction
– Technological and knowledge
spillovers
Human Factors and Ergonomics in Manufacturing & Service Industries
Similarities
They show some similar
advantages: access to
infrastructures and specialized
resources with cojoint cost and
innovation.
Both show common advantages:
access to resources (manpower)
and specialized infrastructures
and innovation.
Both classifications consider
specialization within the cluster,
and they agree regarding some
advantages (human capital
improvement and innovation).
Both cite some similar advantages:
access to information and
specialized manpower.
They show some similar
advantages: cost downsizing,
access to manpower,
information, and infrastructures.
Sources for categorization are
similar. The first group stems
from the region and people. The
second group stems directly from
the cluster.
Both of them match regarding
specific advantages: cost
downsizing, input specialization,
human capital training and
improvement, and transference
and access to information.
15206564, 2010, 2, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/hfm.20207 by Tsinghua University Library, Wiley Online Library on [04/12/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
Why Are Clusters Beneficial?
Differences
Different basis for the advantage
categorization; advantages shown in
both classifications can not be
compared
Different categorization regarding to
advantages: market forces and source
Our classification considers that cluster
advantages may stem from a sole or
several industries, although they must
be related.
Both are supported on different sources.
These authors only cite the origin,
although they do not explain the
consequences of such factors.
Bases for both classifications are
different. These authors do not divide
their advantages into groups, and they
omit some current and important
advantages, such as the creation of
new businesses.
This classification does not consider in the
first group evolutionary advantages,
and it omits social advantages.
Likewise, in the second group,
advantages that show future progress
of the cluster are not considered, such
as human capital improvement.
The categorization of both classifications
is widely different. The authors omit
advantages that may stem from both
criteria, such as trust.
DOI: 10.1002/hfm 167

Why Are Clusters Beneficial?
find trust (Barkley & Henry, 2001; Caniëls & Romijn,
2003; Fan & Scott, 2003; Kim, 2005), access to public
infrastructures (Fan & Scott, 2003; Suarez-Villa &
Walrod, 1997; Swann, 1998), and incentives and perfor-
mance quantification (Fernández, 2005; Porter, 1999).
We go on to elaborate on each of these advantages.
2.1.1. Trust
This advantage has been broadly considered in the pre-
viously mentioned classifications, although it has been
manifested in different ways: the creation of alliances
and business organizations (Fan & Scott, 2003), invest-
ment in technological effort, and joint investment in
technological projects (Barkley & Henry, 2001; Caniëls
& Romijn, 2003; Kim, 2005). The consideration of trust
as an advantage of the cluster is derived from sev-
eral different allegations found in the literature. First,
clusters are based on the social values that foster trust
and motivate reciprocity. Likewise, trust can stimu-
late the introduction of new technology in the cluster
because mutual trust is crucial in creating inter-firm
linkages (Asheim, 1996). At the same time, trust is the
key factor of successful clusters, because it is a tacit link-
age between the members of the cluster that facilitates
transactions, fosters individual creativity, and justifies
collective action (Rosenfeld, 1995). Nevertheless, trust
depends on the sociocultural identity and on the social
capital present in the place where it is located (Porter,
1999).
2.1.2. Access to public infrastructures
As in the case of the previous advantage, access to public
infrastructures can also be found in the previously an-
alyzed classifications (Fan & Scott, 2003; Suarez-Villa
& Walrod, 1997; Swann, 1998) because the interven-
tion of public administrations is particularly effective
for regional development when it provides service and
environmental infrastructures (Sengenberger & Pyke,
1992). Public administrations, on both the national
and local level, play a vital role in the development
and regeneration of regional economies, in both indus-
trialized countries and developing nations. Thus, the
actions carried out by administrations and public in-
stitutions can generate public or quasi-public goods in
the area (for instance, public investment in infrastruc-
tures, training, or information), which not only bene-
fit the members of the cluster, but are also prompted
by the number of businesses benefited. Thus, the busi-
168 Human Factors and Ergonomics in Manufacturing & Service Industries
15206564, 2010, 2, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/hfm.20207 by Tsinghua University Library, Wiley Online Library on [04/12/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
Jiménez and Junquera
nesses that comprise a cluster can have access to and
even increase the creation of rich, dense infrastructures
(Porter, 1999).
