Cluster Business Model

This chapter outlines the theoretical base on which this research has been conducted. The chapter begins with a review of the literature on the determinants of national advantage and the cluster theory and competitive advantage. It is followed by a discussion on the benefits and challenges of tourism clustering and cluster business models accompanied by an analysis of the concept of tourism and its importance to national economics. The research concludes with a focus on Malta’s tourism industry and MICE sector. 2.1 The determinants of national advantage

Porter’s (1990) national “diamond” addresses competition in terms of the determinants of national advantage, in particular industries or industry segments as reproduced in Figure 2.1. Although another of Porter’s theories known better as “the five forces” model could be applied at the level of the organisation in the tourism industry, the national diamond model suggests the fundamental structure of competition amongst national tourism industries; that is, the nation as a tourist destination. Figure 2.1: The determinants of national advantage (Porter, 1990)

Factor (input) conditions refer to the basic production factors. If the factor conditions are not

A cluster was now defined by Porter as “a geographically proximate group of interconnected companies and associated institutions in a particular field, linked by commonalities and complementarities”. Porter argues that clustering in the manufacturing industry is about gaining better access to raw material and enhancing other logistical aspects, whilst clustering in the services industry is about working within an environment with enhanced innovation, where product and service development are constant and the labour force is a skilled