Explaining Geographic Cluster Success-The GEMS Model

Geographical clustering of economic activity and business firms was first incisively and extensively analyzed by Alfred Marshall in his seminal text on economics (1890). However, Porter's Diamond model (1990, 1998) remains the paradigm model for cluster formation in modern economies. Developments in the economics of geography, institutional economics, and strategic management indicate that Porter's and others' models of cluster formation may be incomplete. The Global Economic Management System (GEMS) model of cluster formation and sustainability extends scholarly work in this area by outlining a comprehensive model of cluster formation and testing its robustness against data collected from a sample of global cluster managers. The results indicate the significance of a number of hitherto ignored factors in cluster success and provide guidelines for policy makers, cluster managers, and international firm managers for location decisions and cluster formation.