Given all these advantages, one can ask why firms in a cluster don’t end up
acquiring each other to form larger enterprises if closeness is so advantageous. Of
course, to some extent this takes place in an active merger and acquisition environment.
Yet, in many ways a cluster may be an optimal balance between the
complexity and bureaucracy that hamper innovation in large enterprises, and the
lack of scale that holds back smaller firms. In Porter’s (1998) words ‘‘A cluster allows each member to benefit as if it had greater scale or as if it had joined with
others formally—without requiring it to sacrifice its flexibility’’.