UNIVERSITY OF VAASA 

FACULTY OF BUSINESS STUDIES 

DEPARTMENT OF MARKETING 

 

 

 

 

Mihaela Raluca Tapu 

 

TOWARDS A CLUSTER IDENTITY 

– THE CASE OF ROBOCLUSTER - 

 

 

 

 

Master Thesis in Marketing 

International Business 

 

 

 

 

 

 

VAASA 2008 



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TABLE OF CONTENTS 

LIST OF FIGURES 

LIST OF TABLES 

ABSTRACT 

1. INTRODUCTION.............................................................................. 11 

1.1. Background of the study................................................................................... 11 

1.2. Objectives and delimitations............................................................................. 13 

1.3. Defining the main concepts in the thesis ........................................................... 15 

1.4. The structure of the thesis................................................................................. 16 

2. CLUSTERS AND BRANDS .............................................................. 19 

2.1 Definition of clusters ......................................................................................... 19 

2.2. Main elements of clusters ................................................................................. 22 

2.2.1. Actors........................................................................................................ 22 

2.2.2. Trust and cooperation ................................................................................ 23 

2.2.3. Knowledge sharing and innovation ............................................................ 24 

2.2.4. Entrepreneurship ....................................................................................... 25 

2.2.5. Networks ................................................................................................... 25 

2.3. The importance and advantages of geographical proximity............................... 26 

2.4. Introduction to brands ...................................................................................... 29 

2.5. From product brand to corporate brand............................................................. 33 

2.6. Corporate brand - an analysis ........................................................................... 37 

3. CORPORATE IDENTITY................................................................ 41 

3.1 Introduction to identity ...................................................................................... 41 

3.2. The concept of corporate identity ..................................................................... 43 

3.3. The corporate identity formation ...................................................................... 46 

3.4. Corporate identity elements .............................................................................. 51 

3.4.1. Corporate philosophy................................................................................. 52 

3.4.2. Corporate personality ................................................................................ 52 

3.5. Challenges to constructing a cluster identity ..................................................... 54 

3.6. Synthesis .......................................................................................................... 56 

 



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4. RESEARCH METHODOLOGIES................................................... 59 

4.1. Research design................................................................................................ 59 

4.2. Research strategy ............................................................................................. 60 

4.3. Interviews as means of data collection.............................................................. 62 

4.4. Data collection process..................................................................................... 63 

4.5. Reliability and validity of the study .................................................................. 67 

5. EMPIRICAL ANALYSIS AND FINDINGS .................................... 70 

5.1. The formation of the cluster.............................................................................. 70 

5.2. Philosophy ....................................................................................................... 71 

5.3. Personality ....................................................................................................... 72 

5.5. Members .......................................................................................................... 76 

5.6. Actors’ identity ................................................................................................ 79 

5.7. Impact of the cluster on its members ................................................................ 84 

5.8. Cluster identity................................................................................................. 86 

6. SUMMARY AND CONCLUSIONS ................................................. 92 

6.1. Summary.......................................................................................................... 92 

6.2. Conclusions...................................................................................................... 94 

6.2.1. Managerial implications .......................................................................... 100 

6.3. Further research.............................................................................................. 100 

LIST OF REFERENCES..................................................................... 102 

APPENDICES 

APPENDIX 1. ........................................................................................... 111 

APPENDIX 2. ........................................................................................... 113 

APPENDIX 3. ........................................................................................... 115 

  



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LIST OF FIGURES 
 
 
Figure 1. Structure of the thesis. 17 

Figure 2. The brand triangle. 32 

Figure 3. The Strathclyde Statement. 44 

Figure 4. Corporate identity components. 48 

Figure 5. Components of corporate identity. 49 

Figure 6. The essence of corporate identity. 50 

Figure 7. Balmer’s Afinity Audit. 51 

Figure 8. Theoretical framework of the study. 58 

Figure 9. Mission and vision of RoboCluster. 72 

Figure 10. RoboCluster characteristics. 73 

Figure 11. How RoboCluster should be perceived. 74 

Figure 12. Repartition of RoboCluster members across regions. 78 

Figure 13. Factors influencing the mission and philosophy. 80 

Figure 14. The influence on corporate culture. 82 

Figure 15. Influence on the corporate strategy. 82 

Figure 16. Opportunities from being a part of the cluster. 84 

Figure 17. How members describe the cluster. 87 

Figure 18. Words describing the cluster. 89 

Figure 19. Factors that influence the formation of corporate identity. 96 

Figure 20. The creation of cluster identity. 98 

 

 



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LIST OF TABLES 
 
 
 
Table 1. ARA in relationship and networks.  26 

Table 2. How corporate branding differs from product branding. 35 

Table 3. Definitions of corporate identity throughout the years. 45 

Table 4. Main differences between quantitative and qualitative methods. 59 

Table 5. Relevant situations for different research strategies. 61 

Table 6. Sample companies for the research. 66 

Table 7. Validity in case study research. 68 

Table 8. RoboCluster goals. 75 

 

 
 



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ABSTRACT  
 
In today’s business world, there is a major accent put on differentiation and the creation 
of sustainable competitive advantage. An agreed method in order to achieve these 
targets is that of branding. The phenomenon of branding has been extended in the past 
to corporate, country, place or personal branding. Therefore, a normal extension will 
also be the branding of clusters. But, at the core of branding it lays the identity of the 
elements that will be branded.   
 
With little to no research in the cluster identity field, the present study aims to introduce 
this concept in the attention of the business literature. Moreover, the study aims to 
design a future framework for analysis. 
 
The theoretical part introduces the main concepts of the paper. To start with, there is a 
discussion around the definitions of clusters and their main characteristics, as well as an 
introduction to the brand. The second part of the theory aims to make some light 
regarding the identity principle. It is here that different approaches to corporate identity 
are identified, and the approach of the study is decided. 
 
The empirical part is concentrated around RoboCluster, a robotics and automation 
cluster from Denmark. The research is based on a qualitative study, where interviews 
were used as a mean of data collection. The results of the research have been gathered 
in a case study.  
 
According to the research, cluster identity is formed by the corporate philosophy and 
the corporate personality. In addition, this is greatly influenced by the actors' corporate 
identity, which in turn is influenced by the stage in the life cycle of the company, its 
experience on the market and the number of employees. 
 

KEYWORDS: Cluster, brand, corporate identity, cluster identity, RoboCluster 

UNIVERSITY OF VAASA  
Faculty of Business Studies  
Author: Mihaela Raluca Tapu 
Topic of the Thesis: Towards a cluster identity- The case of 

RoboCluster 

Name of the supervisor Minnie Kontkanen 

Degree Master of Science in Economics and 
Business Administration 

Department: Department of Marketing  

Major subject: Marketing  

Program: International Business 

Year of entering the University 2006 

Year of completing the Thesis 2008                                      Pages: 117 



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1. INTRODUCTION 

 
 
This chapter will be the starting point of the study. It is here that it is introduced the 

background of the study and the research problem is presented. In addition, the main 

purpose of the study is discussed, as well as the sub-objectives in order to achieve that 

purpose. Then, the limitations of the study are mentioned. For a better understanding 

from the reader, the main concepts of the papers are presented in subchapter 1.3. 

Nonetheless, the chapter will finish with a short presentation of the structure of the 

thesis. 

 

 

1.1. Background of the study 

 

The clustering of economic activity is a well known phenomena, usually explained by 

the benefits that proximity affords firms and consumers in reducing many different 

types of transaction costs (Leamer & Storper 2001). 

 

Previous studies are available on many aspects of industrial or business clusters, 

including the preconditions for cluster formation, the forces driving cluster growth and 

development, the flow of knowledge and resources within and across clusters, and 

factors that influence cluster competitiveness and innovativeness (Porter 1990, 1998, 

2000; Bergman and Feser 1999; Feser & Bergman 2000; Enright 2000). However, there 

are not many studies related to how clusters can differentiate themselves and create a 

competitive advantage. 

 

Clusters, just like companies, go through different stages in their life cycle. In the early 

stages of their lifecycle they are mostly interested in developing all the necessary 

elements for a cluster: building a network with many actors, getting them to cooperate 

and trust each other in order to better share knowledge and innovation through different 

projects. However, at a later stage in their lifecycle, although there still is a focus on the 

core activities of a cluster, other activities and ideals become part of their strategy. 

 



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Although clusters are concentrated in a certain location, that does not mean that cluster 

would not aim to become international acknowledged. Getting international awareness 

for clusters means new actors, new activities, and new means of financing. Therefore, 

achieving an international status will be greatly desired by any cluster. International 

awareness can only be achieved through an intense marketing effort of communicating 

and promoting the cluster.  

 

In the last few years, the marketing literature has been acknowledging a new concept: 

that of branding and brands. Branding can be easily understood as the process that 

makes you more knowable, likeable and trustable. Meanwhile, the brand is the actual 

result of the phenomenon of branding. In addition, brands are intangible resources that 

distinguish you from the others.  

 

According to Runyan and Huddleston (2006), “brands in general are posited to be less 

mobile than other firm resources, and thus may provide a more sustainable competitive 

advantage”. Similarly to the large corporations that use branding to distinguish their 

products from other largely indistinguishable products, the concept of creating a “cluster 

brand” becomes more popular. In the same way that consumer associate companies’ 

products to lifetime experience, the cluster brand at its core is based according to Porter 

(1998) on an image of a high-productivity, knowledge-rich, decentralized, 

entrepreneurial and socially progressive economy within the reach of local policy-

markers. 

