Regional innovation, clustering and the growth and development of small and medium sized enterprises

This paper is concerned with regional innovation and clustering. Innovation is considered to be the key to competitive advantage, and new, especially technology -based, SMEs are key contributors to wealth creation, employment, and economic development/regeneration. The author argues that innovation and the growth of such SMEs are often best afforded in clusters, and that the formation and development of clusters makes a positive contribution to economic development for a region. Clusters and clustering involve multiple levels of, often, paradoxical activity. They embrace globalization based on regional advantage. They offer the stability of path-dependency and embeddedness in the region together with discontinuity of new technological developments, innovation and new firm formation. They depend on market efficiency, allow for hierarchical control but create an interface through network organization. They involve industrial sectors but override their standard classification boundaries. Clusters engage similar and related firms, utilize a shared and advanced infrastructure, pro-active supply-side and support service players and locational advantage that relies less on "comparative advantage" and more on "comparative comparative advantage". This paper is concerned with the identification of some of the key issues that can contribute to effective strategies for clusters involving, a technology, business, sectors, skills and people.