A well developed concentration of related business spurs three important activities: increased productivity through specialized inputs, access to information, synergies, and access to public goods, more rapid innovation through cooperative research and competitive striving, and new business formation filling in niches and expanding the boundaries of the cluster map. Clusters are always changing. They respond to the constant shifting of the marketplace. They usually begin through entrepreneurship. Silicon Valley is a relatively new cluster of computer-related industries; in the past, Detroit was the same for automobiles. Nothing sparks productive innovation better than having your competitor across the street.
Clustering helps cities and counties direct their economic development and recruiting efforts. It also encourages communities to refocus efforts on existing industries. Communities understand that the best
way to expand their own economies and those of the surrounding region is to support a cluster of firms rather than to try to attract companies one at a time to an area. Chambers of Commerce, business incubators, and some universities work with companies to develop clusters and synergies in business communities. Strong domestic clusters also help attract foreign investment. If clusters are leading centers for their industries, they will attract all the key players from both home and abroad. In fact, foreign-owned companies can enhance the leadership of the cluster and contribute to its upgrading, according to research by Julian Brikinshaw (2000). For small and developing businesses, locating in a cluster near competitors and related industries may aid the firm in faster growth, recognition, and status within the market. Economies of scale can be gained by group purchasing within the cluster. There can be discussions among cluster members about their unique competitive advantages and future challenges. Linked supply chain networks can naturally be created within a tightly-linked cluster. Informal day-today contact with similar companies is also important, according to Natasha Muktarsingh. Of course, physical location proximity is not always required to be a cluster. Many firms, including retailers and publishers, can be grouped together on an Internet site