 

Balmer (1999) sustains that the acquisition of a corporate brand, has been identified as 

an objective of corporate identity management. By corporate identity it can be 

understood “something that symbolises the organization as a whole.” In addition, 

Leuthesser and Kohli (1997) define corporate identity as “the way in which an 

organization reveals its philosophy and strategy through communication, behaviour and 

symbolism”. Without a proper corporate identity in place, branding can become a 

difficult and inconsistent activity. On the other hand, a well-managed corporate identity 

can be a powerful tool that is essential when an organization wants to be successful and 

differentiate itself (Schultz and Hatch 1997).  



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As clusters need to receive an international reputation, this can be received by branding. 

However, branding itself is actually communicating the corporate identity to the internal 

and external stakeholders. With these being said, I see it important to introduce the 

concept of brands and how organizations, including clusters, can benefit from them; as 

this is the starting point of the paper. After the concept of branding will be covered, I 

will focus more in depth on the concept of identity, which is actually the main theme of 

the study. 

 

 

1.2. Objectives and delimitations 

 

With a lack of research in the fields of cluster brand and cluster identity, it will be 

challenging to find out how a cluster can achieve an international awareness. The 

starting point of the study is the identity. Therefore, the purpose of the study can be 

stated as follows: 

 

To introduce the concept of cluster identity to the business literature and to suggest a 

framework for developing a cluster identity 

 

To be able to achieve the above stated purpose, I will further investigate the following 

sub-objectives: 

 

1. To describe the cluster concept and to introduce the concepts of brand and its 

extension. 

 

As the concept of cluster is to some extent new in the business literature, it is imperious 

to clarify how it should be understood in this research. To achieve this, the paper will 

investigate the various definitions of clusters, as well as the main characteristics of 

clusters. As it was previously presented, clusters are interested in branding themselves, 

and identity is an internal part of the corporate branding. Therefore, it is important to 

understand how brands can be described and whether they can also be extended to 

different concepts, including clusters.  



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2. To describe the notion of identity and its transfer to different entities, including 

the cluster 

 

The cluster identity is the main theme in this paper. However, with little to no research 

in this field, it is necessary to undergo a presentation of the concepts since its initial 

meanings. This will start by discussing the concept in sociological and psychological 

area, and then extending it to the organization and corporate level. After all of these 

notions will be understood, a particular attention will be given to the new emerging 

concept, that of cluster identity and the challenges to its existence.  

 

3. To empirically explore the elements of cluster identity in RoboCluster. 

 

As companies are formed by different employees, clusters are formed by different 

actors. The actors in the clusters are established companies, which can have their own 

identity. Therefore, I consider necessary to first take a look at the corporate identity of 

the actors in the cluster. Then, it would be interesting to analyze the cluster identity and 

to investigate whether there are any correlations between the corporate identity of the 

actors and the cluster identity. 

 

The subject of cluster identity has not received attention in the literature. However, the 

identity concept has received great attention throughout disciplines various disciplines. 

It was first studied in the psychological and sociological areas. Then, the concept was 

extended to the organizational studies. The principle was further transferred to the 

corporate marketing theory and the corporate identity concept was born. Corporate 

identity has received great attention from scholars throughout history. However the 

multitude of papers concentrated in the area has also brought disagreement in defining 

the concept (see Balmer 1995; van Riel & Balmer 1997; Melewar & Jenkins 2002)   

 

With the lack of previous studies in the cluster identity area, the present research will 

use the corporate identity theory, which will be extended to the cluster theory.  As 

mentioned before, there have been some disagreements and confusion in terms of what 



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corporate identity can be defined. While some scholars consider that the construct of 

corporate identity should include elements like visual design and corporate 

communication, I consider the latter as means of promoting the corporate identity. In 

this study, corporate identity should be understood as a concept that emerges in the 

internal part of the organization. Therefore, the study will be limited to investigate the 

internal components of corporate identity and not the activities that the cluster can 

engage in order to promote it to its stakeholders. With this in mind, the present research 

will be limited to using the Balmer’s approach in describing the corporate identity.   

 

 

1.3. Defining the main concepts in the thesis 

 

The present subchapter aims to define the most essential elements presented in the 

papers. Its purpose is that of clarifying to the reader these concepts, so it will be easier 

to understand the research. To achieve this, I have tried to give brief descriptions of the 

terms. However, advancing in the theoretical part of the study, these terms are further 

described and discussed.  

 

Cluster is described as a number of interconnected companies, specialized in a certain 

field and concentrated in a geographical area. 

 

A brand is a set of assets connected to a brand's name and symbol, which adds value to 

the product or service. 

 

Corporate brand can be best defined as the functional and emotional values, which 

coveys expectation about what the company will deliver in terms of products, services 

and customer experiences. 

 

By corporate identity it should be understood a strategic manifestation of corporate-

level vision and mission, underpinned by the strategies which a corporation employs in 

its operations or production (Melewar & Wooldridge 2001). 

 



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The philosophy of a company should be regarded as an expression of the organization’s 

core competencies, its market position and the values and assumptions of the 

organization, created by its owner or of its chief executive and management board.  

 

Corporate personality is best described by Aaker (1997) as the set of human 

characteristics associated with an organization’s identity.  

 

Kiriakidou and Millward (2000) define the corporate culture as the corporate values 

that are held by staff and management and their concrete manifestation in organizational 

symbolism and behavior, which frame the way that the organization operates. 

 

Corporate strategy should be understood “as the blueprint of the firm's fundamental 

objectives and strategies for competing in their given market” (Melewar & 

Karaosmanoglu 2006).  

 

 

1.4. The structure of the thesis 

 

As seen in figure 1, in this first chapter the reader receives an insight to what this thesis 

is about. This is the chapter where I will clearly state the purpose of the study and the 

way I intend to achieve it. The delimitations of the research are also presented in the 

first chapter. Furthermore, in order for the readers to better understand the concepts 

used in the thesis, it has been designed a section which is aimed at defining main 

concepts in the thesis.  

 

The second chapter introduces the reader into the theoretical framework of the thesis. 

Two main concepts are described in this chapter: clusters and brands. The first three 

sub-chapters analyze the clusters, their elements and the importance of geographical 

proximity. The rest of the sub-chapters investigate the concept of brands and compare 

the two main segments of branding: product and corporate branding. In the end, the 

chapter focuses on the corporate brand and introduces the next chapter. 

 



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The role of the third chapter is to add to the theoretical framework the concept of 

corporate identity. It starts with a general overview on the concept of identity and 

slowly transfers into the analysis of corporate identity formation and its construct. It is 

here that the challenges of constructing a cluster identity are presented. Nonetheless, the 

chapter ends with a synthesis of the theoretical part and presents the framework that will 

guide the empirical research. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Figure 1. Structure of the thesis. 

 

The fourth chapter introduces the methodology of the study. It first defines the research 

method that will be used in the research. Then, the collection and analyzing methods of 

the empirical data are included. Lastly, but not the least, the chapter ends with the 

analysis of the validity and reliability of the study.  

Chapter 1. 

Introduction 

Chapter 3. 

Corporate identity 

Chapter 2. 

Clusters and brands 

Chapter 4. 

Research methodology 

Chapter 5. 

Empirical analysis and findings 

Chapter 6. 

Summary and conclusions 



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The fifth chapter is the chapter that the data collected is presented in a form of a case 

study. It firstly starts with an introduction of the cluster and then it analyzes the results 

of the qualitative research.   

 

In the first part of the last chapter of the study there is a short sum up of the purpose and 

the objectives of the research. Then, the main conclusions related to the findings are 

drawn and the managerial implications as well as future research are discussed. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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2. CLUSTERS AND BRANDS 

 

As the title suggests, this chapter will focus on defining two different concepts: clusters 

and brands. It will start by discussing the concept of clusters, their various definitions in 

the literature and the main elements that form them. After this will be covered, I will 

attempt to briefly introduce the concept behind the study and link it to the main subject 

of the study, that of identity. 

 

 

2.1 Definition of clusters 

 

In recent years, there have been great discussions regarding the phenomenon of 

globalisation and its impact on the business world. For some researchers globalisation 

can be translated into “end of geography”, the “death of distance” and the 

“delocalisation” of economic and social relationships (Martin & Sunley 2001). 

However, not all scholars share this view. On the contrarily, for some globalization is 

directly linked with the phenomenon of localization.  

 

According to Enright (2000) “[g]lobalisation can result in a geographic spread of 

economic activities over space, but it also can allow firms and locations with specific 

sources of competitive advantage to exploit their advantages over ever wider geographic 

areas, often, though not always, at the expense of other areas”. 

 

In addition, globalisation has brought both global market opportunities and also 

increasing pressure on the business organizations. The effects of globalisation were 

more intensely felt by the small and medium enterprises. Their main challenges can be 

restricted to two main actions. They could either try to transform and become more 

competitive (Fassoula, 2006). Or, due to their limited size, they can enter into 

cooperative relations with other SMEs and related partner institutions; thus taking 

advantage of the synergy effect. 

 



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In order to overcome their size limitation, but also to improve their productivity, 

innovativeness and overall competitiveness, the most viable solution for SMEs is to 

form clusters. 

