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experiences of selected asean countries and china and policy recommendations for the LaosDeveloping industrial clusters experiences of selected asean countries and china and policy recommendations for the LaosDeveloping industrial clusters experiences of selected asean countries and china and policy recommendations for the LaosDeveloping industrial clusters experiences of selected asean countries and china and policy recommendations for the LaosDeveloping industrial clusters experiences of selected asean countries and china and policy recommendations for the LaosDeveloping industrial clusters experiences of selected asean countries and china and policy recommendations for the LaosDeveloping industrial clusters experiences of selected asean countries and china and policy recommendations for the LaosDeveloping industrial clusters experiences of selected asean countries and china and policy recommendations for the LaosDeveloping industrial clusters experiences of selected asean countries 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INTRODUCTION
Research rationale
The current economic landscape is evolving due to innovation and competition, necessitating new approaches to socioeconomic progress (Lu et al., 2018) The cluster model has gained international recognition as a solution to the challenges posed by the information age and globalization, making industrial cluster development essential for global competitiveness (Niu, 2010) Recently, this approach has become a vital component of local economic policy in leading industrialized nations (Li, 2019) Prioritizing the formation and growth of a competitive national economy is crucial for enhancing economic viability, presenting new challenges to improve efficiency (Ali, 2023) Identifying priority sectors and understanding the factors influencing competitive relations through foreign trade development are essential for a paradigm shift in development management, moving away from traditional industrial policies towards innovation-based clusters amid increasing international competition (Niu, 2010).
The emergence of industrial clusters represents a significant trend in industrial development, bringing together businesses that are economically and technically interconnected within a specific geographic region As noted by Zhong and Tang (2018), these clusters foster close relationships among companies regarding the production and consumption of goods.
Industrial clusters consist of various businesses, including product manufacturers, raw material producers, suppliers, and machinery providers, as well as companies that consume and export products (Lu et al., 2018) Additionally, these clusters may host organizations offering legal services, training, business support, inspection, and logistics The development of industrial clusters fosters a flexible investment environment and an optimal value chain, which encourages the establishment of new businesses and addresses gaps in the existing supply chain (Lu et al., 2018).
Scientists, researchers, and governments globally are increasingly leveraging industrial parks, clusters, and economic zones to gain competitive advantages that bolster regional and local industries Despite the varying definitions and models of these entities, they share common traits, particularly the geographical concentration of industries that capitalize on local opportunities Companies within these zones and clusters benefit from interconnected relationships with suppliers and customers, necessitating additional services such as consulting, training, coaching, and support from financial institutions and key industry players.
Industrial parks, complexes, and clusters play a crucial role in generating a skilled workforce, exporting goods, and providing high-quality services while fostering collaboration among government agencies, universities, research institutes, and funding bodies Research indicates that an effective vocational training network is essential for enhancing development The geographical proximity of these industrial entities leads to economies of scale, reducing product costs and facilitating resource sharing Furthermore, the expansion of industrial clusters contributes to advancements in domestic technology, transformation of the local economic structure, acceleration of industrialization, job creation, and addressing socio-economic development challenges.
The ongoing debate surrounding cluster categorization highlights the relevance of this theme, as management theory has yet to establish a definitive science-based model for such clusters Before exploring new concepts, it is essential to identify precise methods for describing and classifying criteria and indicators for evaluation Evidence from various countries demonstrates that clustering is an effective strategy for implementing industrial policy (Mindlin et al., 2016) Since the advent of handicraft production, economic agglomerations of related companies in specific regions have been recognized as a cluster phenomenon Economists increasingly acknowledge that regions where clusters thrive emerge as leaders in economic development (Palcic, 2022), significantly influencing the growth of national economies.
