Microsoft Word 2007 ichrie conference Proceedings Final-Final 06-06-07. doc

 
2007 Annual International CHRIE Conference & Exposition 
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believe that countries that are lagging behind in small business activity (and therefore in entrepreneurship) will pay a 
penalty through lower economic growth (Thurik & Wennekers, 2001). Amongst other factors (like entrepreneurship 
activity, innovation, etc.) economic growth from small businesses can be derived from their linkages with the rest of 
the economy (Sharma, 2006). While theoretically it has been shown that social and economic factors have an impact 
on the formation of industry clusters, few empirical investigations have been conducted to understand how this 
happens (Feldman, 2001; Krugman, 1991; Saxenian, 1994). Social and economic factors impacting development of 
clusters in a location include skilled labor, supportive infrastructure, and specialized suppliers on site (Marshall, 
1890); knowledge spillovers (Saxenian, 1994); competition between firms for know-how, capital, customers, etc. 
(Hannan & Freeman, 1989; Porter, 1998; 2000). Furthermore, it has been observed that competitive advantages in 
clusters can lower entry barriers thereby having a positive effect on entrepreneurship (Krugman, 1991). Therefore, it 
can be beneficial to study the location and functional clustering of organizations to understand the impact of policy 
issues, and influence of industry and market characteristics (Perry, 2005); and the impact of other factors such as 
financial constraints on the level of entrepreneurial activity (Paulson & Townsend, 2004). Spatial analysis within 
hospitality and tourism is limited so far. Recently Giannone (2002) investigated the emergence of relationship-based 
spatial tourism activity in contrast to the more traditional tourism spaces that have been defined by administrative 
units. Mathews (2000) used location as a common factor amongst hotels to investigate factors of competitiveness 
and rivalry. A cluster analysis approach has been more frequently used in consumer-related studies. For instance, 
Lee and Pearce (2002) used cluster analysis to investigate community attitudes towards paying higher fees for 
natural environment settings. Similarly, Inbakaran and Jackson (2005) used a cluster approach to segment tourist 
hotel resort visitors. Other studies that have used cluster analysis in hospitality literature include analysis of strategic 
clusters (Edgar, Littlejohn, & Allardyce, 1994) and application of the cluster model to analyze tourism destinations 
(Jackson & Murphy, 2002). There have been no studies that have investigated the level of small business activity 
using a cluster or a spatial approach study their relationship with growth and economic development.