The gap between organisations that grow internationally and those that stay stuck is rarely about the quality of their product or service. More often, it comes down to the structure they operate in. Companies, cities, universities and research institutions that are part of well-organised business clusters systematically outperform those acting alone — on productivity, revenue growth, export performance and their ability to co-develop new technologies. This article examines what the data actually shows, where the concept comes from, what distinguishes different types of clusters, and what this means practically for any organisation — regardless of size or sector — that is considering international expansion.
Where the concept comes from
The word “cluster” in its economic sense has roots that go back much further than the modern policy debate. The first systematic description of the phenomenon comes from Alfred Marshall, whose Principles of Economics (1890) characterised the concentration of specialised industries in particular localities as “industrial districts” — geographic agglomerations where shared labour markets, supplier networks and knowledge flows give firms a collective advantage they could not achieve alone.[A][A] Marshall, A. - Principles of Economics, Macmillan, London, 1890 (first identification of industrial districts; labour pooling, input-output links, knowledge spillovers) Marshall identified three foundational mechanisms that still underpin cluster theory today: labour-market pooling, input-output dependency between firms, and knowledge spillovers across organisational boundaries.[A][A] Marshall, A. - Principles of Economics, Macmillan, London, 1890 (first identification of industrial districts; labour pooling, input-output links, knowledge spillovers) [B][B] Porter, M.E. - The Competitive Advantage of Nations, Free Press, New York, 1990; also HBR, March–April 1990. Available: hbr.org/1990/03/the-competitive-advantage-of-nations (formalisation of cluster concept; Diamond framework; four-year, ten-nation study)
The concept re-entered global economic and management thinking nearly a century later through the work of Michael E. Porter. In The Competitive Advantage of Nations (1990) — the result of a four-year study across ten countries — Porter formalised the cluster as both an analytical concept and a policy tool.[B][B] Porter, M.E. - The Competitive Advantage of Nations, Free Press, New York, 1990; also HBR, March–April 1990. Available: hbr.org/1990/03/the-competitive-advantage-of-nations (formalisation of cluster concept; Diamond framework; four-year, ten-nation study) His “Diamond” framework described how four interconnected forces — factor conditions, demand conditions, related and supporting industries, and firm strategy and rivalry — interact to create national competitive advantage, with clusters as the geographic expression of this interaction.[D][D] Huggins, R. & Izushi, H. - “The Competitive Advantage of Nations: Origins and Journey”, Competitiveness Review, Vol. 25, No. 5, 2015. DOI: 10.1108/CR-06-2015-0045. Available: publications.aston.ac.uk (review of Porter’s intellectual journey; shift from national to subnational analysis) Porter argued that in the modern global economy, traditional comparative advantage based on natural endowments was becoming less relevant; what matters instead is the density and quality of the ecosystem in which an organisation operates.[B][B] Porter, M.E. - The Competitive Advantage of Nations, Free Press, New York, 1990; also HBR, March–April 1990. Available: hbr.org/1990/03/the-competitive-advantage-of-nations (formalisation of cluster concept; Diamond framework; four-year, ten-nation study) [D][D] Huggins, R. & Izushi, H. - “The Competitive Advantage of Nations: Origins and Journey”, Competitiveness Review, Vol. 25, No. 5, 2015. DOI: 10.1108/CR-06-2015-0045. Available: publications.aston.ac.uk (review of Porter’s intellectual journey; shift from national to subnational analysis)
Porter identified three specific ways clusters affect competition: by raising the productivityof member organisations; by driving innovation through the constant exchange of knowledge between buyers, suppliers and related actors; and by stimulating the formation of new businesses, as spin-offs and new entrants can rely on an already-functional ecosystem to reduce the risk of failure.[B][B] Porter, M.E. - The Competitive Advantage of Nations, Free Press, New York, 1990; also HBR, March–April 1990. Available: hbr.org/1990/03/the-competitive-advantage-of-nations (formalisation of cluster concept; Diamond framework; four-year, ten-nation study) [D][D] Huggins, R. & Izushi, H. - “The Competitive Advantage of Nations: Origins and Journey”, Competitiveness Review, Vol. 25, No. 5, 2015. DOI: 10.1108/CR-06-2015-0045. Available: publications.aston.ac.uk (review of Porter’s intellectual journey; shift from national to subnational analysis) In 1991, Paul Krugman — later a Nobel Prize laureate — provided the formal economic modelling behind agglomeration effects and explicitly acknowledged the influence of Porter’s cluster thinking.