Industrial clusters are vital for economic development in Southeast Asia, particularly in Laos, where they enhance production and export capabilities in sectors like food, wood, textiles, and electronics The export value from Laos surged from over 2 billion USD in 2010 to nearly 5.8 billion USD in 2019, primarily driven by strong industries within these clusters Additionally, industrial clusters generate employment opportunities and attract foreign direct investment (FDI), leading to improvements in infrastructure such as transport, electricity, and seaports, which benefit local businesses and promote regional growth However, Laos faces challenges including global competition, inadequate infrastructure, and a low-skilled workforce The development of economic clusters can significantly boost productivity and competitiveness by providing access to specialized resources and skilled labor, fostering innovation through collaboration, and attracting investment For Laos, focusing on clusters in agriculture, tourism, and light manufacturing could leverage its unique strengths, such as cultural heritage and natural beauty, to drive economic growth and reduce poverty.
2019), while its strategic location and low labor costs could attract light manufacturing firms (Kyophilavong, 2015).
Laos can learn valuable lessons from the successful economic clusters of ASEAN countries and China as it aims to develop its own By analyzing the strategies and challenges faced by nations like Vietnam, which has excelled in electronics, automotive, and textiles through proactive government support and infrastructure investment, Laos can identify best practices for its unique context Vietnam's electronics cluster, particularly in Ho Chi Minh City, thrives due to the presence of major corporations like Samsung and Intel, fostering a strong ecosystem of suppliers and skilled labor Similarly, Thailand's automotive and textile clusters, centered around Bangkok, have become regional hubs due to supportive policies and strong connections between multinational firms and local suppliers China's leadership in cluster development, especially in Shenzhen's electronics sector, showcases the impact of government backing, foreign investment, and entrepreneurial spirit, providing further insights for Laos in crafting its cluster development strategy.
China's automotive clusters, particularly in cities like Shanghai and Guangzhou, have flourished due to a substantial domestic market, favorable industrial policies, and collaborations between foreign automakers and local companies.
While Vietnam, Thailand, and China provide valuable insights for Laos, it is crucial to acknowledge the uniqueness of each country's context Laos must adapt these lessons to its specific circumstances, considering its economic development, geographic location, resource endowments, and institutional capacity By analyzing the successes and challenges faced by other nations and applying relevant insights, Laos can enhance its cluster development process, sidestep common pitfalls, and foster a more diversified, competitive, and inclusive economy.
This dissertation explores the development of industrial clusters in Laos, drawing on successful experiences from selected ASEAN countries and China It aims to provide practical policy recommendations and strategic guidance to enhance cluster development, attract investment, and foster economic growth in Laos Additionally, the research contributes to cluster theory by analyzing its relevance in emerging economies, conducting comparative studies, and investigating policy innovations in resource-limited settings Ultimately, this study seeks to offer valuable insights into the dynamics and success factors of cluster policies, enriching the literature on sustainable industrial development in emerging and least developed countries.
Research objectives and questions
This study aims to examine factors affecting developing industrial clusters inLaos and evaluate experiences of developing industrial clusters in some selected
ASEAN countries and China Based on the findings, the study suggests some recommendations to develop industrial clusters for Laos.
To achieve these aims, the specific objectives include:
First , to generalize broad theories related to industrial clusters and industrial cluster development.
Second , to analyze the current situation and factors affecting the development of industrial clusters in Laos.
Third , to evaluate the experience of developing industrial clusters of ASEAN countries and China.
Fourth, to make some recommendations to develop industrial clusters in Laos. 1.2.2 Research questions
- What is the current development situation and characteristics of industrial clusters in general?
- What experiences can Laos learn from the process of developing industrial clusters from ASEAN countries and China?
- What are the lessons for developing industrial clusters in the world and some countries?
- What factors affect the development of industrial clusters in Laos today; And is there any solution to promote the development of industrial clusters in Laos?
Research scope
The scope of content: developing industrial clusters in Laos and lessons learned from some other countries
The spatial scope: industrial clusters in Laos.
The time range: secondary data collected during the entire process of developing industrial clusters in Laos; while primary data is collected fromSeptember to November 2023.
Research methods
This thesis focuses on the development of industrial clusters in Laos, examining related challenges and drawing insights from industrial development cases in Southeast Asia and China By synthesizing previous research and lessons learned from these regions, the study aims to create a learning framework tailored for Laos The research proposes solutions to enhance the operational efficiency of industrial clusters within the country.
