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The Nature of ValueHow to Invest in the Adaptive Economy$
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Nick Gogerty

Print publication date: 2014

Print ISBN-13: 9780231162449

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231162449.001.0001

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Stable and Unstable Clusters

Stable and Unstable Clusters

(p.141) Chapter Nine Stable and Unstable Clusters
The Nature of Value

Nick Gogerty

Columbia University Press

This chapter discusses the two types of clusters: stable and unstable. Stable clusters, like stable niches in ecology, are places where value flows without being interrupted by too much change. Clusters often converge towards stability as inos and capabilities form a stable web of strategies, and participants consolidate via mergers or exit. Unstable clusters repeatedly destroy shareholder capital, as new competitors constantly enter, shifting the cluster's dominant strategies and required capability set. Firms in these clusters have little ability to sustainably differentiate offerings from competitors. Unstable clusters are easily spotted by characteristics such as little to no repeat customer loyalty, no effective pricing power among competitors, and minimal historical return on capital.

Keywords:   stable clusters, unstable clusters, value, sustainability

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