 

It all started in 1890, when Marshall has identified in his paper “The Principles of 

Economics”, what he then named “industrial clusters” (Bergman & Feser 1999). His 

framework established a link between co-location by companies and economic 

efficiency, as companies would cluster in order to benefit from positive externalities 

associated with their respective activities. These local concentrations of economic 

specialization became an important characteristic of the industrial organization.  

 

The idea was further developed by a multitude of researchers in the industrial 

organizational literature, who believed that there was a strong connection between 

regional space, economic actors and innovation. The studies conducted in the Italian 

industry districts (qtd. in Andersson, Schwaag-Serger, Sörvik & Hansson 2004) in the 

1980s came to better prove the advantages that these types of structures add over the 

regional economies. 

 

However, it took 100 years until this phenomenon was defined. In his book, the 

Competitive Advantage of Nations, Porter (1990) aimed to change the understanding of 

the strategic factors, which promote innovation and economic growth. By factor 

conditions, Porter (1990) refers to the basic inputs that can create an environment that 

permits competition.  Factors that are generic across many industries can be a source of 

competitive disadvantage, but are diminishing as a source of advantage because many 

locations have them. Therefore, “to maximize the productivity, these factor inputs 

should have better efficiency, quality, and specialization to particular cluster areas” 

(Porter 2000: 20). 

 

In 1990, Porter further insisted that local competition creates incentives to imitate best 

practice and boost pressures to innovate, while also connecting the strengths of 

competition with the virtues of selective cooperation. In Porter’s (1990) view, local 

units, like clusters, have a significant role in increasing the competitiveness of 



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individual firms in spite of globalization and internationalization. Moreover, he argues 

that “the building of a “home base” within a nation, or within a region of a nation, 

represents the organizational foundation for global competitive advantage” (qtd. in 

Lazonick 1993). 

 

However, there is no universally valuable definition of clusters as the cluster has 

received various definitions over time. These definitions varied along the following 

dimensions: formal input-output or buyer-supplier linkages, geographic co-location, 

shared business related local institutions, and evidence of informal co-operative 

competition (Feser & Bergman 2000). According to Porter (1990) clusters tend to be 

localized in space, thus he provided the following definition of clusters: “[c]lusters are 

geographic concentrations of interconnected companies and institutions in a particular 

field”.  

 

Furthermore in 1998, Porter reconsiders the definition of clusters and states: “[a] cluster 

is a critical mass of companies in a particular location, whether it is a country, a state, a 

region or even a city”. Moreover, he suggests that clusters can take varying forms 

depending on their depth and sophistication. However, a group of companies and 

suppliers of specialized inputs, components, machinery and sources, and firms in related 

industries are the actors that most of the clusters are made (Porter, 1998:10). 

 

After a decade from this above definition of clusters, Porter (2008) has stated that the 

definition of clusters hasn’t changed. However, different clusters depend on their size, 

location and development stage. The definition that he gives to cluster at the 2008 

conference in Sweden is the following: “[a] cluster is a geographically proximate group 

of interconnected companies and associated institutions in a particular field, linked by 

commonalities and complementarities (external economies)”. 

 

There have been many scholars that have shown great interest in the domain and not all 

have shared Porter’s view. For example, Bergman and Feser (1999: 2) developed a 

cluster definition from an institutional concept to a functional one, without considering 

the value added of products. In their opinion "an industry cluster may be defined very 



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generally as a group of business enterprises and non-business organizations for whom 

membership within the group is an important element of each member firm's individual 

competitiveness”.  

 

To complete the lack of approach on the value added of products, Roelandt and den 

Hertog (1999) believe that "clusters are networks of production of strongly 

interdependent firms linked to each other in a value adding production chain”. In some 

cases, clusters also encompass strategic alliances with universities, research institutes, 

knowledge intensive business services, bridging institutions and consumers. 

 

As we have noticed from the previous definitions, clusters are made up of more than 

one element and various views seem to overlap. This makes it challenging to arrive at a 

central theme that defines what a cluster is and how it operates. In order to give a better 

understanding of the cluster, in the following subchapter, I aim to investigate and 

discuss the major characteristics of clusters. 

 

 

2.2. Main elements of clusters 

 

The primary elements essential for a cluster are: actors, trust and cooperation, 

knowledge sharing and innovation, entrepreneurship and networks (Frisillo 2007).  

 

2.2.1. Actors 

 

Although primarily driven by the efforts made by private companies and individuals, 

clusters are influenced by various actors, including research institutions, governments 

and other public institutions at national and regional levels.  

 

Companies  

 

In the most cases, the majority of clusters are formed by SMEs. In addition to the 

reasons already presented in the beginning of this chapter, clusters strengthen SMEs, in 



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the fact that they assist smaller companies in their development stages. Thus, SMEs can 

become more efficient and achieve economies of scale. 

 

In their study, Chung and Kanins (2001) found that small firms were some of the 

greatest beneficiaries of the increased revenue accruing to firms operating from cluster 

locations. According to Tallman, Jenkis, Henry and Pinch (2004), firms inside a cluster 

gain superior access to knowledge, which enables them to establish competitive 

advantage. In addition, smaller firms are able to take advantage of the increased number 

of customers who are drawn to the area by the reputations of the larger firms within the 

region, which allows small firms to more easily present their products/services to their 

intended market. 

 

Science Institutions 

 

However, a cluster is not solely developed around a group of companies. In many cases 

clusters have been gathered around a Research Institute or a University. As we will 

further see in this subchapter, innovation is a key point in a cluster life process. Thus, 

having a research centre in the same location is crucial for a cluster’s survival. 

 

Government 

 

Last, but not the least, clusters cannot function properly without the help of the 

Government. Both national and local Governments have considerable roles to play in 

the promotion of a clustering approach. Not only that they create the framework 

conditions, setting the rules for competition and promoting entrepreneurial spirit, but 

they also actively engage in, and promote, such an approach (Porter 1998). 

 

2.2.2. Trust and cooperation 

 

It is not only geographical concentrations of the SMEs operating in the same sector are 

determinants for producing “external economies”. But a cluster cannot develop 

successfully unless there is a trust relationship created across its members. 



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Trust is considered to be a key prerequisite involved in the knowledge sharing process. 

According to Maskell and Lorenzen (2004) if there is trust, then new markets begin to 

form as companies can share knowledge more freely, without worrying that they will 

not gain anything. Moreover, raising the level of trust between businesses that are 

cluster members is a strategic determination in the successful development of clusters. 

 

The other element, without which cluster cannot achieve economic advantage is 

cooperation. As a strategic alliance, companies inside clusters need to be open to each 

other and share all the risks involved. 

 

2.2.3. Knowledge sharing and innovation 

 

In recent years, there has been an advance in the research regarding companies 

resources, and according to business scholars, knowledge is the resource that can create 

competitive advantage. Creating knowledge is a primarily activity of the cluster. 

However, sharing knowledge and technology is the activity that enables clusters to 

develop and grow, while maintaining a competitive advantage. In addition, knowledge 

sharing especially when received from multiple sources, as in the case of clusters can 

help companies to reduce the uncertainty that is associated with innovative activities. 

 

It is stated that knowledge is the driving force behind innovation. Preissl and Solimene 

(qtd. in Karaev, Koh & Szamosi 2007) defined clusters as a set of interdependent 

organizations that contribute to the realizations of innovations in an economic sector or 

industry. They are completed by Enright’s (2000) view that states that “a cluster can 

generate, adapt or use various forms of technology”. Therefore, clusters can create 

technologic innovations that are vital in competing with other organizations.  

 

The ease of the clusters in being innovative is also drawn from the fact that having a 

higher number of actors that are closer to the market, then they also know exactly the 

market and its needs.  

 



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2.2.4. Entrepreneurship 

 

The business literature, advocates the need of a certain business environment that can 

foster competition and economical growth. This type of environment is necessary for 

the cluster development and is a precondition for its formation. According to Love, 

Edwards and Irani (2004), the organizations that are based on learning require an 

environment where experimenting with new approaches is encouraged and errors are 

not perceived as failures. In addition, Castillo and Fana (qtd. in Karaev, Koh & Szamosi 

2007) believe that clusters should be formed in a geographical area, which can be 

characterized by an entrepreneurial environment, which will further boost the 

competitiveness of the cluster. 

 

However, I believe that it should not only resume to the preexisting state before the 

formation of the cluster. The entrepreneurial environment should further develop and, 

for example, organizations within a cluster, as they can easily perceive unsatisfied needs 

in their geographical area and using the needed assets, skills, inputs, and staff, which are 

often readily available at the cluster location, can establish a new enterprise (Porter 

1998). 

 

2.2.5. Networks 

 

Networks have been defined in various ways.  According to Cook and Emerson (1978) 

a network is “a set of two or more connected exchange relationships that are positively 

and negatively linked”. However, a more recent approach to the concept is given by two 

of the most erudits IMP scholars,  Håkansson and Ford. According to them, a network is 

”a structure where a number of nodes are related to each other by specific threads” 

Håkansson and Ford (2002). 

 

Although a bit confusing, the concept of networks will be cleared up with the analysis 

of its components. According to Håkansson & Snehota (1995), networks are sum of 

three elements: actors, resources and activities (see table 1). The actors are the 

companies that are part of the network. The actors are the one that are handling the 



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resources and the activities in the network in order to achieve their purpose. Resources 

can be understood as anything that has a known use for the actors. In R&D networks, 

the primarily resource of a network is knowledge. However, there are also tangible and 

other intangible resources. Activities are all the technical, commercial, administrative 

and other activities of firms which can connect them.  