This thesis adopts a mixed-method approach, combining quantitative and qualitative methods to leverage their strengths and address individual limitations The quantitative component involves statistical analyses of economic indicators and cluster performance metrics, providing a macro-level perspective to identify trends across clusters and countries It also includes an in-depth analysis of factors impacting industrial cluster development in Laos Complementing this, the qualitative aspect features interviews with policymakers and industry stakeholders, along with case studies, offering contextual insights into cluster development challenges and success factors The findings from interviews will inform a measurement model for the quantitative approach, highlighting significant factors affecting industrial clusters in Laos This integrated methodology enhances the examination of industrial cluster development, improving the validity of research findings and supporting tailored policy recommendations for the Laotian context.
Contribution of the research
The emergence of economic rivalry and innovation has led to significant shifts in the economic evolution of countries and regions The cluster model, recognized globally as a solution to challenges posed by the information age and globalization, is essential for enhancing international competitiveness (Bozhko et al., 2021) Recently, this approach has become a key tool for local economic strategies in industrialized nations To ensure a competitive national economy, it is crucial to assess the economic sustainability of the state However, new challenges arise in utilizing this model to improve the efficiency of the national economy, necessitating the identification of priority sectors for development (Ali, 2023).
This dissertation aims to significantly enhance the theoretical and practical understanding of industrial cluster development in emerging economies, particularly in Laos It will advance cluster theory by assessing its relevance in least developed countries (LDCs) and examining how institutional capacity, resource endowments, and socio-economic conditions impact cluster dynamics By focusing on Laos, the research seeks to offer new insights into the contextual factors that affect the success of cluster policies and strategies in LDCs, potentially refining existing theoretical frameworks.
The comparative analysis of cluster development in selected ASEAN countries and China will enhance the theoretical discussion on the adaptability of cluster models in diverse economic, political, and cultural settings This dissertation aims to identify how best practices from more advanced economies can be tailored to meet the specific needs and challenges of least developed countries (LDCs), thereby contributing to the literature on policy learning and transfer in industrial development.
This dissertation presents new empirical evidence on the factors influencing industrial cluster development in Laos, utilizing primary data from surveys, interviews, and case studies It highlights the unique challenges and opportunities for cluster growth in Laos, focusing on the impact of government policies, infrastructure, human capital, and market linkages The findings aim to enhance the understanding of the determinants of cluster success in least developed countries (LDCs), thereby enriching the empirical knowledge in this area.
This dissertation offers actionable policy recommendations for the Lao government to enhance competitive and sustainable industrial clusters It addresses key areas including infrastructure development, human capital formation, technology upgrading, and institutional capacity building By converting theoretical insights into practical guidance, the research aims to connect academia with policymaking, thereby supporting evidence-based decision-making in industrial development.
This dissertation will significantly enhance the understanding of industrial cluster development in emerging economies, focusing on government policies and the cross-border transfer of best practices It aims to offer valuable insights for scholars, policymakers, and development practitioners dedicated to fostering inclusive and sustainable industrial growth in Laos and other least developed countries (LDCs) By advancing both theoretical knowledge and practical applications of cluster-based strategies, the research will contribute to economic growth and competitiveness.
Structure of the thesis
In addition to the introduction, conclusion, list of references and appendices, the content of the thesis is divided into 5 chapters:
LITERATURE REVIEW
Overview of industrial clusters
Industrial clusters, as defined by Babkin et al (2021), consist of a group of companies in a specific region that create a production system capable of both horizontal and vertical expansion The key question is whether these clustered companies exhibit greater productivity compared to independent firms outside the cluster Babkin et al (2021) emphasize that the accumulation and centralization of production are essential for the overall development of the industrial system and individual firms Visser and Atzema (2008) highlight that industrial clusters foster an investment-friendly environment for companies and related organizations The advantages of industrial clusters include concentration, synchronized infrastructure, connectivity, and interaction among components, which collectively enhance technological and socioeconomic infrastructure, ultimately benefiting business growth (Cunningham et al., 2023).
Each industrial cluster experiences a unique crisis lifecycle, characterized by dynamic and uneven growth patterns during periods of decay or recovery Understanding resilience is crucial, as it shapes how these clusters respond to shocks This study defines resilience as the capacity to recover from disruptions, adapt to challenges, and respond constructively.
