Method for Identifying Industry Clusters: Assessment of the State of the Art

The global economy has changed economic strategies both for private and public entities. It is likely that there are no longer permanent enemies in managing business; instead every firm is willing to cooperate in order to survive in an increasingly competitive world economy. Public and government agencies also have tried to provide private enterprises with better business conditions. The forms of the provision vary for issues such as tax abatement, subsidies for starting-up a business, and availability of high-skilled labor, etc. However, no resource can provide more benefit than an industry cluster can. Currently, industry clustering is accepted as the best solution for helping companies cope with the growing economic pressure caused by a competitive world economy because clusters are capable of creating wealth by developing specializations that effectively generate a competitive advantage within markets. That is, clustering industries provides access to more suppliers and customized support services, to experienced and skilled labor pools, and to the inevitable transfer of knowledge. Successful regional economies have clusters that produce goods and services along the entire value chain from basic inputs to final products and services. Among all of the advantages of clustering, nothing is as important as access to innovation, knowledge, and know-how, all of which are actively sought out in today's business world. Such a growing concern with industry clusters has called for many theoretical and empirical studies in order to make the concept of a cluster clear and to apply clustering effectively. However, since industry clusters have been defined, developed, and fostered in various ways, the actual definition of industry cluster differs in each case and stage. Both theoretical literature and empirical reports present different definitions of industry clusters and deal with case studies illustrating different types of clusters. Boekholt (1997, p1) points out that the "multitude of cluster initiatives has led to a wide spread confusion of what clusters really are, and in what way they differ from related phenomenon, such as industrial districts, techno-poles, networks, and industry-research collaborations." Most theoretical studies have claimed that there is not one correct definition or one desirable method of identifying industry clusters. Given the various definitions and different types of industry clusters that exist, a wide range of methods has been performed to identify industry clusters by policy makers and clustering experts. It has been observed, however, that some methods are used more frequently in current empirical cluster studies and reports. Thus it is necessary to classify and examine the various definitions of industry clusters and methods for identifying clusters that are used in the literature and reports in order to present a clear image of industry clusters as they exist today. In addition, it needs to explore what methods are desirable and what factors should be measured in the process of identifying clusters. With respect to these concerns, this paper starts with a review of the relevant concepts and definitions that have emerged in the literature thus far. The second part establishes the criteria that should be used as a basis for assessing various methods of identifying clusters. Finally, the third part examines which methods are used in empirical studies and how they are applied and then methods are assessed based on the criteria established in the second part.Master of City and Regional Plannin