 

Table 1. ARA in relationship and networks. (Håkansson & Snehota 1995: 45). 

 

              Level 

 

Factors 

Company Relationship Network 

Activities Activity 
structure 

Activity links Activity pattern 

Actors  Organisational 
structure 

Actor bonds Web of actors 

Resources Resource 
collection 

Resource ties Resource 
constellation 

 

Therefore, in this study, networks should be understood as the relationships between the 

members of the clusters, which participate in different activities, and use cluster 

resources.  

 

The elements presented in this subchapter are linked to each other and cannot achieve 

the same results if taken separately. However, there is another important factor that 

should be considered when taking about clusters and their competitiveness: the 

geographical proximity, which I will discuss in the next subchapter of the thesis. 

 

 

2.3. The importance and advantages of geographical proximity 

 

As a result of globalization, previous factors have either amplified in importance or 

disappeared. The case of increased attention that the localization has received has four 

bases: rational, economic, sociological and innovative approach. These are also the 

bases that the notion of cluster has emerged on. 

 



 27 

In an economy with rapid transportation, communication and accessible global markets, 

location is fundamental to competition. It has been widely recognized that changes in 

technology and competition have diminished many of the traditional roles of location. 

That is probably why “the first response to globalisation was to pursue these benefits by 

shifting activities to low-cost locations” (Porter 1998).  

 

However, proximity in geographic, cultural, and institutional terms allows special 

access, special relationships, better information, powerful incentives, and other 

opportunities for advantages in productivity and productivity growth that are difficult to 

tap from a distance (Porter 1998).  

 

Clusters are often concentrated in particular geographic areas, and sometimes in a single 

city or metropolitan region. However, these locations are not randomly selected. 

According to Wolter (qtd. in Karaev, Koh & Szamosi 2007), “clusters will concentrate 

in a location only if that agglomeration brings benefits to them, which are greater than 

the costs of locating in the area.” 

 

Geographical proximity is considered to bring additional benefits to clusters. Some of 

these advantages are: higher specialization, innovation and knowledge transfer, which in 

turn, results in costs reduction and improved competitiveness for industrial sectors, 

regions and nations. Porter (1998) further notifies that SMEs which closely cooperate 

and compete, since a host of linkages among cluster members results in a whole greater 

than the sum of its parts. 

 

To start with, as a result of geographical proximity, communication between cluster 

members is strengthened and the exchange of knowledge is intensified. Moreover, face-

to-face interaction is cited in the literature as a motive for cluster growth. Local 

proximity to other firms allows them to cooperate and to adopt new technology and 

innovations rapidly, therefore increasing the overall efficiency of the production 

process.  

 



 28 

Local proximity can also be considered as a trigger for the sharing of tacit knowledge. 

As a result the adoption and implementation of innovations is more rapid. Bergman and 

Feser (1999) sustain this point of view and believe that although codified knowledge 

can be easily transferred today through a various mean of communication, in reality this 

is exchanged rather accidentally because the senders and the receivers are not aware of 

its relevance before they are involved in the communication process. Therefore, the tacit 

knowledge can be best transferred within clusters. 

 

Thinking in terms of cost reduction advantages, geographical proximity decreases the 

transaction costs, including the costs of negotiating and monitoring contracts and the 

costs associated with the potential for opportunistic behaviour. 

 

The transportation costs are reduced as well due to the shorter distances; therefore 

reducing the risks and the insurance costs (qtd. in Karaev, Koh & Szamosi 2007). 

According to the same authors, due to geographical proximity the costs for obtaining 

information could be significantly reduced, as it is easier to access information about 

cluster members and their specific competencies and reliability.  

 

I have already mentioned that clusters often include strategic alliances with universities, 

research institutes, suppliers of corporate services (brokers, consultants) and customers. 

In this case, proximity helps to establish co-operative linkages between companies by 

developing mutual learning and knowledge creation as knowledge can “spill over” 

between local firms due to the easier contact between them (qtd. in Karaev, Koh & 

Szamosi 2007). 

 

To sum up, industry clusters have become one of the most popular concepts in local and 

regional development research and practice. The phenomenon, once started in US has 

spread all across the globe with highly enthusiasm. 

 



 29 

2.4. Introduction to brands 

 

However, in the last century the business world has shifted towards a dimension where 

innovation and technology is not anymore the source of competitive advantage. The 

increasing competition and the growing amount of competitors using common 

technologies and innovations are pushing organizations to find more effective ways to 

be recognized.  

 

In order to protect themselves from the competition, companies have discovered another 

source of competitive advantage: brands. As Gossen and Gresham (2002) suggest, 

“branding is identifying or creating, and then exploiting, sustainable competitive 

advantage” (qtd. in Aderton & Nandan 2004). Branding is recognised as one of the key 

weapons for firms in fiercely competitive markets. Moreover, brand investment has 

been found to contribute to the attainment of positional advantages and hence 

performance (qtd. in Simms & Trott 2006). 

 

As I have already mentioned branding and the value that it can create for a company, I 

believe it is necessary to present the concept in detail. Therefore, the next sub-chapter is 

designed to answer the questions regarding the definition of the brand and its role. In 

addition, the sub-chapter will also present the evolution of branding in time, from 

product branding to corporate branding. Nonetheless, the concept of corporate branding 

will be discussed more in detail towards the end of the sub-chapter. 

 

The interest in brands is relatively new. Although some authors (Malaval 2001) claim 

that the origins of brands date back to the Gallo-Roman period, it was in the 1980s that 

it was marked as a turning point in the conception of brands. This was supported by the 

emergence of brands in activities which previously have resisted or were foreign to such 

concepts, for example industry, banking, the service sector, etc. (Kapferer 1996). 

 

Nowadays literature includes a great number of books and articles on branding. 

However, the abstract nature of the brand makes it difficult to define the notion 

accurately, which has raised questions and disagreement among brand experts. 



 30 

 

A brand may be defined from the consumers' perspective and/or from the brand owner's 

perspective. In addition, brands are sometimes defined in terms of their purpose, and 

sometimes described by their characteristics (Wood 2000). According to de Chernatony 

and Riley (1997), the brand has been defined around nine themes:  a legal instrument, a 

differentiating device, a company, an identity system, an image in consumer’s minds, a 

personality, a relationship, adding value and an evolving entity. These definitions of 

brand are emphasizing the concept either from the consumer’s point of view (output) or 

from the organization’s point of view (input). 

 

The differences in the brand definitions are different not only across scholars, but 

according to de Chernatony and Riley’s (1997) study, there is a gap between the way 

experts perceived brands and management practices towards branding.  

 

According to AMA’s dictionary of marketing terms (2008) a brand can be described as 

“a name, term, design, symbol, or any other feature that identifies one seller's good or 

service as distinct from those of other sellers”. However, this perception of brands has 

been criticised for being too product-oriented, with emphasis on visual features as 

differentiating mechanisms. These attributes, that identify a product and differentiate it 

from another, are considered by Keller (2003) brand elements.  

 

The concept of brand can be compared with that of an iceberg. A brand is not only 

formed by a logo, a name and advertising that sustain the product. Additionally, it is 

also formed by some unseen elements to the customers: values, intellect, commitment, 

high quality and culture. 

 

A 1955 article written by Gardner and Levy emphasizes on the meaning of brands in the 

following saying: "[a] brand name is more than the label employed to differentiate 

among manufacturers of a product. It is a complex symbol that represents a variety of 

ideas and attributes. It tells the consumer many things, not only by the way it sounds 

(and its literal meaning if it has one) but, more importantly, via the body of associations 

it has built up and acquired as a public object over a period of time". These associations 



 31 

have been acquired over time through continued investment from the company 

(Kapferer 1997: 25).  

From an output point of view “[a] brand is a set of mental associations, held by the 

customer, which add to the perceived value of a product or service (Kapferer 2004: 10). 

Moreover, it can be understood as a sign whose function is to disclose the hidden 

qualities of the product, which are inaccessible to contact and possibly those that are 

accessible through experience, but where the consumer does not want to take the risk of 

trying the product. Kapferer (1997: 26) states that in order for a brand to exist there 

should be a perceived risk associated with that good. Once the risk has disappeared the 

brand has no longer any benefit and the brand transforms from a source of value added 

in just a name on a product.  

 

The meanings and associations that brands carry about the products can be 

communicated in different ways. They may be the result of direct experience with the 

product, word of mouth communication about the product, or short-term promotions 

such as advertisements.  

 

In addition, King (1984) argued that brands succeed because they offer consumers 

added values that are communicated through advertising (qtd. in de Chernatony & 

McWilliam 1988). One of the brand’s purposes is to carry out information to the 

stakeholders. However, it is not enough for a market to have many named and packaged 

goods; these goods also need to be supported by advertising in order to communicate 

with the consumer (Kapferer 1997: 26). Moreover, Kapferer (1997: 46-7) argues that 

branding means more than just giving a brand name to a product or products: “brands 

are a direct consequence of the strategy of market segmentation and product 

differentiation”. 