Resilience aims to avert catastrophic decline while maintaining sustainable growth Industrial clusters that have experienced similar developmental and collapse patterns possess key resilience elements As a result, these clusters can quickly respond to emergencies by recognizing and leveraging these elements.
Marshall's Principles of Economics (1920) initiated the study of industrial clusters, leading to extensive research by various scholars employing diverse methodologies Porter (2012) further developed the concept of industrial clusters, encompassing companies across the entire industry value chain, including financial institutions The establishment and growth of these clusters significantly rely on the relationships between universities and research centers An "industrial cluster" refers to the concentration of interconnected businesses and organizations within a specific region (Sarafrazi, 2018).
An industrial cluster is a production organization within a specific industry, characterized by the concentration of businesses, service providers, technical solution providers, and related institutions in a defined geographic area Central to the cluster are business associate enterprises, which foster connections among various organizations throughout the product value chain The primary goal of developing industrial clusters is to ensure the financial viability of each participant while enhancing the collective benefits for the entire system (Maw et al., 2014).
Each industrial cluster experiences a distinct crisis life characterized by dynamic and uneven deterioration and recovery curves Understanding resilience is crucial, as it reflects the ability of these clusters to recover from shocks and adapt positively Resilience is defined as the capacity to recover from trauma and respond constructively, aiming to prevent unsustainable growth and catastrophic decline Industrial clusters with similar development and collapse histories share resilience components, enabling them to respond swiftly to emergencies Thus, the way industrial clusters adapt to shocks significantly influences their growth patterns, highlighting the importance of resilience in their development.
Industrial clusters are characterized by resilience, which is essential for their sustainable growth and ability to avoid severe decline Clusters that have experienced similar developmental trajectories often possess shared resilience traits, allowing them to quickly adapt to emergencies This resilience not only shapes their growth patterns but also aids in their response to external shocks In this context, resilience refers to the capacity to effectively overcome or constructively respond to challenges An industrial cluster that recognizes and leverages these resilience factors can respond rapidly to disasters.
Optimization plays a crucial role in the geographical concentration of related organizations and industrial firms According to Mo et al (2020), this proximity enhances direct relationships, leading to lower transaction costs and reduced transportation expenses for materials and products This necessity for organized manufacturing interactions and financial connections among cluster participants highlights the key differences between industrial parks and other cluster types Additionally, various degrees and types of interactions exist between industrial businesses and member organizations within these industrial clusters (Li, 2019).
Industrial clusters exhibit both vertical and horizontal connections, where vertical links pertain to the technological processes along the value chain, and horizontal links enhance coordination for specific tasks to boost economic efficiency These connections create a diverse membership within clusters, typically divided into three groups: entities directly involved in the product value chain, those that support product manufacturing, and organizations that assist in business operations and production Additionally, the state significantly influences the functioning of industrial clusters by implementing directed policies and mechanisms that promote the formation and growth of cluster networks nationwide.
2.1.3 The role of industrial clusters
Industrial clusters play a crucial role in enhancing innovation, productivity, and economic growth, especially in developing and emerging economies This literature review highlights the significant themes and findings regarding the impact of industrial clusters on economic development.
Michael Porter’s influential research on industrial clusters highlights their role as geographic concentrations of interconnected companies, specialized suppliers, and institutions within a specific field He posits that these clusters foster both competition and cooperation, resulting in enhanced productivity, innovation, and the emergence of new businesses Porter's cluster theory has been pivotal in examining the competitive advantages of regions and nations, underscoring the significance of local factors like demand conditions, factor inputs, and firm rivalry Subsequent studies have confirmed that firms within clusters demonstrate greater productivity, innovation, and export performance compared to those outside, due to positive externalities and spillover effects such as knowledge sharing and access to specialized resources.
Clusters play a crucial role in enhancing learning and capability building, especially in developing countries They create opportunities for firms to engage in collective learning, share best practices, and collaborate on projects, which ultimately leads to improved skills and technologies Notable case studies, such as the Sinos Valley footwear cluster in Brazil and the Sialkot surgical instrument cluster in Pakistan, illustrate how clusters can cultivate specialized knowledge and capabilities, empowering firms to compete effectively in global markets.
