Clusters and Competition
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| Michael E. Porter: learning more about the processes that produce competitive success. |
Michael E. Porter, acclaimed expert on competitive strategy and leader of the HBS-based Institute for Strategy and Competitiveness, began his luncheon address at the campaign launch with an acknowledgment of the School's impact on his own life: “There is no place else in the world where I could do this sort of research,” he said, after noting that being a student at HBS changed his life. “We have been able to create information that is having a major impact around the world,” stated Porter, the Bishop William Lawrence University Professor at Harvard, whose ideas have been applied to improve the economic performance of companies, cities, states, regions, and entire nations. “This goes beyond the traditional writing of articles and books, and influences policy directly through information,” he observed.
Porter's talk focused on regional competitiveness and the role of what he terms clusters: geographic concentrations of interconnected companies, specialized suppliers, service providers, and associated institutions in a nation or region. “Productivity and innovation are the keys to competitiveness in the modern economy,” he noted, “and clusters enhance both.” As an example, Porter pointed to the California wine cluster, where the close proximity of related enterprises — grape growers, wine-equipment manufacturers, PR firms that specialize in promoting the wine industry, universities that offer degrees in winemaking — enhances the performance of the cluster in its totality. Porter argued that the existence of this concentration of companies, assets, and skills, “not just climate and certainly not low labor or land costs,” has made California a leader in the global wine industry. “It's a fascinating paradox that we've seen all over the world,” he observed. “In the age of globalization — with open markets, high-speed communication, and rapid transportation — location still matters.” For more on the role of clusters in economic competition, visit the Institute for Strategy and Competitiveness Web site at www.isc.hbs.edu.
