The title of this project “Enhancing National Economic Benefits through a New Cluster Paradigm” may suggest there is a ‘one size fits all’ approach to cluster establishment and development, characterised by a prescriptive structural and operational model. However, the project team believes the reverse is true. The research from the project suggests that clusters, similar to any business network can be likened to an organic entity with distinctive life-cycle phases. The needs for cluster development will be different depending on the phase of development for a particular cluster.
Cluster development on its own is not a panacea for economic development, but rather, depending on the sustainability and effectiveness of the cluster model, a powerful tool for growth. There is an urgent need in Australia for companies to understand how to collaborate effectively, when to collaborate, and when to compete on a local basis. That is the executive decision to be made, rather than ‘should you collaborate’. Clusters provide the forum for such collaboration.
The report considers the definitional aspects of what constitutes a ‘cluster’, building on the work of Michael Porter and others to conclude that a workable definition is “a system of inter-related companies, institutions and networks with common understandings, a desire for continual growth, and a level of trust which enhances the flow of knowledge.” This is a departure from previous definitions which tended to require geographical proximity of participants. The departure is explained by the recent emergence of spatially remote clusters and newer concepts of ‘cluster of clusters’. However, whilst categorisations are useful, it is important to maintain an open flexible approach to the development of clusters.