The success and sustainability of industrial clusters depend on several critical factors, including strong institutions, social capital, and the capacity for innovation and upgrading Supportive policies and investments in infrastructure, education, and research and development are essential for enhancing cluster competitiveness In developing and emerging economies, challenges such as weak institutions, limited resources, and inadequate infrastructure can impede cluster growth Additionally, the uneven distribution of benefits within clusters raises concerns about inclusivity, particularly regarding the exclusion of smaller firms and marginalized groups.
Industrial clusters are vital for economic development and competitiveness, especially in developing and emerging economies They promote agglomeration economies, learning, and innovation, allowing firms to overcome size and isolation limitations and engage in global value chains However, the success of cluster-based development strategies relies on the specific context and the capacity to tackle institutional, social, and economic challenges in these regions.
The literature on industrial clusters emphasizes their ability to drive economic growth, enhance productivity, and foster innovation However, it also acknowledges the challenges and limitations associated with cluster-based development strategies in various contexts To improve the success and sustainability of clusters in developing and emerging economies, further research is essential This includes understanding the specific factors that influence cluster performance and identifying effective policy interventions and support mechanisms to boost their competitiveness and inclusiveness.
2.1.4.1 Classification of industrial clusters by industry characteristics
According to Staber and Sautter (2011) and Fleisher et al (2010), classifying industrial clusters according to industry characteristics includes the following issues:
Overview of developing industrial clusters
2.2.1 The concept of developing industrial clusters
The development of industrial clusters has become a crucial focus in economic development literature, particularly for developing and emerging economies While the concept, as defined by Porter (1998), has been extensively studied, the emphasis on actively fostering cluster growth is gaining traction Research indicates that the spontaneous emergence of successful clusters seen in advanced economies is often unattainable in developing contexts due to institutional and resource limitations (Schmitz & Nadvi, 1999; Pietrobelli & Rabellotti, 2004) Consequently, targeted policies and investments are essential for cluster development Government policies play a vital role in creating a supportive environment for cluster growth, including infrastructure, education, and research investments (Ketels, 2013; Lindqvist et al., 2013) Furthermore, effective collaboration among stakeholders—such as government agencies, industry associations, and educational institutions—is necessary for successful cluster development strategies (Pietrobelli & Rabellotti, 2004; Oyelaran-Oyeyinka & McCormick, 2007).
Upgrading and innovation are essential for the development of industrial clusters, particularly in developing countries, where competitiveness and sustainability hinge on enhancing products, processes, and functions through continuous innovation (Giuliani et al., 2005; Pietrobelli & Rabellotti, 2004) This necessitates investments in human capital, technology adoption, and research and development, alongside strengthening connections between firms, universities, and research centers Additionally, strong social capital and collective action play a vital role in cluster development, as robust social networks, trust, and cooperation among participants facilitate knowledge sharing, collective learning, and joint problem-solving, ultimately boosting competitiveness and innovation (Schmitz & Nadvi, 1999; Giuliani et al., 2005) Consequently, fostering social capital and promoting collaborative initiatives, such as joint training programs, quality improvement projects, and marketing campaigns, are crucial for successful cluster development.
Cluster development in developing countries faces significant challenges, including weak institutions, limited resources, inadequate infrastructure, and unequal benefit distribution within clusters To promote inclusive and sustainable growth, it is essential for cluster development strategies to effectively address these issues.
Recent literature highlights the significance of global value chains (GVCs) in the development of industrial clusters in developing countries, revealing both opportunities and challenges Participation in GVCs can facilitate access to new markets, technologies, and knowledge, while also increasing competition and the risk of being confined to low value-added activities To effectively develop clusters within GVCs, it is essential to implement strategies that focus on upgrading and capturing higher value-added activities, as well as addressing the power imbalances and governance issues inherent in these networks.
