Cluster life cycles--dimensions and rationales of cluster evolution

We present a model that explains how the very cluster dynamics is both the driver for the movement of a cluster through a life cycle and the reason why this movement differs from the industry life cycle. The model is based on two key processes: the first is that the emergence, growth, decline and renewal of the cluster depend on the technological heterogeneity of firms; the second is that firms have a larger relative absorptive capacity, when they are in the same location, and thus especially localized learning changes heterogeneity: it leads to a technological convergence when learning takes place within the cluster and technological divergence, when learning takes place outside the cluster, yet in the same…