 

According to Kapferer (1997: 29), brands can perform eight different functions that can 

benefit the customer. These eight functions can be grouped under three major groups: 

mechanical, which concern the essence of the brand, reducing the perceived risks and 

more pleasurable.  

 



 32 

Consumers perceive brands as having added values such as reducing the perceptions of 

social risk or project a personality that they want to identify themselves with.  

Nowadays, consumers also started building an emotional bond with brands, becoming 

friends with them, and are even said to be seduced to look alike, eat alike and be alike. 

Moreover, the theoretical and empirical literature can identify more various benefits that 

brands can bring to consumers. These benefits can be grouped in four different 

categories: functional benefits, price benefits, social benefits and emotional benefits.  

According to de Chernatony (2002: 116) the success of a brand depends on the extent to 

which the managerially defined values, their effective implementation by staff and their 

appreciation by customers harmonize. 

In addition, de Chernatony (2002: 116) has developed a brand triangle (figure 2) 

according to which, when consumers choose a brand, their primarily concern is rational, 

involving functional benefits that are linked to the product. The functional values are 

correlated to the emotional values. On top of this, to simplify the brand, a promise is 

communicated to the stakeholder, which can rapidly enable the latter into deciding how 

the product can bring value to him. Moreover, the extent to which the internal and the 

external components of the brand triangle are congruent gives the brand strength.  

 

Figure 2. The brand triangle. (de Chernatony 2002: 116). 

On the other hand, brands can bring a number of benefits to the company. The brand is 

considered to be an intangible asset to the organization and bring value. “Brand value is 

the value of the additional cash-flows generated by a product because it is identified 

with its brand” (qtd. in Calderon, Cervera & Molla 1997). In addition, Aaker (qtd. in 



 33 

Calderon, Cervera & Molla 1997) considers a brand value to be "[a] set of assets and 

liabilities linked to the brand, its name and symbol, which incorporate or diminish the 

value supplied by a product or service exchanged with the company's clients".  

Kapferer (1997: 31) believes that just as a brand diminishes the risk for a consumer, it 

diminished the risk for the company. In his view, if a brand is strong, it benefits from a 

high degree of loyalty and therefore its futures sales are stable. In addition, strong 

brands can also function as an entrance barrier for competition on a certain market, as it 

is considered a point of reference for the product (Kapferer 1997: 31). 

Therefore, brand value is of great importance not only regarding the financial 

significance when quantifying intangible assets but also because the brand is a core 

element in company’s strategy and management.  

With such success that brands are receiving, it was a natural step to extend the concept 

from product brand, to service brand, place brand, non-profit brand, political brand, 

national brand, industrial brand and last but not least corporate brand. As the present 

study will focus on branding an organization as a whole, I will shift my attention to the 

concept of corporate branding and try to explain in depth its meaning and its role. 

 

 

2.5. From product brand to corporate brand  

 

As presented in the previous subchapter, the main purpose of a brand is to add value to 

a product or service, with the purpose of creating brand preference and loyalty.  

 

The study of branding has traditionally been focused on the explanation of product 

brands, the focus of which is on the unique features associated with a particular item of 

a firm’s product portfolio. 

 

However, because of globalisation, as markets are becoming more complex and 

products and services are quickly imitated and homogenized, maintaining credible 

product differentiation has become more difficult requiring the positioning of the whole 



 34 

corporation rather than simply its products. As noted by Argenti and Druckenmiller 

(2004) in their study involving 20 senior communication officers of “Best Global 

Brands”, the change in product marketing has implied an increase of the corporate brand 

in comparison to the product brand. Corporate brands like Coca-Cola, Microsoft, IBM, 

GE and Nokia, have proved to be the top 5 highest valuable global brands in 2007.  

 

However, product branding remains closely linked, as according to the world’s most 

valuable brands survey (qtd. in van den Bosch, de Jong & Elving), 19 out of the 20 

companies listed, share the same product and corporate name. It is true that product 

brands continue to be successful in domains of relatively standardized mass 

consumption.  

 

Ward and Lee (2000) found that there was a shift by firms away from reliance on 

product brands to reliance on corporate and service brands (qtd. in Xie & Boggs 2006). 

Thus, the fast innovation, increased service levels and diminishing brand loyalty 

characterizing today’s marketplaces, have led to corporate branding becoming a 

strategic marketing tool (Morsing and Kristensen, 2001).  

 

Corporate branding, like corporate reputation, has come into the business spotlight in 

recent years, in fact, 2001 marking the debut of Business Week and Interbrand's ranking 

of the "Best Global Brands", which used a valuation methodology to assign dollar 

values to this important "intangible asset" of some of the largest global companies 

(Argenti & Drukenmiller 2004).  

 

Some consider that corporate branding is built on the tradition of product branding, in 

the need of creating differentiation and preference. However, corporate branding is very 

different from product branding (see table 2). 

 

Firstly, corporate branding is conducted at the company’s level, as opposed to the 

product or service level (Hatch and Schultz 2001). This means that corporate branding 

exposes the organization and its stakeholders to a larger extent. In addition, corporate 



 35 

branding tends to be more general, identifying broad themes that are easily agreed upon, 

whereas product branding is typically based on specific product qualities and benefits. 

 

Secondly, product branding focuses more on the consumer. Product branding is about 

getting brand recognition from the customer: Does the customer recognize the product? 

Does the product make sense to the customer?  Schultz & de Chernatony (2002) believe 

that “corporate branding provides a basis for a corporation to develop and express its 

distinctiveness through its consistent relationship with its stakeholders”. 

 

Table 2. How corporate branding differs from product branding. (Hatch & Schultz 
2001). 
 

 Product brands Corporate brands 

Focus attention on The product The company 

Managed by Middle manager CEO 

Attract attention and gain 

support of 

Customers Multiple stakeholders 

Delivered by Marketing Whole company 

Communications mix Marketing communications Total corporate 

communications 

Time horizon Short (life of product) Long (life of company) 

Importance to company Functional Strategic 

 

According to the marketing thinking, the stakeholders of the company resume only to 

customers and shareholders. However, once the organizational theorists have developed 

the branding literature, organizational members have been also introduced in the 

stakeholders’ category (Morsing & Kristensen 2001). Therefore, a company’s 

stakeholders are made up by employees, customers, investors, suppliers, partners, 

regulators and local communities. In addition, Schultz and de Chernatony (2002) 

suggested that unlike companies that pursue product brands, organizations that establish 

corporate brands are more dependent on the employees that deliver the brand promise. 

 



 36 

Thirdly, Balmer and Gray (2003) believe that corporate brands are fundamentally 

different from product brands in terms of disciplinary scope and management. In 

addition, Balmer (2001) states that the difference between product and corporate brand 

lays in the strategic focus and its implementation; which combines corporate strategy, 

corporate communications and corporate culture. Moreover, according to Ind (1997), 

corporate branding has three distinct features that are marketed different in concept and 

operation by the “standard” product branding.  

 

Although corporate branding is seen as being intangible, it becomes tangible with the 

message that it communicates and with the relationships that it develops with the 

stakeholders. Unlike product brands, which usually are intended towards specific 

stakeholders, the customers, corporate brands appeal to all the internal and external 

stakeholders of an organization. 

 

In addition, it is these messages and relationships that a corporation creates that make 

the corporate brand highly complex. For a corporate brand, corporate social 

responsibility should also be taken into consideration. In particular, the people that 

deliver brand messages and the organization’s ethical and social responsibility. Having 

communication and the right people to send the message for the corporate brand has 

been also argue by Harris and de Chernatony (2001).  

 

Hatch and Schultz (2001) believe that corporate branding is an alignment of three 

different elements: vision, culture and image that are coordinated by the top 

management so that there are no discrepancies between them and the message that the 

corporate brand conveys to its stakeholders. In addition Harris and de Chernatony 

(2001) believe that corporate branding requires a different management approach, as it 

needs cohesion in communication, consistency of approach and above all, the right 

people to deliver the right 'message'. Moreover, it should be noted that managerial 

responsibility for product brands usually rest in the middle-management marketing 

function, while corporate brands usually involve strategic considerations at top 

executive level. 

 



 37 

According to Hatch and Schultz (2003), product brands are relatively short-term, 

compared to corporate brands, which live both in the past and the future. According to 

Olins (qtd in Hatch & Schultz 2003), corporate brands are associated with heritage and 

articulate strategic visions of what is there to come.  

 

New ideologies in corporate branding suggest that corporate branding should not be 

viewed as merely a marketing-communication activity. While product brand relies on 

advertising, distribution, and communicated image to communicate a message to the 

customer, corporations should include corporate branding in the strategic framework. 

Thus, it will give the company a clear sense of direction and prove to be a competitive 

advantage. That is why corporate branding is more complex than product branding, as it 

requires simultaneous and effective interaction of strategic vision, organizational 

culture, and images.  

 

So far, I have presented a general insight in what the branding phenomenon means, and 

presented a comparison between two main applications of branding: product versus 

corporate. However, as the subject of the thesis is strongly related to corporate branding, 

the concept requires a better understanding. With this in mind, the next sub-chapter will 

investigate the definition and construct of corporate branding. 

 

 

2.6. Corporate brand - an analysis 

 

The reason for adopting a corporate brand has been described by de Chernatony (2006: 

32) as follows: “through building respect and trust with one of the organization’s 

offerings, consumers are more likely to accept the corporation’s promises about other 

offerings”. In addition, corporate branding emphasizes value through employees' 

involvement in relationship building and internally signals messages about desired 

culture and externally it reduces the information overload problems from line branding, 

decreasing customers' information processing costs. 