The literature on industrial cluster development underscores the necessity of intentional strategies and interventions to enhance competitiveness in developing countries Key elements include supportive policies, innovation, social capital, and collective action, while addressing challenges like weak institutions and limited resources Additionally, it highlights the significance of global value chains and their impact on cluster development Further research is essential to explore the specific strategies and contextual factors that contribute to the successful establishment of industrial clusters in these regions.
2.2.2 Assess the possibility of developing industrial clusters
Determining the ability to form and develop an industrial cluster involves three interrelated factors: (1) a concentration of enterprises within a territory, regardless of the concentration's scope; (2) the presence of a dominant industry, which may include multiple industries with strong interconnections; and (3) the capacity to establish a network of links between enterprises and other economic activities, particularly in innovation and creativity This study employs the location quotient (LQ) index to identify potential industrial clusters across various territories (Sugden et al., 2006).
Location quotient analysis, as described by Wheeler (2005), is a quantitative method used to analyze statistical data for identifying potential industrial clusters within a specific area This approach posits that a high concentration of labor in a particular industry indicates the area's potential for developing that industrial cluster The calculation of the location quotient is based on a specific formula.
Where: ei: local employment in industry i e: total local employment
Ei: national employment in industry i
LQi: location quotient (a relative local employment concentration) for industry i in the regional economy
Location quotient analysis reveals the relative presence of industries within a local economy A location quotient of 1.0 indicates that the employment share in a specific industry matches the national average A quotient greater than 1 signifies a higher concentration of labor, suggesting potential for developing industrial clusters, while a quotient below 1 indicates a lower concentration, implying limited potential for such development It is important to note that location quotient indexes assess the capacity for forming industrial clusters rather than their actual development Additionally, other factors, particularly the development of vertical and horizontal linkages among economic actors in the area, must also be considered.
Three connected criteria are used to evaluate the full formation that might lead to the success of an industrial cluster in a given region These criteria are as follows:
(1) Territorially: there needs to be a concentration of businesses, but the extent of that concentration shouldn't be too important;
(2) Related to industry: it can refer to one industry or several, but there needs to be a single primary industry and close connections between industries;
(3) Capability to establish a web of connections between enterprises and other economic activities, particularly in the areas of innovation and creativity.
Due to the limited availability of data on this issue in many countries, it is challenging to assess all three criteria simultaneously Consequently, most studies focus on a single factor to evaluate the potential for an industrial cluster to emerge and thrive in a specific location (Federico and Giorgio, 2021).
Industrial clusters significantly enhance the efficiency of participating companies, enabling them to better compete with one another The growth of these clusters fosters creativity and innovation, compelling businesses to continuously evolve and develop Additionally, the presence of industrial clusters encourages the emergence of new companies within the industry and its supporting sectors Learning from the experiences of other nations is essential for Laos to identify the most suitable industrial cluster structure for its thriving sectors.
To successfully develop industrial clusters, a systematic approach is essential, emphasizing investment in human resources and leveraging foreign direct investment (FDI) for education and technology transfer Key businesses play a vital role in promoting industrial concentration, while local governments are instrumental in facilitating the establishment and growth of these clusters The development process consists of two main phases: the concentration phase, which includes creating industrial zones, enhancing capacity, attracting major companies, and engaging related businesses; and the innovation phase, which involves collaborating with research institutions and universities to build capabilities.
The development of industrial clusters involves two key steps: first, establishing an industrial park, and second, building its capacity Essential technical infrastructure for industrial parks includes transportation, energy, water supplies, wastewater treatment, and telecommunications Once the infrastructure is in place, institutional building becomes crucial, encompassing administrative processes, regulations, and the tax system necessary for the park's growth The final step involves ensuring the availability of both trained and unskilled labor for the construction of these industrial parks.
The development of industrial clusters requires immediate connections with research institutes and training centers to ensure a highly skilled workforce To attract major investors, it is essential to enhance the living environment, which includes social infrastructure such as housing, schools, hospitals, commercial centers, and entertainment venues The spillover effect allows satellite firms to invest following the approval of the primary enterprise, thereby fostering regional economic growth Promoting industrial clusters involves strengthening relationships among key companies, suppliers, training institutions, research institutes, and related organizations.