[C][C] Krugman, P. - Geography and Trade, MIT Press, Cambridge MA, 1991 (formal economic modelling of agglomeration economies) [D][D] Huggins, R. & Izushi, H. - “The Competitive Advantage of Nations: Origins and Journey”, Competitiveness Review, Vol. 25, No. 5, 2015. DOI: 10.1108/CR-06-2015-0045. Available: publications.aston.ac.uk (review of Porter’s intellectual journey; shift from national to subnational analysis) Together, Marshall, Porter and Krugman laid the intellectual foundation on which all subsequent cluster policy — including European Commission cluster programmes, ADB city-cluster development models and national cluster excellence schemes — is built.[D][D] Huggins, R. & Izushi, H. - “The Competitive Advantage of Nations: Origins and Journey”, Competitiveness Review, Vol. 25, No. 5, 2015. DOI: 10.1108/CR-06-2015-0045. Available: publications.aston.ac.uk (review of Porter’s intellectual journey; shift from national to subnational analysis) [E][E] Giacomin, V. - A Historical Approach to Clustering in Emerging Economies”, Harvard Business School Working Paper 18-018, 2017. Available: hbs.edu (history of cluster scholarship from Marshall through Porter)
Not all clusters are created equal
The word “cluster” today covers a wide range of structures, and conflating them leads to poor decisions. On one end of the spectrum sit segment clusters: groupings defined by a shared technology or industry label — AI cluster, space cluster, biotech hub. These are primarily a signalling mechanism. They are useful for visibility and policy positioning, but they rarely take responsibility for concrete business outcomes such as contracts signed, new markets entered or investment attracted.
On the other end sit business clusters: structured partnerships that connect companies, public institutions, universities and development organisations around a common operational goal — usually international growth or innovation commercialisation. The difference is not cosmetic. A segment cluster organises events and publishes reports. A business cluster coordinates market entry projects, connects members with verified partners in specific geographies, and measures its performance against outcomes — contracts, joint R&D projects, market entries — rather than attendance statistics.
Poland’s own experience illustrates this distinction sharply. PARP’s Guide for Cluster Initiative Animators (third edition) warns explicitly that initiatives created primarily to access public funds, rather than as an answer to the question “what do we want to achieve together?”, typically end in frustration and eroded trust.[J][J] Palmen, L. & Baron, M. - Przewodnik dla animatorów inicjatyw klastrowych w Polsce, III edycja, PARP/FENG, Warszawa, 2016. Available: feng.parp.gov.pl/publications/publication/przewodnik-dla-animatorow-inicjatyw-klastrowych-w-polsce-iii-edycja (Polish cluster definition; benchmarking findings; failure modes; evolution of Polish cluster policy; National Key Clusters criteria; role of universities in clusters) Between 2005 and 2014, a wave of Polish cluster initiatives emerged before each funding round and disappeared after projects ended. The authors’ conclusion is direct: “Devices and technologies can be acquired anywhere — trust, not necessarily.”[J][J] Palmen, L. & Baron, M. - Przewodnik dla animatorów inicjatyw klastrowych w Polsce, III edycja, PARP/FENG, Warszawa, 2016. Available: feng.parp.gov.pl/publications/publication/przewodnik-dla-animatorow-inicjatyw-klastrowych-w-polsce-iii-edycja (Polish cluster definition; benchmarking findings; failure modes; evolution of Polish cluster policy; National Key Clusters criteria; role of universities in clusters) The performance data that institutions like the OECD, the European Commission and the Asian Development Bank generate on cluster impact refers almost exclusively to the second type: actively coordinated structures with governance mechanisms, dedicated management and clearly defined value propositions for all types of members.
Clusters work for every type of organisation — not just small firms
One of the most persistent misunderstandings about clusters is that they primarily benefit small and medium-sized firms. The data on SMEs are striking — but the cluster effect is not a phenomenon limited to growing companies.
Large organisations, industry associations and public institutions join clusters for different but equally strategic reasons: to access new geographies faster than through bilateral agreements, to position their innovation agenda within a broader ecosystem of partners, and to co-develop standards, supply chains and markets that no single actor can build alone â from municipalities seeking foreign investors to universities looking to commercialise research.
A practical illustration: the Taipei Computer Association (TCA), one of Asia’s largest industry organisations with over 3,100 member companies spanning Taiwan’s electronics and ICT sector, joined 8Foundry Alliance in 2025. For an association of that scale, cluster membership is not primarily about growth statistics — it is about opening a single coordinated channel to European and African markets, governments and research institutions simultaneously, rather than building each relationship bilaterally over years.
