Cluster strength and regional resilience: the case of the USA in the Great Recession

Purpose This paper aims to evaluate the role of cluster strength on regional resilience. Previous literature shows that the industrial composition of a region, measured with indicators of its specialization, diversity and related and unrelated variety, is a crucial determinant of resilience. In this paper, the authors aggregate cluster-level data into several indicators of regional cluster strength to proxy for different aspects of the cluster portfolio of a region. Design/methodology/approach In particular, the authors consider the role of the presence of strong clusters in a regional economy as well as the mix of clusters in which the region has main relevance. On the one hand, the authors assume that the agglomeration forces arising in regions specialized in certain clusters could mitigate the effect of recessions. However, these strong industrial linkages may increase the diffusion of the economic shock from one industry to the rest. To check which of these two forces dominates, the authors consider the resilience of the US states over the Great Recession period and use a cluster definition that classifies traded industries into 51 clusters. Findings This study’s findings suggest that the presence of a portfolio of strong clusters allows mitigating economic shocks. Practical implications Resilience mechanisms must be identified in the face of future economic shocks or pandemics like COVID-19. Originality/value Some research works have demonstrated that strong clusters help make other clusters resilient. However, the effects they can have on the entire region have not been analyzed, as in this study.