Industry Clusters in Ireland: An Application of Porter's Model of National Competitive Advantage to Three Sectors

Abstract

This paper examines the importance of industrial clusters, and the relevance of Porter's diamond model, in the context of the small open economy of Ireland. It analyses the experience of three relatively successful Irish indigenous sectors and it considers to what extent have clusters of related or connected industries been important in accounting for the degree of success attained in Ireland. We do not find evidence of well-developed clusters of the type described by Porter, and our study provides support for some previous critiques of Porter's model. It is concluded that Irish industrial policy does not need to be focused strongly on developing the type of industry clusters described in Porter's model. At the same time, different elements of Porter's model do prove to be relevant and we find that companies in Ireland benefit from being part of some form of wider grouping of connected or related companies and industries, although these groupings can differ from Porter's clusters in significant respects.