On the public sector side, cities illustrate the same logic. Gdynia — one of Poland’s major Baltic port cities — and Sochaczew, in the CPK (Central Communication Port) development corridor, both joined cluster networks to activate international connections they could not build bilaterally at comparable speed or cost. Existing infrastructure and geographic position create the foundation; cluster membership turns that foundation into an operational network.
Productivity: the 8-percent structural advantage
Firm-level research on European manufacturers shows that companies located in industrial clusters enjoy on average around 8% higher productivity than comparable firms outside such agglomerations, even after controlling for industry structure and geographic factors. In several sectors — including traditional manufacturing — this edge is even larger, and the effect remains positive across almost all industries studied.
The scale of the cluster economy in Europe underscores why this matters: the European Cluster Observatory estimates that clusters account for approximately 25% of EU employment and generate around 30% of EU GDP — meaning the productivity differential between clustered and non-clustered activity has macroeconomic significance far beyond individual firms. Clusters raise productivity through two channels simultaneously: they improve individual organisation performance through access to specialised suppliers, infrastructure and talent pools; and they reallocate resources within the local economy toward the most efficient players. A 2023 study on geographic clusters and regional productivity found that both effects are statistically significant and reinforce each other over time. At the macroeconomic level, regions built around strong clusters consistently outperform comparable regions without cluster policy coordination — which is why institutions like the European Cluster Observatory and national development agencies treat cluster development as a core instrument of competitiveness policy, not a niche programme.
Growth: eight times more likely to become a high-growth firm
Canada’s Global Innovation Clusters programme — one of the most systematically measured cluster schemes in the world — reports that among organisations participating in cluster projects, 45.2% qualify as high-growth firms by revenue, compared to a national baseline of just 5.5%. Their average annual revenue growth reaches 16.4%, versus 9.3% for comparable organisations outside clusters.
This means that organisations embedded in a coordinated innovation cluster are roughly eight times more likely to become high-growth entities, and they grow revenues almost twice as fast as the national average. ISED notes that the data are associational — firms with higher growth ambitions are more likely to join cluster projects in the first place — but an eight-fold gap is consistent with the broader cross-country literature and analytically significant regardless of direction of causality. The scale of the effect may vary by sector and organisation size; the direction does not.
Export and international expansion: double the probability of going global
Research on cluster membership and export performance consistently confirms a pattern: organisations embedded in active clusters achieve significantly higher export performance than comparable solo actors.
Research on regional clusters, innovation and export performance consistently finds that organisations embedded in active clusters achieve significantly higher export performance, driven by shared institutional resources, local infrastructure and coordinated international networks. Structural analysis on a sample of 100 export-oriented manufacturers confirms that agglomeration economies in a regional cluster are a statistically significant driver of both export volumes and export diversity, as well as a key source of product and process innovation.
The Canadian programme data provide a concrete benchmark: 22% of cluster participants generate significant export revenues, against a national baseline of 12%. Nearly double. This gap reflects the actual pathway that cluster coordination enables: verified local partners, on-the-ground knowledge, and a shared reputation that reduces the due-diligence barrier for foreign buyers and investors.
Why clusters win: four structural mechanisms
Four structural mechanisms explain this pattern, consistently across sectors, organisation types and geographies:
- Shared infrastructure and institutions — organisations in clusters benefit from specialised testing labs, accelerators, technology parks and local institutions that concentrate funding, expertise and support programmes. This lowers fixed costs and shortens the path from idea to market — whether for a company developing a new product, a university commercialising research or a city building a smart infrastructure project.
- Knowledge spillovers and talent flows — physical and relational proximity between firms, universities and public actors creates knowledge flows that are structurally inaccessible to isolated organisations. Research shows that cluster strength is positively associated with higher wages in private-sector firms, suggesting these ecosystems also concentrate and retain the best talent.
- Coordinated internationalisation — cluster organisations orchestrate trade missions, study tours and B2B matchmaking that no single company, city or university could execute at comparable scale or quality. By pooling contacts and credibility, they open doors to corporations, governments and research institutions that remain out of reach for solo actors, and de-risk first steps on new markets.
- Systemic resilience — cluster-based economies distribute capabilities across many specialised players, making them better positioned to absorb shocks, reconfigure supply chains and pivot toward new technologies. In an era of geopolitical uncertainty and supply chain disruption, this distributed architecture is itself a competitive advantage.
What clusters change for cities, universities and R&D institutions
For cities and public agencies, joining a well-structured cluster is one of the most efficient routes to international visibility, investment attraction and access to co-financing for complex projects. The Asian Development Bank has shown that city-cluster development models — where municipalities coordinate infrastructure, industrial policy and investment attraction as one regional unit rather than competing separately — can raise local governments’ credit ratings by demonstrating a diversified economic base and structured private-sector engagement. This translates into lower borrowing costs for transport, logistics, digital infrastructure and education projects.
