Abstract
We contribute to the unresolved debate about why clusters evolve and transit across their life cycles. This paper is about how routines and capabilities are formed in clusters, and how they provide the basis for a dynamic model of knowledge and capabilities accumulation, which in turn drives cluster evolution. The paper utilizes the management-based theoretical resource-based view, and also the dynamic capabilities perspective, in order to construct a formal conceptual framework containing causal type arguments for addressing cluster evolution. The cross-fertilization of the strategic management and economic geography perspectives explains how both endogenous and exogenous interactions combined with existing knowledge, thereby creating, adapting and eliminating cluster capabilities. During the process of capability accumulation, clusters evolve and foster vertical disintegration and a more complete division of labor. A clusters dynamic capability is a capability to engage in a learning process, during which resources and capabilities are adapted and modified, and new knowledge is formed which alters existing capabilities. The modification of a clusters capabilities drives subsequent cluster evolution. A qualitative case-study based on longitudinal data covering sixty years for a world-class cluster is used to induce theory.