Industrial cluster research hypotheses can be classified into two main types based on their formation mechanisms: top-down and bottom-up The top-down model involves government planning, where local authorities select construction sites, identify key and supporting industries, and implement incentive programs to attract businesses and investors (Yang et al., 2008) Notable examples of top-down industrial clusters include Beijing's Zhongguancun, the Skolkovo Innovation Center in Russia, Shenzhen's high-end electronic industrial cluster, and Silicon Valley in the USA.
The bottom-up model emphasizes the organic development of industrial clusters, often stemming from the growth of established businesses with a rich history in manufacturing and local traditional industries (Boja, 2011) Notable examples of this clustering phenomenon can be observed in Wenzhou City's lighter manufacturing sector and the textile industry in Zhejiang province.
Literature review on developing industrial clusters
Agglomeration economics refers to the phenomenon where businesses and individuals gather in a specific area to leverage shared social, economic, and infrastructural benefits This concentration leads to enhanced infrastructure, support services, and access to a skilled workforce, fostering collaboration and learning among industry peers The presence of multiple companies within the same sector cultivates a competitive environment that drives innovation and improves product quality (Aggarwal, 2011) Additionally, the diverse workforce within industrial clusters facilitates the exchange of knowledge and skills, which can lead to the development of new products, services, and improved production methods (Nathan & Overman, 2013).
Increasing labor efficiency and resource utilization through specialization can significantly reduce production costs When businesses are situated in close proximity, transportation expenses decrease, and they benefit from shared infrastructure such as highways and distribution centers (Hafner, 2004) This concentration fosters a diversified business ecosystem, promoting the development of suppliers, support services, and subsidiaries As industrial clusters grow, they contribute to a vibrant local ecosystem, enhancing employment opportunities and driving regional economic growth (Gordon & McCann, 2013).
Companies within the same region can enhance innovation and technological advancement through knowledge and experience sharing Developing industrial clusters attract foreign investors due to their growth potential and financial benefits Businesses in similar industries are more inclined to collaborate, leading to cooperative initiatives and products that boost the cluster's competitiveness in global markets In summary, agglomeration economics can create a favorable business environment in growing industrial clusters, promoting regional economic growth and sustainability.
Resource dependency theory posits that organizations, like business corporations, must engage in transactions with external individuals and entities to acquire necessary resources While these interactions can be advantageous, they may also result in detrimental dependencies Consequently, organizations might face challenges in accessing essential resources or could be subject to control by unfavorable parties, leading to inequitable transactions that create imbalances in authority, power, and resource access (Li & Geng).
In order to enhance their negotiating power in resource-related transactions and reduce dependency, organizations implement various strategies These strategies include engaging in political activities, broadening their product offerings, diversifying operations, and forming alliances with other groups Specifically, diversifying product lines can significantly boost a company's leverage and autonomy, minimizing reliance on external entities (Jiang et al., 2022).
Resource theory in management emphasizes the importance of a company's relationship with its external environment, highlighting that an organization's survival and growth depend on acquiring external resources The stability and strength of a business can be influenced by its interactions with peripheral partners Applying the resource dependence hypothesis to industrial clusters reveals that essential resources, such as labor, infrastructure, and raw materials, are often sourced from the surrounding social and economic environment Consequently, the ability of these clusters to meet their resource needs is significantly affected by their relationships with external partners, including suppliers and alliance partners.
Companies within industrial clusters often rely on auxiliary partners for supplies and support, with their influence and negotiation power varying based on their level of dependence Businesses in growing industrial clusters may encounter increased risks if they overly depend on a small number of peripheral partners Resource dependence theory highlights the importance of supply diversity as a strategy to mitigate risks and enhance organizational stability.
Growing industrial clusters must engage with their social and economic environments to minimize risks and maximize opportunities Effective communication and understanding with stakeholders are crucial for their adaptation and success Applying Resource Dependence Theory to these clusters enhances the understanding of how businesses interact with external partners, which can lead to more effective management and development strategies.