2.1.3. Incentives and performance
quantification
This advantage, although lacking in the classifications
previously mentioned, has been considered an advan-
tage in the literature for different reasons. First, clus-
ters increase the incentive that stimulates businesses to
achieve greater productivity. This is the case for several
reasons. One of the most important reasons is com-
petitive pressure (Porter, 1999). Rivalry among local
competitors prompts strong stimulating effects, given
the ease with which they can establish constant com-
parisons and because the local rivals find themselves in
similar general circumstances (e.g., they have the same
labor costs), so that they must compete on the basis
of other issues. Moreover, the pressure of the members
increases the competitive pressure inside the cluster,
even in the businesses that do not compete with each
other either directly or in any other way whatsoever
(Enright, 1990; Porter, 1999). Also, clusters make it
easier to quantify the performance of the activities in-
side a business, because oftentimes other businesses in
the area perform similar functions (Fernández, 2005).
2.2. Business Advantages
These types of advantages are found at the busi-
ness level and represent the most common types.
They consist of access to information and spe-
cialized resources at a lower cost (Beardsell &
Henderson, 1999; Beaudry & Breschi, 2003; Caniëls &
Romijn, 2003; Fan & Scott, 2003; Krugman, 1991; Scott,
1988a; Swann, 1998), improvement of human capi-
tal (Beardsell & Henderson, 1999; Caniëls & Romijn,
2003; Fan & Scott, 2003), flexibility, creation of new
businesses, and innovation. We will go on to examine
each of these advantages in detail.
2.2.1. Access to information and specialized
resources at lower cost
This advantage can be contemplated in the previ-
ously mentioned classifications, although with dif-
ferent names: localization economies (Beardsell &
Henderson, 1999; Beaudry & Breschi, 2003; Fan &
Scott, 2003), external pecuniary and technological
economies (Krugman, 1991; Scott, 1988a), knowledge
DOI: 10.1002/hfm

Jiménez and Junquera
spillovers (Fan & Scott, 2003), specialized labor and
inputs, informative externalities (Beaudry & Breschi,
2003), informal communication (Caniëls & Romijn,
2003), access to research and development (R&D) in-
formation and specialized inputs, and access to highly
skilled personnel (Suarez-Villa & Walrod, 1997). There
are several different reasons for the importance of this
advantage. First, a vast amount of specialized informa-
tion (commercial, technical, etc.) is found inside the
cluster, in the businesses and institutions that comprise
it. Access to this information is easier and/or less expen-
sive from within the cluster (Asheim, 1996). Proximity,
supply and technological linkages, and the existence
of frequent personal relations and social linkages that
foster trust facilitate the flow of information inside the
clusters (Porter, 1998).
2.2.2. Improvement of human capital
This advantage is also considered in the analyses al-
ready examined, albeit with different terms: urbaniza-
tion economies (Beardsell & Henderson, 1999), dense
local labor market (Fan & Scott, 2003), and human cap-
ital training by means of informal learning-by-doing
(Caniëls & Romijn, 2003). This advantage stems from
the previously analyzed one in that the tremendous
flow and exchange of information and knowledge con-
tribute to human capital improvement, whether it be
by means of informal learning (direct observation and
tacit knowledge) or by means of exchanging workers
(Yamawaki, 2002).
2.2.3. Flexibility
This advantage is not found in the previous classifi-
cations. It has been considered, however, by different
authors as a critical cluster advantage (Barkley & Henry,
2001; Caniëls & Romijn, 2003; Sengenberger & Pyke,
1992) because the flexibility provided by small and
medium-sized businesses in the cluster is perhaps the
characteristic that is most commonly associated with
advantages of the cluster (Hadjimanolis, 2000). Flexi-
bility can take on different forms, depending on how
it is related to the desired objective. It can assume the
form of “active versatility” or of “passive adaptability”
(Semlinger, 1990). That is, it can consist of the abil-
ity to exploit market niches and respond quickly to
orders or it can mean simply adapting to external pres-
sure exerted by clients (Sengenberger & Pyke, 1992).
The productive organization regarding the behavior of
Human Factors and Ergonomics in Manufacturing & Service Industries
15206564, 2010, 2, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/hfm.20207 by Tsinghua University Library, Wiley Online Library on [04/12/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
Why Are Clusters Beneficial?
clusters at the very least appears to offer the possibility
of a regime of “active versatility” (Caniëls & Romijn,
2003).