McKinsey’s analysis of growth clusters draws a similar conclusion: municipal support for entrepreneurial clusters has become a competitive necessity, not an optional extra, in the global race for capital and talent. Cities that actively connect entrepreneurs, universities and investors around cluster themes, and that create dedicated implementation units to coordinate the ecosystem, consistently outperform those relying on generic SME support schemes — in terms of job creation, tax revenues and foreign direct investment.
For universities and R&D institutions, clusters offer something that traditional technology transfer offices often cannot: a direct pipeline from research to international commercialisation, supported by business partners who already operate on target markets.[J][J] Palmen, L. & Baron, M. - Przewodnik dla animatorów inicjatyw klastrowych w Polsce, III edycja, PARP/FENG, Warszawa, 2016. Available: feng.parp.gov.pl/publications/publication/przewodnik-dla-animatorow-inicjatyw-klastrowych-w-polsce-iii-edycja (Polish cluster definition; benchmarking findings; failure modes; evolution of Polish cluster policy; National Key Clusters criteria; role of universities in clusters) PARP’s benchmarking of Polish cluster initiatives shows that the most successful ones systematically involved academic partners in applied projects — not as passive knowledge providers but as co-investors in development and market validation.[J][J] Palmen, L. & Baron, M. - Przewodnik dla animatorów inicjatyw klastrowych w Polsce, III edycja, PARP/FENG, Warszawa, 2016. Available: feng.parp.gov.pl/publications/publication/przewodnik-dla-animatorow-inicjatyw-klastrowych-w-polsce-iii-edycja (Polish cluster definition; benchmarking findings; failure modes; evolution of Polish cluster policy; National Key Clusters criteria; role of universities in clusters) Clusters that bridge business and academia produce faster commercialisation cycles and higher rates of patent application and licensing.[J][J] Palmen, L. & Baron, M. - Przewodnik dla animatorów inicjatyw klastrowych w Polsce, III edycja, PARP/FENG, Warszawa, 2016. Available: feng.parp.gov.pl/publications/publication/przewodnik-dla-animatorow-inicjatyw-klastrowych-w-polsce-iii-edycja (Polish cluster definition; benchmarking findings; failure modes; evolution of Polish cluster policy; National Key Clusters criteria; role of universities in clusters)
Poland as a case in point
Poland offers an instructive example of how cluster policy evolves when taken seriously over two decades. One of the most internationally recognised outcomes is Dolina Lotnicza (Aviation Valley) in the Podkarpacie region — a cluster connecting over 160 companies in aerospace manufacturing, R&D and MRO services that today exports more than 90% of its output and operates in supply chains for Airbus, Boeing and Pratt & Whitney. It demonstrates that a sector cluster, when built around genuine operational goals rather than administrative boundaries, can achieve international competitive weight within a decade. From the benchmarking studies conducted by PARP in 2010, 2012 and 2014, a consistent pattern emerges: organisations active in clusters showed higher innovativeness compared to the national average for Polish enterprises.[J][J] Palmen, L. & Baron, M. - Przewodnik dla animatorów inicjatyw klastrowych w Polsce, III edycja, PARP/FENG, Warszawa, 2016. Available: feng.parp.gov.pl/publications/publication/przewodnik-dla-animatorow-inicjatyw-klastrowych-w-polsce-iii-edycja (Polish cluster definition; benchmarking findings; failure modes; evolution of Polish cluster policy; National Key Clusters criteria; role of universities in clusters) The top declared goals of Polish cluster initiatives shifted over time toward “joint projects oriented at creating innovative solutions”, “increasing internationalisation and international competitiveness” and “raising the cluster’s position as a strategic partner” — a clear move from promotional activity toward measurable economic outcomes.[J][J] Palmen, L. & Baron, M. - Przewodnik dla animatorów inicjatyw klastrowych w Polsce, III edycja, PARP/FENG, Warszawa, 2016. Available: feng.parp.gov.pl/publications/publication/przewodnik-dla-animatorow-inicjatyw-klastrowych-w-polsce-iii-edycja (Polish cluster definition; benchmarking findings; failure modes; evolution of Polish cluster policy; National Key Clusters criteria; role of universities in clusters)
