What do we know about clusters? In search of effective cluster policies

Geographical clusters are in the focus of a large breadth of literature and have been discovered as a preferred policy tool by policymakers around the world. The vast literature suggests differing explanations for the advantages clusters offer to constituent firms. Yet not all of these explanations have been empirically confirmed. Before cluster policy can act as a reliable tool for economic policy, there must be a certain degree of clarity about what kind of advantages a cluster can bring to constituent firms. Therefore, the following article reviews different explanations of cluster advantages from the literature. Its aim is to identify concrete mechanisms through which these advantages materialize. On the basis of these mechanisms the article identifies questions in cluster theory that are still open and defines steps for further research to develop a comprehensive theory of cluster policy.