Virtualization of industry cluster

CHEN Xiaoyong1

(1.School of Economics, Northwest University of Political Science and Law 710063)

【Abstract】Under the Internet economy, the virtual transformation has made the development of industry clusters directly beyond the border constraints of geographical space. A cluster can accommodate firms from all parts of the world without limit of number and size. The global nature of virtual industry cluster (VIC) and the scattered distribution of firms in the cluster directly change the definition of industry cluster by the traditional theory on basis of geographical space. The traditional theory holds that “external economies of scale” is the direct advantage created by industry clusters. Based on labor division theory and transaction cost theory, this paper pointed out that labor division rather than industry cluster provides such advantages. The fundamental strength of industry clusters lies in effectively narrowing the “distance,” reducing the cost of cooperation among participants, and then deepening labor division among participants; and the distance discussed here contains two meanings: “spatial distance” and “psychological distance.” The results of this research show that the virtual transformation can help the industry cluster narrow the distance among firms to zero by utilizing modern information technology; and the virtual cluster can effectively narrow the psychological distance among main actors through community operation and integration advantages of formal and informal institutions in the community. The virtual transformation has fundamentally changed the formation and evolution of industry clusters. The “quantity concentration-quality improvement-R&D and brand innovation dominating” traditional industry cluster (TIC) evolution path is replaced for the “platform drive-community operation-borderless development” evolution path of industry cluster. Virtual transformation turns industry clusters into “firms,” then “communities,” and experiment base for finding effective “organization institutions,” where organization form, operation mechanism, size, and ability all achieve borderless development.

【Keywords】 industry cluster; virtualization; borderless development; specialization and labor division;


【Funds】 Youth Project of National Social Science Foundation of China (13CGL041)

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(Translated by GENG Qingyou)


    [1]. ① External economies of scale means that with other conditions constant, the operation efficiency of an individual firm expands and rises with the external economies of scale. [^Back]

    [2]. ① Interface rule of contact originally means the interface rule of data exchange between two program modules in computer program development. [^Back]


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This Article


CN: 11-3536/F

Vol , No. 12, Pages 78-94

December 2017


Article Outline



  • 1 Introduction
  • 2 Motivation analysis on the virtualization of industry cluster
  • 3 Change in the organization form of industry cluster caused by virtualization
  • 4 Change in the operation mechanism of industry cluster caused by virtualization
  • 5 Change in evolution path of industry cluster caused by virtualization
  • 6 Main conclusions and policy implications
  • Footnote