Friday, July 7, 2017

Vertical and Horizontal Proximity Leads to Cluster Development

Offering rental space to businesses that function in a company's production chain can help develop local clusters. It is these connections of vertical and horizontal businesses that help to develop increasing innovation. Research on property led approaches to cluster management found that linkages were formed when physical proximity to businesses in the supply chain and the artistic class were located near each other (Zheng & Chan, 2013). 

Relocating business near each other helps to create denser connections. Businesses need help making vertical linkages to different levels of the production chain as well as horizontal connections to businesses at their same level to encourage growth. When they need support and resources it should be there.

A high percentage of these connections occur because of the rental proximity of the supportive businesses to the parent company.  It is natural for people to walk across the hall, see each other in the parking lot, and eat in the same restaurants to become familiar with each other and engage in business related endeavors.  

It was also found that in many industries the interaction between innovative industries and the artistic community was lacking. Strengthening artistic-business relationships often leads to new ideas and products. One brings forward unique ideas while the other sifts through them for practicality. 

The development of cluster success for specific industries can be enhanced through offering rents and proximity benefits with other vertical and horizontal partners. Making sure that an artistic class is close and has open lines of communication are helpful in the process. As the environment develops with needed suppliers and relationships the cluster has more ability to feed its growth.  

-Large companies that rent spaces within close proximity can encourage greater cluster formation. 

- There should be a mix of vertical and horizontal companies within the cluster. 

-Keeping a creative and artistic class within reach helps spur innovation. 

Zheng, J. & Chan, R. (2013).  A property-led approach to cluster development: ‘creative industry clusters’ and creative industry networks. Town Planning Review, 84 (5).

No comments:

Post a Comment