To thrive in a rapidly changing environment, companies must foster continuous learning and adaptability, which hinges on managers' ability to identify opportunities and threats while anticipating external changes This principle is central to dynamic management competence theory, emphasizing the importance of dynamic capabilities—the capacity to integrate and reconfigure both internal and external resources Dynamic competencies encompass three key areas: sensing opportunities and risks, making swift judgments, and effectively implementing strategic decisions Similarly, dynamic capabilities involve recognizing and seizing new opportunities, reorganizing competencies, and establishing operational procedures, all aimed at revitalizing the company's resources and enhancing its competitive edge.
Dynamic capabilities are essential for organizations to maintain flexibility and competitive advantage in evolving environments This concept emphasizes the importance of an organization's ability to swiftly adapt to changes while effectively managing its knowledge and resources Implementing dynamic capabilities in industrial clusters can lead to positive outcomes, such as enhanced adaptability to market fluctuations As these clusters face various opportunities and challenges, businesses within them gain a competitive edge by responding quickly and flexibly to market dynamics.
Dynamic capacities within industrial clusters enhance creativity and innovation, allowing companies to learn from both successes and failures By exercising self-regulation, these companies can develop new products, services, and processes while leveraging each other's strengths to build strong collaborative relationships Fostering cooperation in research and development through resource and information exchange boosts the competitive power of the cluster, supported by flexibility and inventiveness A vibrant business environment attracts investors and partners to companies that can swiftly adapt and create new opportunities Ultimately, dynamic capabilities significantly contribute to the growth and competitiveness of expanding industrial clusters by promoting rapid adaptation, creativity, and collaboration.
2.3.2 Empirical studies on developing industrial clusters
Maw et al (2013) conducted an empirical study on industrial clusters and company development, focusing on special economic zones Their research, which involved a questionnaire survey followed by regression analysis, aims to explore the interaction within corporate clusters, the impact on corporate performance, and the strategic resources available in these zones The findings reveal that the strategic resources within industrial clusters significantly influence the dynamics among companies and enhance their competitive advantage Additionally, the study indicates that a firm's development and performance can be positively impacted by the connections and resources present in these industrial clusters.
Every industrial cluster faces distinct crises, revealing dynamic and uneven growth patterns during economic recessions and recoveries Resilience plays a crucial role in understanding these clusters, as it reflects their ability to adapt to shocks and maintain sustainable growth Resilience is defined as the capacity to overcome trauma and respond constructively, aiming to prevent severe decline Industrial clusters with shared histories of growth and collapse possess resilient characteristics, enabling them to respond swiftly to challenges Various researchers have explored industrial clusters through diverse methodologies, recognizing that all entities within the industry value chain, from upstream to downstream, along with financial institutions, contribute to these clusters Additionally, the relationships between research groups and universities significantly influence the establishment and development of industrial clusters, which are defined as interconnected businesses and organizations within a specific region.
Industrial clusters are a significant topic in scientific literature, characterized by their diversity and ongoing debates They can be categorized into two main types: those initiated by entrepreneurs and those that have recently developed in various global regions The growth of industrial clusters is influenced by numerous internal and external factors (Babkin et al., 2013) The concept remains contentious, yet industrial clusters offer several advantages, including social influence theories, financial positioning, regional economic benefits, national innovation frameworks, knowledge transfer, and insights from economic geography Additionally, innovative methods for integrating these concepts are beneficial The accumulation of industrial activity leads to positive feedback processes that create and sustain structure (Munnich et al., 2015) Intermediary organizations, defined by specific technological and social relationships among private and public entities, consist of firms within the same industry or sector These organizations can be established formally or informally by multiple enterprises sharing common goals and regulations within a designated geographical area (Karaev et al., 2007).
A significant portion of global industrial clusters in the electronics and communications sectors are still in their early stages Research by Lu et al (2013) identified eighteen factors, categorized as internal and external, that influence the development of these industrial clusters, aiming to enhance industry growth and regional economic progress Utilizing panel data from 21 Chinese provinces between 1997 and 2009, the study assessed the impact of these factors on cluster development, highlighting that firm size and employment concentration are crucial determinants Additionally, the analysis revealed that the number of patent applications is a key factor affecting industry clusters, with some less developed regions hosting more businesses than their more developed counterparts.