2.2.4. Creation of new businesses
This advantage, although absent in the previously ex-
amined classifications, is present in numerous analyses
dealing with the advantages of clusters (Porter, 1999;
Rosenfeld, 2002; Saxenian, 1995; Sengenberger & Pyke,
1992), which argue that many, if not most, businesses
are created within clusters, not in isolated locations.
This is so for several reasons. First, clusters are appeal-
ing, because they have better information regarding
opportunities. It is easier for the people who work in
the cluster or close to it to detect existing gaps in prod-
ucts, services, or suppliers. Armed with this knowledge,
these people will be more willing to leave the businesses
they work for and set up other, new ones, aimed at fill-
ing the gaps discovered (Sengenberger & Pyke, 1992).
2.2.5. Innovation
Innovation, although neglected in most of the previous
classifications, is an advantage of clusters that the lit-
erature deems important (Bell & Albu, 1999; Giuliani
& Bell, 2005; Miller & Côté, 1985; Nassimbeni, 2001;
Porter, 1999; Saxenian, 1995; Yamawaki, 2002; Zander,
2004) for several reasons. First, the businesses in the
clusters tend to pick up on buyers’ trends faster than
isolated competitors do (Porter, 1999). Likewise, par-
ticipation in a cluster also offers advantages in perceiv-
ing new technology, production, or commercialization
possibilities (Bell & Albu, 1999).
3. CONCLUSIONS
As we can see from what has been previously examined,
the advantages that a cluster can provide are highly het-
erogeneous. Following our analysis of the literature, we
can see that, first of all, different advantages are derived
from the region where the cluster is located and, sec-
ond, the cluster provides the businesses that comprise
it with important advantages. Among the first advan-
tages we can identify are trust, access to infrastruc-
tures, and incentives and performance quantification.
The second group of advantages consists of access to
information and specialized resources at a lower cost,
improvement of human capital, flexibility, creation of
new businesses, and innovation.
DOI: 10.1002/hfm 169

Why Are Clusters Beneficial?
The literature indicates that the cluster is a complex,
dynamic entity, which makes it difficult to measure its
performance and evolution. Consequently, the empiri-
cal studies carried out to date adjust more to established
clusters, reflected in economic data, than to those clus-
ters that are in the process of being created (Colgan &
Baker, 2003). That is why it is so hard for both policy
designers, as well as for businesses, to make the deci-
sion to foster the creation and development of a cluster
in a given region. In different studies, however, we
find that clusters are not always appropriate for all re-
gions and economic activities (Barkley & Henry, 2001;
Colgan & Baker, 2003; Suarez-Villa & Walrod, 1997;
Visser, 1999). Current literature suggests that differ-
ent factors must necessarily be analyzed in depth to
determine whether a cluster is suitable for a specific
place. Robertson and Langlois (1995), in fact, suggest
that the presence of information networks, their im-
pact on different industries, the presence or absence
of economies of scale, and the stage the product life
cycle is in must all be examined. Likewise, Colgan and
Baker (2003) suggest that it is important that eight fac-
tors in the clusters be observed: innovation, regional
business functions, business objectives, financing, re-
lations, local advantage, market potential, and growth
of the leading industrial group.
The literature addressing clusters has revealed that
they go through a life cycle, so that the factors that fos-
ter or foil the development of clusters take on different
roles over time (Navarro, 2001). Thus, we gather from
the literature that during the birth phase “chance often
has a history of place,” which diminishes the influence
that, a priori, the random factor has (Porter, 1998).
Insofar as the growth phase is concerned, we must dis-
tinguish between those factors that attract newcomers
and those that promote growth. A cluster that is already
strong in a given sector will probably attract fewer new-
comers to that sector, whereas businesses located in that
sector in the cluster will tend to grow more than the
businesses of that sector that are outside of the cluster.
In contrast, the businesses of the cluster belonging to
other sectors will tend to grow less than the businesses
located outside of the cluster. Said sector of the clus-
ter will tend to attract more newcomers. Likewise, in
this phase of the cycle, the clusters of a single technol-
ogy will tend to grow faster than diversified clusters
(Swann, Prevezer, & Stout, 1998).
Furthermore, the benefits and barriers to develop-
ment derived from the specialization or sectorial con-
centration of clusters change meaning and take on par-
170 Human Factors and Ergonomics in Manufacturing & Service Industries
15206564, 2010, 2, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/hfm.20207 by Tsinghua University Library, Wiley Online Library on [04/12/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
Jiménez and Junquera
ticular relevance in the phase of stagnation and decline.
