Clusters exist in various nations around the world especially in the economically advanced nations like the U.S and some European nations. Examples of world’s renown clusters include the Hollywood film cluster, the Californian wine industry cluster and the Silicon Valley cluster (Boja, 2011).Among the popularly known clusters, the Italian clusters have received much attention for their wide distribution across different regions and industries. However, clusters have been faced with a myriad of challenges leading to a decline in economic viability of most clusters. The purpose of this paper is to analyze the Italian clusters and provide an informed opinion as to why they are declining and whether they can be improved. Many of Italy’s clusters concentrated across several industries and geographical districts have been in existence for many years. Italian clusters are composed of various firms of varying sizes belonging to different industries but sharing common or complementary technologies (Boari, 2001). Some of Italy’s popular clusters include food machinery clusters located in Parma, footwear industry clusters in Fermo, Tiles cluster in Sassulo Silk cluster in Como and Woolen products clusters in Biella among others (Castellanza et al, 2011). Clusters offer a number of economic benefits to members and to the nation or region. According to Porter (1998), clusters affect competitiveness at the national and regional level by influencing innovation, increasing the productivity of firms within the geographical area and encouraging emergence and growth of new businesses (Rosenfeld, 2002). Clusters are vital because geographical concentration enables small firms to overcome the limitations associated with size. It also enables small firms to enhance their technology and increase their local and global competitiveness (Barrientos and Nadvi, 2004). More specifically, clusters allow each of the cluster members to enjoy benefits beyond its capacity without having to forgo its flexibility (Porter, 1998). Despite the benefits offered by clusters, most of the Italian clusters have not been able to sustain the competitive advantage over the years. The decline in performance and closure of most Italian clusters illustrates that competitiveness can no longer be attained from the geographical proximity offered by clusters (Porter, 2000). Only a few of the Italian clusters like the Leather Fashion Cluster have been able to survive the emerging challenges (Castellanza et al, 2011). The major strength exhibited by the Leather Fashion Cluster is largely due to synergistic relationship complementarity and multiple connections enjoyed by the cluster members (Porter, 1998). Conversely, many of the once popular Italian clusters like the Cotton mill clusters and the Woolens cluster have lost their competitiveness leading to closure (Castellanza et al, 2011).
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