An Approach for Building Virtual Clusters

Meng, Liying and Hawkins, David (2006) An Approach for Building Virtual Clusters. In: ISBE Conference, 31 October - 2 November, Cardiff - Caerdydd.

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Objectives: This paper proposes an approach for virtual clustering amongst Small and Medium Sized Enterprises (SMEs) across regions. Advances in technology and logistics like the growth of the Internet and transportation are causing changes in the economic development model of clusters from self-contained regional clusters to specialised networked regions. To follow this trend and gain competitive advantage, a new model of cluster is needed to help improving the interactions between UK regions that have been poor until recent. Prior Work: This work bases on the spirit of Porter’s cluster model (1998) – the various stages of production will be shared by a number of entities. The geographical proximity, however, need no longer bind the entities together. A group of SMEs from different regions could function as a virtual organisation with the support of advanced information technology and logistics (Katzy et al 2002, Meng 2005, New Economy Strategies LLC 2005). Approach: Building on publications and articles, the approach is developed through steering focus group events that have drawn on experts. The approach has been regularly tested through a wide range of discussions covering a broad spectrum of organisations across government departments, private sector corporations, focus business groups and individual SMEs. Case studies are also planned for evaluating the approach proposed. Results: The proposed approach provides a mechanism to engage SMEs and encourage them to bring forward potential solutions. It allows aggregated supply, integrated services, virtual manufacturing, enhanced delivery, co-development, sharing marketing networks, serving a common nationally operating customer and developing alternative route to international market with combined competitiveness. The approach can be directed to specific local focus whether regeneration or optimising local procurement through competitive clusters. It also provides a structure for creating additional competitive options where markets may be dominated by a limited number of competitors. Constraints for implementing the virtual cluster approach include understanding of partnering concept by SMEs, creation of robust business model and purchaser acceptance for trading with clusters. Implications: The virtual cluster development programme must be developed and supported centrally and then delivered through the regional development agencies. Adoption in the public sector will require the consolidation of views to address potential constraints in order to provide an acceptable structure. Value: This paper draws attention to the need for developing a new approach for building virtual clusters and provides an approach for developing virtual clusters, which will enhance the competitive advantage of small and medium sized enterprises.

Item Type: Conference or Workshop Item (Paper)
Keywords: partnering, cluster, virtual organisation, and network
Depositing User: Ms Raisa Burton
Date Deposited: 05 Feb 2020 15:29
Last Modified: 05 Feb 2020 15:29

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