 



 38 

Over the years corporate branding has been viewed in many different ways: as a 

metaphor, a conceptual framework, a management process, a strategic tool-kit, a 

communication facilitator or an organizational business model (Schultz & de 

Chernatony 2002).  

 

What is important to know is that a corporate brand is not limited to a nice logo or to a 

powerful advertising. But, a corporate brand’s scope is to give an organization the sense 

of what it stands for. In addition, Keller (2003) states that corporate branding means that 

companies can express themselves in means different from their products or services.  

 

When dealing with corporate branding the following questions regarding the 

organization should be answered: what does the organization stand for, what are its 

ethical principles, how does it treat its employees, what are its attitudes towards 

customers, suppliers, the environment, etc (Morsing & Kristensen 2001). 

 

Ind (1997) suggested that a corporate brand is the sum of values that represent the 

organization. Moreover, a brand is seen to encapsulate the additional values that are 

inherent in or associated with the corporation and its products and services. 

 

A corporate brand conveys expectations about what it should be delivered in terms of 

products, services and customer experiences. Similar to product brands, corporate 

brands are seen as a guarantee of quality, as an insurance against risk of poor 

performance or financial risk.  

 

Taking into account the differences between the product and corporate brand presented 

in the last chapter and the ideas regarding the definition of corporate branding presented 

in this part of the study, the corporate brand definition can be rounded to the following: 

the process of communicating the values of the organization to its internal and external 

stakeholders, through marketing and corporate instruments. It is very important to have 

congruity between the values, their communication and the experiences that 

stakeholders actually undergo. 

 



 39 

According to Balmer (2001), corporate brands have a utility in several regards: they 

communicate the brand's values (often seen as a promise), they afford a means of 

differentiation from their competitors, and they enhance the esteem and loyalty in which 

the organization is held by its stakeholder groups. Others may see a corporate brand as a 

contract between the company and its key stakeholders, which demonstrate, unceasingly 

and over time, that it has delivered the promise (Balmer & Gray 2003). 

A successful corporate brand will enable the users and potential users to easily identify 

the benefits that they will receive by choosing that brand. Moreover, successful brands 

are internationally well known. Olins stated that corporate brands are often much well 

known than nations (qtd. in Melewar & Walker 2002). In addition, Aaker (1996) 

considers corporate brands as assets that are worth million of dollars to the organization. 

Therefore, having a well-developed corporate brand is crucial for some companies 

(Balmer 2001). 

However, when deciding to build a corporate brand, there is a concept that needs to be 

taken into consideration: corporate identity. The two concepts, although used 

interchangeably (Balmer 1998), are describing two different aspects from the process of 

branding in a company. As Rode (2004) has stated, corporate identity can be seen as the 

internal part of the corporate brand, without which the corporate brand cannot be 

consistent.  

On the other hand, Aaker and Joachimsthaler (2000: 45), talk about brand essence as 

part of identity: "the brand essence can be viewed as the glue that holds the core identity 

elements together".  

As key element for the whole business concept, the idea of corporate identity needs a 

more in depth discussion. Thus, the following chapter will aim to define the concept and 

its construct. In addition, another key point of the next chapter is to analyze the 

challenges that appear when trying to build an identity for a cluster. However, let’s first 

go through the main ideas of this chapter.  

To sum up, this chapter has introduced two concepts to its readers: clusters and brands. 

Clusters should be perceived as geographical concentrated companies, specialized in a 



 40 

certain field, which form with each other relationships of cooperation, knowledge 

sharing, based on trust. In addition, these clusters are characterized by entrepreneurship 

and innovation. 

A brand is a more complex concept, which has received great attention in the business 

literature. Firstly started as characteristics to products, the concept was quickly shared 

through various entities like services, organizations, countries, places and people. 

Brands are intangible resources for these entities, and actually act as mirrors for what 

the entity stands for. The main benefits from creating a brand stand in the fact that 

brands offer unique opportunities to achieve sustainable competitive advantage. 

 

 

 

 
 
 
 
 
 

 

 

 

 

 

 

 

 



 41 

3. CORPORATE IDENTITY 

 

The previous chapter has ended with a short dispute in arguments, regarding the 

relationship between the corporate brand and corporate identity. This chapter is meant 

to clear all these uncertainties, starting with the definition of corporate identity and 

going deeper into analyzing its elements.  

 

 

 3.1 Introduction to identity  

 

The term identity draws its roots from the psychological and sociological studies, where 

it is used to express the sense that a person has about his or herself. Moreover, identity 

is the features that makes one unique or at least to distinguish between one individual 

and another. The corporate identity concept refers to a series of attributes of the entity 

and address the questions “who am I?”. Thus, we can say that identity is linked with 

personality and character.  

 

As Mead suggested, identity is also linked to different roles that the entity has in the 

society (qtd. in Ashman & Winstanley 2007). Playing these different roles automatically 

translates in the fact that an entity has multiple identities. Inevitably these identities 

appear, disappear, reappear and alter over time depending upon individual situations 

and circumstances. Therefore, although the starting point for the construction of an 

identity is the individual consciousness, the environment that surrounds the entity, be it 

economical, political, social and cultural is an important factor that shapes the identity. 

 

Organizational identity is constructed on the same basis as the individual identity. That 

is why, in the organizational identity theory, many concepts come from psychological 

and sociological studies. Precursors in the study of organizational identity, Albert and 

Whetten (1985) believe that organizational identity is made up by a set of beliefs that 

are the most important, enduring (like the ability to be flexible in the organization) and 

distinctive (how the organization differ from others in ways of for example 



 42 

management) about the company. They add that the concept of identity appears in an 

organization once people in the organization start asking: “Who are we?”.  

 

Organizational identity refers to what members perceive, feel and think about their 

organizations, and it is view as a collective, commonly shared understanding of the 

organization’s distinctive values and characteristics. In addition, the identity of an 

organization is a critical perception of organizational members that guides and 

influences their interpretations of the strategic issues facing the organization. 

Furthermore, the organizational identity motivates individuals to support strategic goals 

and serves as a gauge against which organizational members evaluate and justify acting 

on issues facing the organization (qtd. in Dhalla 2007). 

 

However, similar to the individual identity, individuals in the organizations have 

multiple conceptualizations about “who we are”, based on personal experiences or on 

positions held in the organizational hierarchy. Moreover, Sillince (2006) was arguing 

that an organization could have multiple identities as the strength to specific resources 

that are crucial to resources based view and competitive advantage. 

The concept of corporate identity, which is actually the main focus of the chapter, as it 

is the key piece in constructing a corporate brand, although is keeping the same main 

ideas as the organizational identity, is different than the latter. The discussion of identity 

within the organizational literature has developed around the concept of organizational 

identity, while it is the marketing literature that focuses on corporate identity (Hatch & 

Schultz 1997). 

 

Well known scholars in the field of corporate identity, Balmer and Olins agree that 

corporate identity differs from organizational identity in the degree to which it is 

conceptualized as a function of leadership and by its focus on the visual (Hatch & 

Schultz 1997). The organizational literature has stressed more on the relationship of the 

employees with the organization, while the marketing literature has focused on the 

communication of the key message from the top management to the external 

stakeholders.  

 



 43 

The next sub-chapter will apply the marketing approach toward identity and examine in 

depth the definition and characteristics of corporate identity. 

 

 

3.2. The concept of corporate identity 

 

There has been an increased interest in the corporate identity concept in the recent 

years. However, there is still no clear definition of the corporate identity and there are 

misuse of the term to express the concept of brand, corporate brand and employee 

brand. (Melewar, Karaosmanoglu & Paterson 2005).  

 

According to Melewar and Jenkins (2002) a potential cause for this is that corporate 

identity has been associated with a wide range of functions in an organization, starting 

with business strategy, corporate culture and visual design, which are both 

interdependent and unique to every organization. As a result, the concept of corporate 

identity has different connotations to different stakeholders. A potential second cause is 

that the management of the corporate identity has a multi-disciplinary approach. This 

characteristic can be clearly seen from the statement that International Corporate 

Identity Group, an organization leaded by key scholars in this field has published 

(figure 3). 

  

 

"The Strathclyde Statement" 

 

Every organization has an identity. It articulates the corporate ethos, aims and values 
and presents a sense of individuality that can help to differentiate the organisation 
within its competitive environment. When well managed, corporate identity can be a 
powerful means of integrating the many disciplines and activities essential to an 
organisation's success. It can also provide the visual cohesion with each other and 
result in an image consistent with the organisation's defining ethos and character. 
 
By effectively managing its corporate identity an organisation can build 
understanding and commitment among its diverse stakeholders. This can be 
manifested in an ability to attract and retrain customers and employees, achieve 
strategic alliances, gain the support of financial markets and generate a sense of 
direction and purpose. Corporate identity is a strategic issue. 
 



 44 

Corporate identity differs from traditional brand marketing since it is concerned with 

all of an organisation's stakeholders and the multi-faceted way in which an 

organisation communicates. 

 

Figure 3. The Strathclyde Statement. (Balmer 2001). 