Mature, diversified sectors display greater capability of
reanimation and recuperation. Thus, in this sense, clus-
ter and technical change analysts emphasize the risks
of lock-in stemming from a high degree of specializa-
tion. In contrast, the literature indicates that the decline
process does not necessarily have to end up as the dis-
appearance or disintegration of the cluster, especially
in light of the possibility of “convergence” (or cross-
sectorial effects) of old and new technologies (Navarro,
2001).
A series of implications for public administrations
can be inferred from this notion that, like many others,
considers clusters to be ideal strategies to foster indus-
trial development. These implications are listed later
in text. The key for prescription policy is to compare
the costs of starting up or expanding a cluster with the
potential benefits from successful development of the
cluster. Nevertheless, it must be added that cluster pro-
motion is not an industrial development solution for
all activities. The cluster strategy is more promising in
those areas with developed clusters in growth sectors.
Those regions with concentrations of sectors in decline
or areas with diverse industrial bases should probably
concentrate their resources for industrial development
in areas of traditional programs—recruitment, devel-
opment of small businesses, conservation, and expan-
sion (Barkley & Henry, 2001).
In general, public policies must be concerned with
facilitating instead of limiting and prescribing, by offer-
ing opportunities for businesses to develop the business
organization that best suits their particular environ-
ments. This facilitation requires the provision of infras-
tructures and regulations needed to prevent antisocial
activities and to channel behavior in productive direc-
tions. Likewise, this entails legislators not doubting the
businesses and forcing malicious strategies (Robertson
& Langlois, 1995).
As we can see, up until now there has been no con-
sensus in the literature regarding the true contribu-
tion made by clusters. First of all, the classifications of
the advantages imparted by said agglomeration vary
in terms of wording and origin. After a revision of the
literature, we have chosen to select the most important
ones. Likewise, it can be inferred from the literature
that clusters can also generate obstacles to develop-
ment, which are heterogeneous among the publica-
tions found. After analyzing different contributions in
this regard, we have detected the most relevant poten-
tial barriers. Moreover, from different analyses it can be
DOI: 10.1002/hfm

Jiménez and Junquera
concluded that clusters are not always appropriate for
all kinds of environments and innovations. Thus, we
see that certain factors must be studied to determine
the suitability of a cluster in a given place. Different
authors have proposed those elements that are indis-
pensable to the successful creation and functioning of a
cluster (Barkley & Henry, 2001; Colgan & Baker, 2003;
Robertson & Langlois, 1995). A key idea is inferred
from this analysis: The cluster is an economic develop-
ment strategy, but it is not an industrial development
solution for all activities. Therefore, research must be
done in which the costs of starting up or expanding a
cluster are compared with the potential benefits of its
successful development.
References
Arthur, B. (1990). Positive feedbacks in the economy.
Scientific American, 262(2), 92–99.
Asheim, B. T. (1996). Industrial districts as “Learning
Regions”: A condition. European Planning Studies, 4,
379–400.
Barkley, D. L., & Henry, M. S. (2001). Advantages and
disadvantages of targeting industry clusters. REDRL
Research Report.
Beardsell, M., & Henderson, V. (1999). Spatial evolu-
tion of the computer industry in the USA. European
Economic Review, 43, 431–456.
Beaudry, C., & Breschi, E. (2003). Are businesses in clus-
ters really more innovative? Economic of Innovation
and New Technology, 12(4), 325–342.
Bell, M., & Albu, M. (1999). Knowledge systems and
technological dynamism in industrial clusters in de-
veloping countries. World Development, 27(9), 1715–
1734.
Caniëls, M. C. J., & Romijn, H. A. (2003). Dynamic
clusters in developing countries: Collective efficiency
and beyond. Oxford Development Studies, 31(3), 275–
292.
Colgan, C., & Baker, C. (2003). A framework for as-
sessing cluster development. Economic Development
Quarterly, 107(4), 352–366.
Enright, M. (1990). Geographical concentration and
industrial organization. Doctoral thesis, Harvard
University.
Fan, C., & Scott, A. (2003). Industrial agglomeration and
development: A survey of spatial economic issues in
East Asia and a statistical analysis of Chinese regions.
Economic Geography, 79(3), 295–319.
Fernández, E. (2005). Estrategia de innovación. Madrid:
Thompson.
Human Factors and Ergonomics in Manufacturing & Service Industries
15206564, 2010, 2, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/hfm.20207 by Tsinghua University Library, Wiley Online Library on [04/12/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
Why Are Clusters Beneficial?
