Evolution of the Bangalore ICT cluster: A stage theory based on the crystal growth model

Abstract

Industrial clusters have been recognized as an important tool for the economic development of a region. Research has hence focused on the identification of the essential ingredients of an innovation ecosystem that would support and sustain a business cluster, so that such clusters could be promoted by creating the relevant ecosystem. Having studied well- developed clusters, researchers often come out with a comprehensive list of such ecosystem ingredients such as: geographical proximity of firms, sectoral specialization within the cluster, close inter-firm interactions, access to investment funds and financial services, infrastructural facilities, favourable government policies, business support services, technology sources and support, and social capital and formal/informal networks among entrepreneurs. An often-unstated inference from these findings is that such ingredients are the cause of cluster formation, and therefore the best way to promote a business cluster is to create such institutions in the proposed region. What is often forgotten is the fact that many of these institutions or characteristics are consequences, rather than causes, of cluster development. An evolutionary study of the Bangalore ICT cluster has shown that there are at least four distinguishable stages of cluster development, namely: incubation, nucleation, agglomeration and attrition, with each of them being supported by a different type of ecosystem.