Creating Clusters As A Means Of Achieving Competitiveness

NikolayKarev, a3, (1), 2018, 49-53Creating clusters as a means of achieving competitivenessNikolay Karev, Aleksandra Gospodinova*Department of Economy and Management, University of Chemical Technology and Metallurgy,8 Kliment Ohridski, 1756 Sofia, BulgariaReceived 15 June 2018, Accepted 12 July 2018ABSTRACTIn today‘s rapidly globalizing world, avoiding co-operation with competitors and concentratingon business isolation is a strategy that could lead to its collapse. Enterprise goals are geared towardsparticipation in the global production network, attracting resources and achieving competitiveness.Creating clusters helps them to achieve these goals by helping them with faster communication, accessto resources and opportunity to expand their business.Keywords: clusters, competitiveness, enterprises, creating clusters.INTRODUCTIONThere is a precise definition of a cluster inthe economy and, in its view is that the clusteris a geographically linked network of companiesthat carry out similar, interlinked and/or complementary activities. Companies must have activechannels for business relationships and constantcommunication, requiring them to use commonspecialized infrastructure, labor markets and services, and to share opportunities for expandingtheir business.Depending on their composition, clusters arecharacterized by their depth, width and length.The depth of clusters is determined by the numberof companies included in it vertically followedfrom each other and linked through a supplychain of materials, components, machines, services, etc. The width of the clusters depends onthe number of companies involved in each level,i.e. of the number of industries in a horizontalsection. These industries are related to commonproducts, technologies, implementation channels,and users. The width can be determined for eachof the cluster levels, but it is usually done at thelevel of the leading industry. The length of theclusters is determined by the total number of thecompanies involved [1].DISCUSSIONThe idea of creating and implementingclusters was born in the mid-1980s, and only adecade later became extremely popular. Clusters*Correspondence to: Aleksandra Gospodinova, University of Chemical Technology and Metallurgy, 8 Kliment Ohridski,1756 Sofia, Bulgaria, E-mail: aoi bg@abv.bg49

Science, Engineering & Education, 3, (1), 2018help find solutions to defects caused by the influence of globalization [2]. The main problemis to redefine the relationships of internationalcorporations and governments due to the rapidincrease in resource mobility and the opening ofnew markets.Clusters contribute to achieving competitiveness alongside other national initiatives suchas political reforms, public-private dialogue,regional development, workforce growth. Theyare catalysts of public support for economicreform programs, as they attract a wide range ofstakeholders and are one of the most effectivetools in a broad context for developing privatesector initiatives [3]. In part of the developedeconomies, clusters represent an attempt to connect small and medium-sized enterprises that, dueto the globalization of the production chain, findthemselves in difficulty as a result of the declineof the locations in which they operate [4].Local factorsAccording to Michael Porter, it is importanthow much is produced not what is produced. Heconsiders it is unreasonable to attract a certainpart of an industry on the basis of existing conditions such as low wages. Putting emphasis onlow wages rather than on high productivity, forexample, shows willingness to find new workplaces. Michael Porter’s idea has revolutionizedthe industrialization of the areas and the use oftheir resources. This is the difference betweencreating a location and creating clusters.The role of clusters in promoting competitiveness is determined by the goals for whichthey are created. Cluster initiatives are a kind ofcomplement to allow the effective redeploymentof policies towards a globalizing world, makingtheir goals and expected results consistent withthe notion of competitiveness [5]. This contributes to the relationship between developed anddeveloping countries.A system bywhichfactorsbecome aclusterConnectivitywith the restof the worldThe structureof clusterrelationshipsтаналия святThe problemwhich isformulatedThe contentof the clusterFig. 1. Highlights of cluster creation.50

Nikolay Karev, Aleksandra GospodinovaCluster initiatives allow refocusing on aspecific industry to a particular area, they enhance competition, avoid a strong bureaucraticapproach and allow participation in the globalproduction chain without the need for unnecessary protectionism.Businesses that use innovation policies as ameasure to achieve higher levels of productivityand competitiveness use clusters to target goalsin one direction. Cluster initiatives are focusedon how much and how it is innovated ratherthan on what and who is innovating. Innovationthus depends on the national innovation systemas part of the global production or commercialnetwork rather than the economy or the place ofinnovation.A clustering feature is that they work in ahighly dynamic and changing environment.When conducting initiatives related to their establishment, their geographic location, its linkage todifferent types of industries, as well as changes inthe production structure of the individual sectorsare taken into account.The impact of these initiatives is focused onthe components presented in Fig. 1.Most cluster initiatives are geared towardusing the Michael Porter model called “MichaelPorter Diamond”. It appears to be a finished ideain 1990 and is an empirical summary of the successful experience of some countries and regionsin building competitive economies. Basically, thesummary is based on a model that was graduallyshifted in the early 1990s by the growing globalization and new structure of the world economy,different from the familiar international trade.A distinctive feature of the “diamond” is thatit attracts resources that are part of the region’soverall infrastructure. This creates a relationshipbetween search conditions, related and supporting industries and strategies, structure and rivalrybetween participants, as in this model the countryhas the opportunity to influence each of the elements of Michael Porter’s diamond. This impactmay be at regional, national or international level.The main goal of cluster initiatives in someregions is the concentration of resources in themsuch as capital, people, knowledge or materialresources. This means not only the existence ofa highly effective environment, but also of onethat cannot easily be created. This goes beyondthe specific area in which the region exists andwhich has undoubtedly an impact on access toresources and resources to the region at all. Thesustainable attraction of resources requires theachievement of certain conditions such as theefficiency of the accumulated assets and theirReasons forcreating aclusterMarketfailuresGovernmentinefficiencyand policiesSystemproblemsNeed forcompetitivenessFig. 2. Reasons for creating a cluster.51

Science, Engineering & Education, 3, (1), 2018interconnectedness [6].Cluster initiatives would be successful in successfully attracting resources, time-bound activity, and linking them to a product used by clusterparticipants. The creation of clusters should notbe interpreted solely as an act to create clusterorganizations but as an act to create a clusterenvironment. The reasons for creating clustersare presented in Fig. 2.Most often when creating cluster organizations, tasks are related to:l creating infrastructure to allow networkingbetween cluster participants;l increasing the dynamics of innovation;l increase in productivity.Here, it is important to note the main featuresof both the system and the cluster approach andto compare them. While in the system approachwe focus on end-product industries, avoiding cooperation with competitors and rivals, dialoguewith the government is focused on subsidies,protection and restriction of competitors, thecluster approach involves engaging consumersand suppliers of products and services, connecting industries with common technologies,skills, information, users and channels (as mostparticipants are not direct competitors but sharecommon needs and constraints), and the dialogueis wide-ranging in the area of general concerns,which increases competitiveness and productivity.From what has been presented up to now, wecan summarize some goals for creating clustersrepresented in Fig. 3.Most cluster initiatives face constraints related to the benefits of a given cluster, its cause,identifying which clusters generate particularlystrong ones, and defining the role of market potential for the cluster.In turn, the base of a cluster or cluster environment is built on several basic parameters. The firstparameter is the presence of participants, whichis a fundamental condition as the main actorsin the cluster can occupy the following roles:participants offering similar or related services;participants offering complementary productsand services; participants, users of productsand services and participants sharing a commonresource base. The second parameter is the availability of consumption. It evaluates products andcreates problems, defines the boundaries of theGoalsParticipation in the globalmanufacturing networkCreating flexible productionnetworksCreating conditions requiringthe presence of participants ina given locationFig. 3. Goals for creating clusters.52