Fujita, M., Krugman, P., & Venables, A. (1999). The spa-
tial economy: Cities, regions and international trade.
Cambridge, MA: MIT Press.
Giuliani, E., & Bell, M. (2005). The micro-determinants
of meso-level learning and innovation: Evidence from
a Chilean wine cluster. Research Policy, 34, 47–68.
Gordon, I. R., & McCann, P. (2000). Industrial clusters:
Complexes, agglomeration and/or social networks? Ur-
ban Studies, 37(3), 513–532.
Hadjimanolis, A. (2000). A resource-based view of inno-
vativeness in small businesses. Technology Analysis and
Strategic Management, 12(2), 263–281.
Kim, J. Y. (2005). The formation of clustering of direct
foreign investment and its role of interbusiness net-
works in China: Case study of Qingdao development
zones. In C. Karlsson, B. Johansson, & R. Stough (Eds.),
Industrial clusters and inter-firm networks (pp. 390–
412). London: Edward Elgar.
Krugman, P. (1991). Geography and trade. Cambridge,
MA: MIT Press.
Marshall, A. (1920). Principles of economics. New York:
MacMillan.
Miller, R., & Côté, M. (1985). Growing the next Silicon
Valley. Harvard Business Review, July–August, pp. 114–
123.
Nadvi, K. (1999). The cutting edge: Collective efficiency
and international competitiveness in Pakistan. Oxford
Development Studies, 27, 81–107.
Nassimbeni, G. (2001). Technology, innovation capacity,
and the export attitude of small manufacturing busi-
nesses: A logit/tobit model. Research Policy, 30, 245–
262.
Navarro, M. (2001). El análisis y la polı́tica de clusters.
Instituto de Análisis Industrial y Financiero, Universidad
Complutense. Documento de trabajo 27-2001.
Porter, M. (1990). The competitive advantage of nations.
New York: The Free Press.
Porter, M. (1998). Clusters and the new economics of
competition. Harvard Business Review, 76, November–
December, 77–90.
Porter, M. (1999). Ser competitivo. Nuevas Aportaciones
y Conclusiones, Ediciones Deusto, Bilbao, [Capitulo 7:
Cúmulos y competencia. Nuevos objetivos para empre-
sas, Estados e instituciones, pp. 203–288].
Robertson, P. L., & Langlois, R. N. (1995). Innovation,
networks, and vertical integration. Research Policy, 24,
543–562.
Rosenfeld, S. (1995). Overachievers: Business clusters that
work: Prospects for regional development. Chapel Hill.
NC: Regional Technology Strategies, Inc.
Rosenfeld, S. (2002). Just clusters. Economic development
strategies that reach more people and places. Chapel
Hill. NC: Regional Technology Strategies, Inc. Available
at: www.rtsinc.org
DOI: 10.1002/hfm 171

Why Are Clusters Beneficial?
Saxenian, A. (1995). Redes regionales y adaptación indus-
trial en Silicon Valley y la Ruta 128. Revista Asturiana
de Economı́a (RAE), 4, 231–253.
Schmitz, H. (1995). Collective efficiency: Growth path for
small-scale industry. Journal of Development Studies,
31, 529–566.
Schmitz, H. (1999). Collective efficiency and increasing
returns. Cambridge Journal of Economics, 23, 465–
483.
Schmitz, H. (2000). Does local co-operation matter? Ev-
idence from industrial clusters in South Asia and Latin
America. Oxford Development Studies, 28, 323–336.
Schmitz, H., & Nadvi, K. (1999). Clustering and indus-
trialization: Introduction. World Development, 27(9),
1503–1514.
Scott, A. J. (1988a). Metropolis: From the division of labor
to urban form. Berkeley, CA: University of California
Press.
Scott, A. J. (1988b). New industrial spaces: Flexible
production organization and regional development
in North America and Western Europe. London:
Pion.
Semlinger, K. (1990). Small businesses and outsourcing
as flexibility reservoirs of large businesses. Documento
presentado en un seminario sobre socioeconomı́a de
la cooperación empresarial. Berlı́n, Centro de Ciencias
Sociales.
Sengenberger, W., & Pyke, F. (1992). Distritos industriales
y regeneración económica local: Cuestiones de investi-
gación y de polı́tica. En F. Pyke & W. Sengenberger
(Eds.), Los distritos industriales y las pequeñas empre-
sas (Vol. III, pp. 27–60). Madrid: Ministerio de Trabajo
y Seguridad Social.
