In economics and management literature the business or industry cluster theory gained prominence over recent decades. It was expounded most famously in 1990 in The Competitive Advantage of Nations
, an 896 page book by Michael Porter
, the American economics and management academic.
Porter and his research team applied the cluster theory to manufacturing industries, eg for Italian shoes and Japanese cars. The theory has remained in vogue including with governments in Australia.
The cluster theory seems to be displaced in academic literature more and more by discussions on network economics. A common feature of both is their recognition of the rising importance of collaboration in contemporary economics.
The graphic accompanying this article applies the cluster theory to "The California Wine Cluster". It illustrates that competitive advantage is gained when a cluster of industry participants work together to achieve vastly more together than they could working in competition individually.