Degree Name

Master of Information technology - Research


School of Information Systems and Technology - Faculty of Informatics


SME clustering has attracted much attention to date as it encourages SMEs to achieve competitive advantage through co-operation. Although the Australian government advocates and actively promotes the formation of SME clusters, much academic commentary is dissatisfied with the theory on clusters, in particular its reliance on geographic proximity. The literature primarily addresses the benefits of industry clusters but overlooks the processes of how clusters are formed. This leaves some sections of the SME population underserved particularly those involved in horizontally integrated value chains. This thesis explores the formation process of a horizontal alliance and compares this to Rogers’ innovation-diffusion theory. Through a case study of an Australian carpet buying group, SMEs were surveyed to collect data on the characteristics of buying group growth over a 13 year period. Our results show that the S-shaped innovation diffusion pattern of Rogers’ theory accurately describes the growth of the buying group over this time. In particular, strong support was found for the opinion leadership theory. The use of Rogers’ theory led to a better understanding of the role of networks and ICTs in promoting information sharing. In particular, the research finds that the dominant theory of geographical proximity advanced by Porter (1998a) needs to be qualified in relation to horizontally integrated value chains where SMEs share a high degree of homogeneity.

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Unless otherwise indicated, the views expressed in this thesis are those of the author and do not necessarily represent the views of the University of Wollongong.