Another expressed difference regarding to corporate identity is the one between the 

opinions of practitioners and scholars. Seven distinct schools of thought have been 

identified and they broadly fall into two categories: practitioners and scholars (Balmer 

2001). Although the two opinions are very different in terms of thinking between the 

two groups, they do share a common view upon the corporate identity: that corporate 

identity is closely related to how a firm presents itself to the public. 

 

As it can be seen from table 3, the practitioners’ literature on corporate identity defines 

the concept from the visual arrangements of elements of the company, which focus on 

the corporate name and logo. In addition, the practitioners’ approach is process-oriented 

and is concerned with more tangible elements of identity. This school of thought 

emphasizes the importance of graphic design and argues that visual changes are massive 

catalysts for changes of every kind. But, its concentration on visual elements has made 

it overlook some important areas.  

On the other hand, the scholars take the definition of corporate identity to a higher level 

of abstraction, focusing on the intangible from a firm’s behavior to its reputation. The 

attention is focused on the question of strategy, culture and communication, namely the 

non-design aspect of corporate identity. They are more structured-oriented and address a 

number of mix components. 

 

 

 

 



 45 

Table 3. Definitions of corporate identity throughout the years. (Alessandri 2001). 

 



 46 

To conclude, there are four important features that characterize the corporate identity. 

Firstly, corporate identity is concerned with the reality of the corporation, most 

specifically the strategy, the philosophy, history, business scope, the products or 

services offered and its internal and external communications. Secondly, the concept is 

a multi-faceted one, which can be easily seen from the table below. Thirdly, the 

corporate identity of a corporation is based on its personality. It can be interpreted as an 

organization's ethos, aims and values that create a sense of individuality, which 

differentiate a brand. Fourthly, as defined by Melewar and Karaosmanoglu (2006), 

corporate identity is a presentation of the company that includes what makes an 

organization unique and it incorporates the organization’s communication, design, 

culture, behavior, structure, industry identity and strategy. It is thus intrinsically related 

to both the corporate personality and image.  

The above sum-up of the main features of corporate identity is an introductory part of 

my next sub-chapter, which will focus on describing the construct of the corporate 

identity. 

 

3.3. The corporate identity formation 

 
As presented before, there is no clear conception regarding what corporate identity 

really is. The same confusions appear in concern to the elements that form the corporate 

identity.  

 

In Markwick and Fill’s (1997) view, there are three components in the management of 

corporate identity: corporate image, corporate reputation and corporate personality.  The 

objective of corporate identity management is to form a favorable corporate image 

among an organization’s key stakeholders i.e. its employees, suppliers, customers and 

shareholders, which over time results in the acquisition of a favorable corporate 

reputation (Balmer and Wilson, 1998). 

 



 47 

However, it is important to differentiate between these three concepts and not to 

misunderstand these terms as elements that form the corporate identity of a company. 

But, they should be considered as consequences of the communicated corporate 

identity. Corporate image is actually the public perception of the organization, which 

can be easily described when answering at the following question: “What do others 

think we are?”. Corporate reputation is a reflection of the historical, accumulated 

impacts of previously observed identity cues and possible transactional experiences and 

it can answer at “What do we know about what others think we are?”.  

 

In another view, corporate identity is constructed form cohesively interconnected 

physical, operational and human elements of an organization. Melewar et al. (2005) 

consider that corporate identity is a sum of the following elements: corporate design, 

corporate culture, corporate communications, corporate behaviour, corporate structure, 

industry identity and corporate strategy, as seen in figure 4.  

 

This framework was drawn by the authors based on interviews with 32 individual from 

20 different companies. Their result has also shown that corporate identity is not fully 

understood as two main opinions have derived from their research. On one hand, 

corporate identity is seen as a marketing tool, while on the other hand it is seen as an 

inclusive concept that deals with every aspect of the company starting with strategy and 

ending with culture.  

 

The above-mentioned framework is based on the study that Melewar and Jenkins have 

established in 2002. At that time, there were only four elements that constitute the mix 

of corporate identity, namely: communication and visual identity, behaviour, corporate 

culture and market conditions. 

 



 48 

 

Figure 4. Corporate identity components. (Melewar and Karaosmanoglu 2005). 

 

Rode and Vallaster (2005) has studied the corporate branding for start-ups. In their view 

corporate identity is the internal part of corporate branding, where corporate identity is 

the sum of corporate culture, corporate design, corporate behaviour and corporate 

communication. As seen from figure 5, they consider corporate culture as being the 

central point in the corporate identity of a company, while the other three components 

are supporting elements of the core concept. 

 



 49 

 

Figure 5. Components of corporate identity. (Rode and Vallaster 2005). 

 

In their work, Leuthesser and Kohli (1997), consider corporate identity as referring to 

“the way in which an organization reveals its philosophy and strategy through 

communication, behaviour and symbolism.” This is supported by Birkigt and Staedler 

(qtd. in van Riel 1995: 30), who believe that corporate identity is the planned and 

operational self-presentation of a company, both internal and external, based on an 

agreed company philosophy. Moreover, they believe that the self-presentation can be 

expressed in three ways: behaviour, communication and symbolism, while the central 

part remains the philosophy.  

 

Symbolism is described as the aspect, which communicates a firm's corporate 

personality through visual means to stakeholders. It should be noted that symbolism 

doesn’t mean assigning a symbol to an organization. But a tool which increases the 

organization’s visibility. This will help the company to achieve identification, 

distinction and differentiation among stakeholders. 

 

Behaviour is a key element to the corporate identity mix, which relates to activities, 

actions, mannerisms of the internal members of an organization. Target groups will 

judge the company by its actions. 



 50 

  

Figure 6. The essence of corporate identity. 

 
Communication is the activity that primarily deals with transforming the corporate 

identity into corporate image and reputation. It primarily sends verbal and visual 

messages to the target group. Balmer and Wilson (1998) argue that the corporate 

communication should reflect the corporate personality, which is the essence of an 

organization’s corporate identity (figure 6). Their view is supported by van Riel (1995), 

who considers that all the three elements, namely symbolism, behavior and 

communication, have the source in the corporate personality. Therefore, understanding 

corporate personality should be interpreted as a prerequisite for understanding the 

corporate identity. Furthermore, corporate personality is seen as the total values and 

beliefs that an organization shares. This has been suggested several times by Olins 

(1994), who explained that the tangible manifestation of a corporate personality is its 

corporate identity. 

To further support the understanding of corporate identity, Balmer has developed 

Balmer’s Afinity Audit, which explains the driving forces that sustain the corporate 

identity. His research concludes that corporate identity formation is grounded in a basic 

social psychological process based on affinity.  

As seen in figure 7, Balmer’s Afinity Audit, is a four-step process that gains acces to the 

values and belief system of a corporation. Firstly, it needs to be defined the corporate 

mission and strategy of the company. Secondly, it should show the values and the belief 

system within the corporation. Thirdly, it should evaluate the values and belief system 



 51 

against the mission and strategy of the company. And lastly, there is the urge to nurture 

those values and beliefs which support the corporate mission and strategy. 

 

 

Figure 7. Balmer’s Afinity Audit. (Van Riel & Balmer 1997). 

To sum up, in order for a company to be successful and to use its corporate identity to 

gain competitive advantage, it first needs to have a clear corporate mission and 

philosophy and to understand its corporate personality. These three concepts will be 

further explained in the next sub-chapter of the paper. 

 

 

3.4. Corporate identity elements 

 

As I have presented in the above sub-chapter, there is no clear view on the formation of 

corporate identity. However, I believe that the core elements of the corporate identity lie 

in the philosophy and personality of the corporation. I consider the rest of the activities 



 52 

being support activities, which companies use in order for their corporate identity to 

reach the intended stakeholders. In order to better understand the concepts that form the 

corporate identity, I will analyze them one by one. 

 

3.4.1. Corporate philosophy 

 

Corporate philosophy is associated with the fundamental values and assumptions of a 

company created by senior management. The company’s philosophy directs decisions, 

policies, and actions and entails core motivating assumptions, principles, values, and 

belief. It is the organization’s business philosophy brings the company’s uniqueness to 

the corporate identity construct.  

 

According to Collins and Porras (qtd. in Simoes, Dibb & Fisk 2005), philosophy can be 

expressed in the mission statement to convey a sense of commonality and purpose. 

Furthermore, corporate mission is seen as the most important component of the 

corporate philosophy. Many practitioners consider the mission statement as the starting 

point for a corporate identity program. A mission statement has a general understanding 

as being a broad declaration of the organization’s purpose, goals and functions.  

According to Olins (1994) mission statements help managers to maintain the strategic 

decision and to remind the employees on what the organization is about.  

 

Both concepts, as Balmer (1995) sustains, represent the definition of a company's core 

competencies, its position on the market and the expresssed values of the corporate 

owner or of its chief executive and management board. It is also Balmer that stressed on 

the influence of a clear corporate mission and philosophy have on the success of brand 

management.  

 

3.4.2. Corporate personality 

 

Corporate personality refers to the ideologies inside an organization. These ideologies 

are revealed through the value systems and through the behaviour of the personnel. I 

believe that corporate personality has its main component the corporate culture of the 



 53 

organization. In addition, the business practices in general and the corporate strategy in 

particular, are other important characteristics of the personality of a corporation. 

 

Corporate culture 

 

Corporate culture has been formally defined as being “the pattern of basic assumptions 

that a given group has invented, discovered, or developed in learning to cope with the 

problems of external adaptation and internal integration, and that have worked well 

enough to be considered valid and, therefore, to be taught to new members as the 

correct way to perceive, think, and feel in relation to those problem.” (Schein 1984.) 

