MARKET ANALYSIS
CLUSTERING KEY TO ELECTRONICS INDUSTRY GROWTH Dr Ronald Grill, Managing Director, Technology Management
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ggregation of industry-related businesses in geographic proximity is not new. The phenomenon was reported during the Industrial Revolution in places described as ‘industrial districts’. In 1990, Harvard Professor Michael Porter introduced the term ‘cluster’ to describe the 20th-century iteration of this natural aggregation process. Porter defined clusters as “geographic concentrations of interconnected companies, specialised suppliers, service providers, firms in related industries, and associated institutions in a particular field that compete but also cooperate”. So how have electronics firms evolved unaided over decades into dense and highly productive ‘industry clusters’? Electronics industry professionals communicate on common interests with others in local firms, and when this leads to collaboration a cluster can begin to form. Collaboration between businesses and local education, research and support organisations provides a channel for the interchange of information, goods and services. Repeat localised business reduces transaction costs and increases productivity. Specialisation allows local businesses to outsource
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Industry clusters have long been used to facilitate economic growth. New research shows how the electronics industry in Adelaide and in Christchurch is using a cluster-based approach to seize growth opportunities.
non-core tasks to trusted local companies. These relationships lead to a high level of firm-to-firm interdependence. A developed cluster provides significant advantages to its participants — these benefits aren’t available to businesses that are isolated. Start-ups thrive in a cluster environment and the establishment of specialised firms can further extend cluster capability. However, it takes decades to develop successful clusters. Recent research provides additional understanding of the widely studied electronics clusters in Austin, Texas; Cambridge, UK; and Silicon Valley, California. As a part of this research project, electronics clusters in Ireland, Scotland and Singapore were also studied. The study, involving 18 cities around the world, also included the relatively unknown electronics clusters in Adelaide, South Australia and Christchurch in New Zealand. So far, only limited research has been done on the Australasian clusters, and their origin, structure and value to the regional communities and governments is not well understood. The research found that the most successful and highest density electronics clusters developed unplanned in small and relatively
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