From The Advance And Retreat Mechanism Of Cluster Development

In recent years, clusters are booming over through our country andbecome a main factor to improve economy. So it is necessary to researchhow and why firms gather in clusters in order to show effective policy todevelop clusters or keep it flourish. In this paper, clusters are defined by Porter(1998,p.78) as"geographic concentrations of interconnected firms and institutions in aparticular field which encompass an array of linked industries and otherentities important to competition". It should be noted that the"interconnected firms and institutions in a particular field" is the centerorganizations and "an array of linked industries and other entities"serve for it in the clusters. As Alfred Marshall said the concentration offirms in close geographical proximity within clusters allowed all firms toenjoy the benefits of economies of scale, external and of technical andorganizational innovations. Some common ground is established in different theories clusters butthe various theoretical approaches draw upon an immensely wide set ofarguments in establishing the advantages to firms locating within a cluster,and the balance between competition and cooperation in the generation ofthese advantages. Majority of theories focus on the agglomeration orcooperation but to some extent, dispersion or competition is now aneglected field. The paper tries to analyze clusters and its boundarythrough a new angle, that is whether the firm will enter into clusters ornot. If the firm chooses locating in cluster it means that clusters areattractive and will progress continuously, vise verse, it will be dead.Finally, we show suggestion and public policy to develop Hi-Tech FirmsParks. The paper is organized as follows. Section one point out what the paper is concerned with and how wearrange the paper. Section two reviews the different theories of clusters. Severaldifferent traditions are identified and criticized, each one pays greatemphasize on different factors to explain what the sources of theadvantages to firms locating within a cluster or why firms might clustertogether. They includes such advantages as transport charges, labor wage,marketing scope, economics of scale, economics of external, cooperation,free liquid of human capital, technological and knowledge innovation.Then we start by classifying above factors to two types, that is, thelocation factors and the agglomeration factors. Through analyzing theHi-Tech firm' strategy of location, we find that the latter factor is moreimportant. So the main point of Hi-Tech firm strategy of location is thedecision whether entering into the cluster or not. Intuitively, it should be clear that the spatial configuration ofeconomic activities is the outcome of a process involving two opposingtypes of forces, that is, agglomeration forces and dispersion forces. Theobserved spatial configuration of economic activities is then the result ofa complicated balance of the contrary forces. For example, a famousFrench geographer argued that all societies, rudimentary or developed,face the same dilemma: Individuals must get together to benefit from theadvantages of the division of labor, but various difficulties restrict thegathering of many individuals. As Marshall believed the importance oflocalization of production within industrial districts is that, by providingopportunities for entrepreneurs to specialize and for the industrial districtas a whole to secure internal economies of scale and external benefitsdenied to isolated firms, it improves the competitive position ofindividual firms. The response of deepening the organizational division oflabor leads to an increase in the number of formal market transactionsexternal to the firm. There may also be an increase in the unpredictabilityand complexity of transactions. Modern industrial district theoryemphasizes the interdependence of firms, flexible firm boundaries, andthe importance of trust in creating and sustaining collaboration betweeneconomic actors within the districts. The reasoning is that firms withinnetworks of trust benefit f...