The age old adage about the three keys to success for operating a business “location, location and location” still holds true despite the reduced effect time and space barriers have on our life following the advent of transport and communication technologies. Porter has referred to this phenomenon as a paradox.

The growing global movement of goods, information, capital, and technology in recent decades has led to a tendency to see geography as diminishing in importance to competition. (Porter, 1998b, p.11)

The notion of location has influenced business in a major way from the loca gas station to the multinational corporation’s offshore activities. In today’s economy, more than ever, we see a conflicting set of pressures toward globalisation and localization, which has been coupled with a shift in perspective from economic theory to business theory. It is this notion that underlies in Porter’s literature on the competitive advantage of nations.

The following paragraphs, 90 years apart, discuss the nature of a cluster, the subject which is the

Though Porter (1990; 1998a; 1998b; 1998c; 2000; 2001) has been the first champion of cluster theory as an underlying factor in a nation’s competitive position, he was not the first to discuss localisation economics. There is a history of research in spatial economics (in which Adam Smith himself participated), but it is Alfred Marshall (1842-1924) with his study of the agglomeration of cotton mills in Northern England who is the first leader in the field . In his book Principles of Economics (1890) he describes that agglomeration and industrial districts contain the following key ingredients:

What do a pin factory in Scotland, cotton mills in Manchester and footwear manufacturers in Italy have in common?

§ Institutions providing specialized training, education, information, research, and technical support (universities, think tanks, vocational training providers, etc.)

“The cluster is the physical juxtaposition of the various parts of the Diamond in one particular location within the country” (Porter, 2002). It requires a clear home base, Private investments in "public" goods (e.g. university, specialised infrastructure and testing laboratories), as well as a prominent role for trade associations and other collective bodies. This concept will be expanded upon below.

Some topics in this essay:
Porter’s Diamond, Dilemma Boekholt, According Porter, Marshall Marshall’s, Porter Stern, View Appendix, Government Chance, Conditions Basic, Theory Competition, Maynard Keynes, competitive advantage, porter 1990, porter 1998b, cluster theory, porter 1998a, diamond model, economic theory, porter’s diamond, porter 1990 1998a, feser 2002, factors production, bergman feser 2002, classical economic theory, pin factory scotland, 1998a 1998b 1998c,