The Emergence of Industry Clusters. Theory & Evidence Essay

The Emergence of Industry Clusters. Theory & Evidence - Essay Example According to the researchers, an industry cluster may be defined as a geographical adjacent group of interrelated industrial firms and connected institutions which is linked by unity and harmony. In an organisational form, clusters offer more flexibility to the industrial firms in the ever- changing industrial environment. In other words, the extent along with the nature of link between the customers, the suppliers and the competitors determine the various advantages of industrial cluster with respect to industrial structure. The emergence of industry clusters has made an exceptional mark as well as caused a significant variation in regional financial performance of the United States and Germany. Through the occurrence of pioneering clusters of the companies and industries such as semiconductor industry of Silicon Valley, automobile industry of Detroit and German Laser industry, the researchers observed that the above mentioned industrial units attained strong financial performance d ue to the presence of modernised clusters. Thus, it can be stated that during the emergence of industry clusters lie a significant as well as mention worthy effect upon attaining strong and well organised financial performance which is performed by the industrial units such as semiconductor industry of Silicon Valley, automobile industry of Detroit and German Laser industry. The industry clusters act as a source of local modernisation along with improvement towards geographic attention of various business organisations, industrial firms and related trade institutions that include standard agencies and trading organisations among others. ... rgement, the formation and the progression of industry clusters such as semiconductor industry of Silicon Valley, automobile industry of Detroit and German Laser industry are elaborately discussed. Supportive theories and evidences along with various prescribed policy recommendations regarding the emergence and impact of industry clusters will also be taken into concern in the discussion of this paper. Key Facts of the Industry Clusters There are various factors that are associated with industry clusters that encompass a favourable business situation which is an elementary requirement for activating industrial agglomeration (Klepper, 2009). The factors that include steady macroeconomic atmosphere, government institutional structure, enhanced legal system, and modernised technologies are regarded as a few of the encouraging factors for industrial clustering. The factors that include deficiency of low labour cost, trained labours and professionals, scarcity of advanced physical structu re such as roads, legalised actions and legislations and lack of improved logistics, production methods and innovative business operations eventually act as an obstacle towards industrial clustering (Klepper, 2009). Along with the encouraging factors, there also lie certain major elements that act as a crucial obstacle towards industrial clustering. It has been identified that the two most inspiring and remarkable industry clusters of the United States are especially the semiconductor industry in Silicon Valley and the automobile industry in Detroit (Klepper, 2009). In the early days of semiconductor industry i.e. 1950, Silicon Valley enjoyed maximum financial leverage due to the contribution of its semiconductor industry. However, in the next 30 years, nearly 100 semiconductor companies