What do German cars, Swiss chocolate, French champagne, and New Zealand dairy have in common? They're all examples of clusters.

While there are many definitions of what clusters are, we (the Institute) use Professor Michael E. Porter's (Harvard Business School) definition:

“Clusters are geographically proximate groups of interconnected companies, suppliers, service providers, and associated institutions”

— Michael E. Porter, "The Competitive Advantage of Nations," 1990.

When talent (i.e., workers), firms (anchor firms, suppliers, etc.), research organizations, and other actors within a cluster ecosystem co-locate together in a geographical area, they create a competitive environment, which can spur:

Labour market pooling - larger pool of specialized workers who come for jobs and opportunities
Supplier specialization - to remain competitive, suppliers develop innovations and specializations to stay ahead
Knowledge spillovers - e.g., when people move from firm to firm, or when friends meet up to "talk shop"

Combined, these interactions produce innovations, which help firms become more productive and competitive, especially on the global stage, generating economic prosperity for the region.

There is currently alignment across all three levels of government in Canada. The Federal government's superclusters initiative has produced some healthy competition, but more importantly, reasons for firms to work together to pool resources and reap shared benefits. The Ontario Government continues to support clusters from a regional economic perspective, and there is a plethora of sector development offices across the Toronto Region that help firms and organizations grow.

Listen to our Clusters & Competitiveness podcast

Episode 1 explains what a cluster is and why they're important.

Episode 2 busts the myth of building a cluster from scratch and presents the story of how the theatre cluster developed in the small town of Stratford, Ontario.