Visualising the Operating Behaviour of SMEs in Sector and Cluster: Evidence from the West Midlands

Abstract

Cluster policy in the UK, pursued by the Regional Development Agencies (RDAs), has readily adopted a simplistic definition based upon industrial sectors and location quotients. Evidence drawn from a study of the operating behaviour of SMEs belonging to two traditional manufacturing industries within the West Midlands—automotive components and clothing—provides a critique of this approach. Whilst the automotive components industry has been designated part of a key, high priority cluster, the clothing industry has not. Using case studies from both industries, this paper shows firms both within and outside RDA cluster definitions display a remarkably similar range of behavioural characteristics. Yet, based on weakly defined cluster policy, one industry enjoys considerably more policy support than the other. The paper begins to question the logic of RDA cluster policy and to ask whether a more sophisticated and locally sympathetic manner of visualising clusters and business behaviour rather than an emphasis on employment numbers would have a greater impact for policy.