Whitman School of Management at Syracuse University
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Abstract Details

Clusters and Entrepreneurship: Implications for Innovation in a Developing Economy
Vol. Volume 9, Number 3 December/2004

Jamshed H. Khan and Jawaid A. Ghani
This paper presents a framework for examining technological innovation and entrepreneurship in clusters. Specialized suppliers in the cluster share the risks of failure associated with new technologies. New technologies rapidly diffuse throughout the cluster, encouraged by close proximity, trust, rivalry, and extensive outsourcing arrangements. The framework is illustrated through a case study of the Faisalabad textile cluster, as they upgraded their weaving technology from power looms to shuttle-less looms. Small firms were able to thrive by outsourcing upstream and downstream processes to efficient specialized suppliers. Specialized maintenance contractors helped reduce the risk of adopting the new technology by providing guaranteed 24-hour maintenance support. They also played a key role in diffusing the technology throughout the cluster. Government policy seemed to play a minimal role in this particular technological innovation.