Cluster Definitions

What is a cluster?

Clusters should be considered as regional ecosystems of related industries and competences featuring a broad array of inter-industry interdependencies1.

They are defined as groups of firms, related economic actors, and institutions that are located near each other and have reached a sufficient scale to develop specialised expertise, services, resources, suppliers and skills. Clusters are referred to both as a concept and a real economic phenomenon, such as the Silicon Valley, the effects of which, such as employment concentration, can be measured.

What is a cluster
Cluster Organisations

Cluster organisations

Cluster organisations are the legal entities that support the strengthening of collaboration, networking and learning in innovation clusters and act as innovation support providers by providing or channelling specialised and customised business support services to stimulate innovation activities, especially in SMEs2. They are usually the actors that facilitate strategic partnering across clusters.

Cluster policies

Cluster policies are an expression of political commitment, composed of a set of specific government policy interventions that aim to strengthen existing clusters and/or facilitate the emergence of new ones. They are to be seen as a framework policy that opens the way for the bottom-up dynamics seen in clusters and cluster initiatives. This is different from the approach taken by traditional industrial policies, which try (and most often fail) to create or back winners. Instead, modern cluster policies aim to put in place a favourable business ecosystem for innovation and entrepreneurship in which new winners can emerge and thus support the development of new industrial value chains and ‘emerging industries’. This thus implies more than merely supporting networking activities and setting up cluster organisations that manage networking and provide support services to SMEs. It means that specialisation strategies need to be placed in a broader context and anchored in a policy framework that goes beyond a sectoral, geographical and departmental ‘policy-silo pattern’. Modern cluster policies thus follow a systemic approach that combines different policies, programmes and instruments.

More definitions, explanations and examples can be found in the Smart Guide to Cluster Policy.

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1 Delgado, Mercedes/Porter, Michael E./Stern, Scott, 2013: Defining Clusters of Related Industries, Working Paper 20375 of the National Bureau of Economic Research. Available at:

2 Annex 1 to the EU ‘Framework for State aid for research and development and innovation’ (Commission Communication 2014/C 198/01) lists eligible costs for aid for the operation of innovation clusters. This gives a more detailed picture of the typical related activities that a cluster organisation may undertake. These include ‘(a) animation of the cluster to facilitate collaboration, information sharing and the provision or channelling of specialised and customised business support services; (b) marketing of the cluster to increase participation of new undertakings or organisations and to increase visibility; (c) management of the cluster’s facilities; and (d) organisation of training programmes, workshop and conferences to support knowledge sharing and networking and transnational cooperation.’ The full reference text can be found at