Smith, A. (2003). Power relations, industrial clusters,
and regional transformations: Pan-European integra-
tion and outward processing in the Slovak clothing in-
dustry. Economic Geography, 79(1), 17–40.
Storper, M. (1989). The transition to flexible specializa-
tion in the U.S. film industry: External economies,
the division of labor, and the crossing of industrial
divides. Cambridge Journal of Economics, 13, 273–
305.
Storper, M. (1995). The resurgence of regional economies,
ten years later: The region as a nexus of untraded inter-
dependencies. European Urban and Regional Studies,
2, 191–221.
Storper, M. (1997). The regional world. New York:
Guilford Press.
Suarez-Villa, L., & Walrod, W. (1997). Operational strat-
egy, R&D and intra-metropolitan clustering in a poly-
centric structure: The advanced electronics industries
of the Los Angeles Basin”, Urban Studies, 34(9), 1343–
1380.
172 Human Factors and Ergonomics in Manufacturing & Service Industries
15206564, 2010, 2, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/hfm.20207 by Tsinghua University Library, Wiley Online Library on [04/12/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
Jiménez and Junquera
Swann, G. M. P. (1998). Towards a model of cluster-
ing in high-technology industries. In G. M. P. Swann,
M. Prevezer, & D. Stout (Eds.), The dynamics of
industrial clustering. International comparisons in
computing and biotechnology (pp. 52–76). Oxford: Ox-
ford University Press.
Swann, G. M. P., Prevezer, M., & Stout, D. (Eds.). (1998).
The dynamics of industrial clustering. International
comparisons in computing and biotechnology, Oxford:
Oxford University Press.
Vernon, R. (1960). Metropolis 1985. Cambridge, MA:
Harvard University Press.
Visser, E.-J. (1999). A comparison of clustered and dis-
persed businesses in the small-scale clothing industry
of Lima. World Development, 27(9), 1553–1570.
Yamawaki, H. (2002). The evolution and structure of in-
dustrial clusters in Japan. Small Business Economics,
18, 121–140.
Zander, I. (2004). El espı́ritu emprendedor en el ámbito
geográfico. Fundamentos conceptuales e implicaciones
para la formación de nuevos clusters. Cuadernos de
Economı́a y Dirección de la Empresa, 20, 9–34.
Endnotes
1. Agglomeration economies are defined as the added
benefits that arise from the spatial proximity by find-
ing different production factors (infrastructure and
services, stock of specialized labor, specialized suppli-
ers, and a common knowledge base) geographically
concentrated (Fan & Scott, 2003; Saxenian, 1995).
The term “agglomeration economies” suggests that
the benefits obtained from mutual proximity are
aimed largely at lowering transaction costs as well as
the costs of common resources (Fan & Scott, 2003).
2. Businesses incorporated into the cluster have to deal
with lower transaction costs due to the increased
economies of scale (Schmitz, 1999). Cost savings
can arise from the high local demand for goods
and services (Swann, 1998). They might also arise
from the fierce local competition among businesses
which lowers input costs (Nadvi, 1999). In contrast,
low-scale inter-firm transactions that are variable in
terms of content and subject to frequent readjust-
ments usually generate high costs per unit of dis-
tance. Mutual proximity of businesses that comprise
networks made up of transactions of this type is an
important factor in keeping costs from getting out
of hand and lowering the risk of inter-firm contact
failure (Fan & Scott, 2003; Scott, 1988a).
3. Another concept of collective efficiency can be found
in Schmitz (1990), who defines it as efficiency and
DOI: 10.1002/hfm
 15206564, 2010, 2, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/hfm.20207 by Tsinghua University Library, Wiley Online Library on [04/12/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
Jiménez and Junquera Why Are Clusters Beneficial?

flexibility derived from the advantages provided by
grouping small individual businesses.
4. Localization economies, derived from the special-
ization of the businesses that comprise the cluster,
arise when there is a single industry. In contrast, if
more than one industry is present in the cluster, the
so-called urbanization economies are displayed that
arise from the complementarity of the businesses
pertaining to different, yet related industries.
5. Prior existence of trust within the cluster environ-
ment generates more inter-firm linkages which, in
turn, entail greater trust (Asheim, 1996).

Human Factors and Ergonomics in Manufacturing & Service Industries DOI: 10.1002/hfm 173