Rise and fall of SME clusters in Latvia

Abstract

One of the leading driving forces of every state economy is Small and Medium Enterprises. In Latvia, SMEs counts for 99.7% from national industrial system, creating 70% from states’ value added. The recent crises heavily affected SMEs and highlighted one of the modern economic imperatives for SMEs – need for collaboration in order to survive and successfully compete. In modern economic environment SMEs need to establish collaborative links with other SMEs, operating in same industrial sector and region, thus forming business networks and clusters. The objective of the paper is to provide analysis on development of Latvian government supported SME clusters and outline the factors influencing rise and, sometimes, fall of SME clusters. The task is to compare Sweden experience against the Latvian one and evaluate the impact of Latvian cluster initiatives. This analysis can be useful in the development and planning of SME cluster projects. The methods of the research are systematic, logical and comparative analysis of scientific literature, analysis of statistical data, case study and expert method.