Organisation plays an important role in almost all facets of life and clusters are not untouched by it. My experience of working in the clusters for the last 10 years suggest that any irreversible successful intervention is backed by some kind of institutionalisation of efforts in the form of organisation. Amiya Kumar Bagchi in his book on INDIAN ECONOMIC ORGANISATIONS (1999) , classify evolution of such organisation on three parameters. First, labour intensive firms ( capitalist),second, historical evolution of firms and the last is socio-economic ecosytem. The above three factors have historically impacted differently on the evolution of local organisation in clusters.
The importance of local organisation theoretically based on the assumption that each cluster is unique in its requirements. being in proximity cluster gives an opportunity to evolve new norms to dialogue and network, it gives an opportunity to institutionalise the networking among local stakeholders in the form of trust. This process is embeded in the culture of the cluster and very beautifully captured by Marshall
the mysteries of trade become no mysteries:but are as it were in air , and children learn many of them unconsciously. Good work is rightly appreciated , inventions and improvements in machinery , in process and general organisation of business have their merits promptly discussed ; if one man starts a new idea , it is taken up by others and combined with suggestions of their own ; and thus it becomes source of new ideas.
the local factors in economic thinking has become so important that an article by TT RAM MOHAN ( based on a paper published in HARVARD BUSINESS REVIEW, MARCH 2008 ) in todays Economic Times, suggest that how local firms are giving MNC a run for money. In many market MNCs has been coming face to face with high quality local talent. A very interesting read for today http://economictimes.indiatimes.com/Columnists/T_T_Ram_Mohan_MNCs_at_bay/articleshow/2999915.cms
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I agree wholeheartedly, however institutionalization is a very very difficult thing to do. I would attribute this to the lack of long term view among indian SMEs. I suspect that many SME clusters are unable to comprehand the reasons of their success. Which is why i am not entirely convinced of the competitiveness of the indian SMEs on a global stage. I firmly believe That the rate of SME death would become phenomanal once our cost advantages have eroded sufficiently. ( and to be sure they are being eroded)
Unfortunatly, i do not entirely understand the forces at work in such a situation. Hopefully you will shed some light in a future post.
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