Cluster Theory and Practice: Advantages for the Small Business Locating in a Vibrant Cluster

This paper seeks to review the state of knowledge to this much talked‐about paradigm, first made famous by Porter (1990). Clusters are a striking and common feature in today’s economy. Nonetheless, this phenomenon is not exactly new and has been the object of attention from a wide variety of social scientists for much of this century. In the last ten years, this phenomenon has attracted renewed interest from academics, practitioners, and the British Government – who have become aware of its central importance in competitive strategy. An understanding of clusters adds an important dimension to the more commonly debated role of personal contact networks in the success of entrepreneurial small business.