Customer Clusters as Sources of Innovation-Based Competitive Advantage
Vishal Bindroo, Babu John Mariadoss, and Rajani Ganesh Pillai
ABSTRACT
The authors examine the effect of customer clusters on a firm’s innovation. They argue that knowledge leveraged from customer clusters can help the firm develop innovations. The authors specifically concentrate on the effect of a firm’s geographical proximity and diversity of customer clusters on innovation outcomes. In addition to showing the importance of customer cluster proximity on firm innovation, they explore the effect of customer cluster heterogeneity on innovation in an international marketing environment. They test the theoretical model using multicountry data (N = 288) drawn from the U.K. innovation survey implemented by the Economic and Social Research Council, which collected the data across five European countries. Theoretical constructs operate largely as hypothesized and explain a substantial proportion of the variation in the different innovation outcomes tested. Keywords: radical innovation, customer cluster, cluster heterogeneity, proximity, innovation speed

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nnovation is frequently acknowledged as the source of organizational renewal and growth, the primary source of competitive advantage (Porter 1990), and central to marketing strategy (Varadarajan and Jayachandran 1999). Because innovation is linked to superior financial performance and survival ability of firms (Agarwal, Cockburn, and McHale 2006), creating and managing innovations is critical for firms to achieve sustained competitive advantage (Porter 1990). For firms competing in a global marketplace, innovations play an increasingly vital role in achieving superior performance (Atuahene-Gima 1995; Jeong 2003). In a fast-changing global marketplace characterized by global competition, short product life cycles, evolving customer needs, and