Fostering collective efficiency
Industrial clusters of small enterprises can be found throughout the world. Clustering bestows certain advantages of collective efficiency on small enterprises, such as the external economies of proximity, (e.g. well-developed networks of suppliers and buyers) and the potential gains of consciously pursued joint action (e.g. several firms sharing an order). Many clusters arose without external intervention, but this article addresses what may be done to promote clustering in developing countries. Three essential elements of effective enterprise assistance are described: developing customer orientation, a collective approach, and building the cumulative capacity to upgrade. A number of cases are outlined, where clusters and networks have been promoted successfully, and several mechanisms are identified that build up customer orientation and competitiveness.