Understanding the Adoption of Clusters by SMEs using Innovation Theory

SMEs-clustering has been of considerable interest over the last decade and is associated with regional development. The Australian government advocates the formation of SMEs cluster thereby encouraging SMEs to achieve competitive advantage through globalisation. However, the notion of SMEs clusters involves some issues in terms of its adoption by SMEs. Firstly, most academic research shows that SMEs cluster has been treated as a phenomenon in the economy and that its foundation lacks a theoretical perspective. Secondly, there is a lack of understanding of SME clusters in general. Much of the literature on SMEs and clusters has primarily addressed the benefit of industrial clusters; however, the process of how SMEs adopt clusters is given less attention. This study leads to a more refined understanding of SME clusters with an emphasis on its adoption by SMEs. It utilises Roger's Innovation theory to explore the processes involved in the adoption of SMEs cluster by SMEs and also the advantages and disadvantages obtained by doing so. The novelty of this study lies in the assumption that the cluster idea is an innovation per se. In particular, we adopt Roger's S-shaped innovation curve model to investigate how SMEs adopt the cluster idea as an innovation. We look to see if the pattern of joining the cluster in time follows Roger's S-shaped curve. A case study methodology method will be used to collect data from SMEs within a cluster in Australia. It is expected that the data gathered will be analysed to suggest implications as to how SMEs can sustain competitive advantage within SME clusters