Poland’s national cluster policy today operates through the National Key Clusters (Krajowe Klastry Kluczowe) instrument, granting selected clusters preferential access to public support for internationalisation and R&D under the FENG programme (Fundusze Europejskie dla Nowoczesnej Gospodarki).[J][J] Palmen, L. & Baron, M. - Przewodnik dla animatorów inicjatyw klastrowych w Polsce, III edycja, PARP/FENG, Warszawa, 2016. Available: feng.parp.gov.pl/publications/publication/przewodnik-dla-animatorow-inicjatyw-klastrowych-w-polsce-iii-edycja (Polish cluster definition; benchmarking findings; failure modes; evolution of Polish cluster policy; National Key Clusters criteria; role of universities in clusters) [I][I] PARP - Benchmarking klastrów w Polsce – edycja 2024, 2024. Available: en.parp.gov.pl/storage/publications/pdf/2025.11.16.-Raport-ogolny.pdf (scale of cluster ecosystem in Poland) This dual approach — supporting the strongest clusters in their international ambitions while maintaining a broader ecosystem development policy — mirrors the European Commission’s recommendation: concentrate resources on clusters that have already achieved a critical mass and can demonstrate sustainable competitive advantage at the international level.[J][J] Palmen, L. & Baron, M. - Przewodnik dla animatorów inicjatyw klastrowych w Polsce, III edycja, PARP/FENG, Warszawa, 2016. Available: feng.parp.gov.pl/publications/publication/przewodnik-dla-animatorow-inicjatyw-klastrowych-w-polsce-iii-edycja (Polish cluster definition; benchmarking findings; failure modes; evolution of Polish cluster policy; National Key Clusters criteria; role of universities in clusters)
Privately coordinated clusters: governance structure and market focus matter
Not all active clusters perform equally. European cluster policy evaluation frameworks consistently show that performance correlates strongly with the quality of professional cluster management: a dedicated coordinator, clear KPIs, a transparent governance structure and regular impact measurement. The European Cluster Excellence Initiative (ECEI), operating under the European Commission’s cluster support framework, formally benchmarks and labels cluster organisations at Gold and Silver level based on these governance criteria — providing a standardised quality signal that members and investors can rely on. Regions like Baden-Württemberg, which co-finances around 100 cluster initiatives and benchmarks their performance against non-cluster firms, have made this measurement discipline central to their cluster excellence approach.
Beyond governance, market focus is equally decisive. The most impactful business clusters are not those chasing the same high-profile markets as everyone else. They create disproportionate value by identifying less obvious geographies and segments — markets with higher growth dynamics precisely because they are less contested. This is what economists and strategists describe as a blue ocean approach: competing where the competition is sparse and the upside is structural, rather than fighting for margin in saturated corridors.
Some clusters apply this principle deliberately by focusing on corridors that larger institutions overlook. Rather than competing on saturated Western Europe–North America trade routes, they target markets at the intersection of fast-growing digital economies, emerging manufacturing bases and underserved demand for European technology and infrastructure. 8Foundry Alliance, for example, focuses on connections between Central Europe, Taiwan and sub-Saharan Africa — corridors that remain structurally less contested while offering strong demographic and technological growth dynamics.
Cross-sectoral composition — combining private companies, municipalities, universities and logistics operators — is not incidental. International projects in emerging markets typically require private sector agility, public sector legitimacy, academic credibility and infrastructure capacity simultaneously. A cluster that brings all four to the table is structurally better positioned than one that provides only one.
What this means for organisations considering international expansion
The evidence across geographies and organisation types points in one direction: well-managed clusters consistently outperform comparable solo actors on productivity, revenue growth, export performance and innovation output. The structural advantages are documented and applicable regardless of whether the organisation is a manufacturer, a municipality or a university.[J][J] Palmen, L. & Baron, M. - Przewodnik dla animatorów inicjatyw klastrowych w Polsce, III edycja, PARP/FENG, Warszawa, 2016. Available: feng.parp.gov.pl/publications/publication/przewodnik-dla-animatorow-inicjatyw-klastrowych-w-polsce-iii-edycja (Polish cluster definition; benchmarking findings; failure modes; evolution of Polish cluster policy; National Key Clusters criteria; role of universities in clusters)
For any organisation considering international expansion, the strategic question is therefore not whether clusters work, but which cluster is the right partner for specific goals.
The answer depends on three criteria: geographic coverage that matches your target markets, sector diversity that fits your actual offer, and a governance model focused on measurable outcomes rather than on participation numbers. Clusters that meet all three criteria — and that connect business, academia, public administration and civil society as genuine co-participants rather than passive members — represent one of the highest-return structures available for international growth.
In an era of complex supply chains, geopolitical realignments and accelerating technology cycles, structured cooperation is not a nice-to-have. The data make that case clearly enough on their own.