 

In addition to this definition, I also embrace the point of view that De Long and Fahey 

(2000) are suggesting, that an organizational culture consists of practices, norms and 

values. Often, the organizational culture has been regarded as an iceberg, where on its 

top are the practices, further down are the norms and deeply embedded are the values of 

the organization. Continuing on the same thinking path, the literature mentions that the 

organizational culture can be changed, but on the visible surface i.e. practices and 

norms.  

 

In this view, practices are the most visible elements that compose the organizational 

culture. They refer to repetitive employees’ behaviours for example how people interact 

with each other or with their clients and how they do certain tasks. In addition, the 

organizational norms can be both visible and invisible in the same time, as they derive 

from the values. They are mostly derived from the employees’ perceptions, it relates to 

the cognitive level of the human mind.  

 

The invisible part of the corporate culture consists of the values, this being the part that 

it is very difficult to change. However, as De Long and Fahey (2000) suggest, values 

can be reshaped. They see the organizational culture as a continuum. Values are at the 

basis of the corporate culture, and they have a great impact on the norms. In turn, the 

norms help to design the organizational practices. Starting from these assumptions, 



 54 

managers, in their need to change a company’s values, they work on changing the 

practices and norms in a company. 

 

Corporate strategy 

 

Porter (1998) referred to corporate strategy as “what makes the corporate whole add up 

to more than its business parts”. According to Melewar et al (2005), corporate strategy 

is the blueprint of the firms' fundamental objectives and strategies for competing in their 

given markets. It is built on core competencies of the corporation, which makes the 

organization compete succesfully. Corporate strategy sets the direction for the 

management and the employees of the company. It is practiclly the vision of the 

company translated into action. A strategy is based on a specific goal. Thus, it should 

concentrate efforts and investments to achieve the set goal. Strategies can be set for a 

different periods of time. However, they should provide consistency for the company. 

Last, but not the least, a corporate strategy should ensure flexibility, which means that a 

strategy should ensure the predication of change and adaptation according to different 

situation of the company. 

 

In conclusion, corporate identity is a sum of two important elements: corporate 

philosophy and corporate personality. At their turn, these concepts can be divided into 

sub-elements, which I have analyzed in this sub-chapter. It will be this corporate 

identity framework that I will further use in conducting the research. However, due to 

the nature of the subject of the study, there might be some challenges that need to be 

approached. Therefore, the next sub-chapter will try to address these challenges. 

 

 

3.5. Challenges to constructing a cluster identity 

 

So far in the thesis, I have been discussing the issue of corporate identity. However, 

with the appearance of the “new economy” there is a shift between the organization to 

the cluster.  

 



 55 

The concept of cluster identity might not be as simple as that of corporate identity. 

Similar to a corporation, as it is formed by many individuals, a cluster can be considered 

the sum of a number of corporations. Another similarity between the two concepts is the 

existance of a certain purpose. The existence of a shared sense of purpose is actually the 

core prerequisite for creating an identity for a collective, be it a firm or a cluster. 

 

It is important when two or more companies form an alliance to create a new corporate 

identity, and this new corporate identity must be nurtured in order to allow its various 

stakeholders to identify with the new strategic group. Similar to the situation when a 

new employee joins an organization, companies can face an unfamiliar corporate 

culture. Therefore it is important to identify the core values of the companies, and to 

recognize both potential synergies and area in which the corporate cultures may clash. 

 

In a cluster it is important to interpret the organisations perception of itself and others 

and how they identify other organisations as we, them and the others, as one part of 

identifying process and defining the boundaries of your organisation. Organizational 

identification arises when there is an acceptable level of ‘Me-We’ synchronization, a 

shared sense of purpose and destiny. In the same way, when organizations join together 

within a defined cluster boundary characterized by a shared sense of purpose a 

corresponding definition of a ‘We-Us’ synchronization applies on the organization 

cluster level. 

 

A cluster is considered to be the sum of three distinct elements actors, relationships and 

activities. At the organization level, the spirit of competition is much more emphasized 

than at the individual level. It is important to reiterate the fact that a cluster is a group of 

companies that want to achieve the same goal and enter in direct competition. However, 

the cluster is set between some boundaries. The actors in the cluster should realize that 

they are able reach their own goals if, and only if, the others also reach theirs.  

 

However, when talking about identification with the cluster, then the issue is escalated 

to a higher level. Organizations identify with the cluster when they perceive an overlap 



 56 

between cluster attributes and their own attributes. The corporations not only need to 

have common goals but also common values. 

 

In order to research the existence of a corporate identity and its contents, a research 

framework needs to be constructed. Therefore, the next sub-chapter of the thesis will be 

a synthesis of the reviewed literature and will conclude with a framework that will be 

used in the present research. 

 

 

3.6. Synthesis 

 

Due to rapid changes in the business world, creating a competitive advantage is a major 

concern of corporations. The acces to resources and the quality of them seem to be the 

core element of competitiveness for a company. In this way, two of the main adopted 

strategic operations will be discussed in my thesis. One of them is the strategic alliances 

that form between companies. The purpose of forming alliances can be based on various 

reasons. By far the most important in my opinion is the sharing of resources. According 

to the knowledge-based theory, knowledge is the most strategically significant resource 

of a firm.  

 

However, there is another core resource of the company that has received attention in 

the literature and is considered as being a source for sustainable competitive advantage: 

corporate identity. As Balmer (1998) believes, corporate identity is an important 

corporate asset, representing the firm’s ethics, goals and values, that differentiate the 

firm from its competitors. 

  

The subject of the thesis encorporate both concepts and aims to investigate the existence 

and the components of the cluster identity. In order to conduct the reasearch, I have 

initiated a previous literature review on both subjects.  

 

In the first theoretical chapter, I have addressed the concept of cluster and its elements, 

as well as general views about the brand. It was in the second chapter of the thesis that I 



 57 

started to narrow down the subject and approach more in depth the concept of corporate 

identity, its formation and its construct. 

 

As an outcome of the theoretical review, the following theoretical framework has been 

built (see figure 8). 

 

As it can be seen from figure 8, the center of the clusters are the actors, the SMEs, 

research institutes and governments that are a part of the cluster. They are bound 

together by the main elements of the clusters, which were previously discussed: 

knowledge sharing and innocation, trust and cooperation, entrepreneurship and 

networks.  

 

It is important to know that these actors share a common cluster philosophy based on 

their fundamental values of the cluster. An element of the philosophy is the cluster 

mission, which is usually communicated to the stakeholders through the mission 

statement. The next element that add to the mission, in order to create the philosophy is 

the cluster vision, which is also represented in the figure. 

 

Going up to the next level, it is the corporate personality of the cluster. In the current 

study, personality is understood as a sum of two important factors: the culture and the 

strategy of the cluster. According to Balmer (1995) the main concern for management is 

that these cultures and the resulting behavior of organizational members should reflect 

the organization’s personality. 

 

The last square in the framework, which can be interpreted as a sum of the other 

presented factors, stands the cluster identity.  As mentioned before, corporate identity 

has been identified in the literature as a potential resource for creating competitive 

advantage. As Rowden (2000) suggests, the greatest benefit for having a clear identity is 

that the cluster is seen to be different, because it makes it visible and separates it from 

the others. 

 

 



 58 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Figure 8. Theoretical framework of the study. 

 

So far, the paper has been following the theoretical objectives of the thesis. Going 

further, the next chapters will focus on the research itself and will aim to answer to the 

empirical objective that was set in the introductory part of the paper. 

 

 

 

 

CLUSTER IDENTITY 

Cluster personality 

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Cluster philosophy 

                         Knowledge sharing  

 

                                    Innovation 

 

 

 

 

 

 

 

                                   Cooperation  

                                       Network  

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Corporate 
 
 
 

Identity 

SME 

Corporate 
 
 
 

Identity 

SME 

 
 
Trust 

 

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4. RESEARCH METHODOLOGIES 

 

After the literature review, this chapter serves as a mean to describe the research 

methodology that will be used for conducting this research. It will first mention the 

research design and the data collection methods and then it will bring up the issues of 

validity and reliability. 

 

 

4.1. Research design 

 

There are two main research approaches within social sciences: quantitative and 

qualitative method (Yin 1994). A quantitative method is formalized and structured and 

has the purpose to make generalizations, based on the processed results of the 

investigation. The results of a quantitative research are measurable and can be easily 

presentable in figures. On the other hand, qualitative methods engage researcher’s 

attitude, interpretation and intuitive understanding, which are not subject to 

quantification and quantitative analyses. To give a better understanding of the 

differences between the two methods, the following table (4) was established: 

 

Table 4. Main differences between quantitative and qualitative methods. (Malhotra & 

Birks 2007).  

 

Quantitative method of research is 

associated with: 

• Seeks to quantify data  

• Large scale studies 

• Answer specific hypothesis 

• Use statistical analysis 

Qualitative method of research is 

associated with: 

• Words as unit of analysis 

• Description 

• Small-scale studies 

• Holistic perspective 

• An emergent research design 



 60 

 
The emphasis on this thesis has been placed on a qualitative method where a more 

detailed investigation is carried out to gain a deeper understanding on specific 

situations. The situations investigated under qualitative studies are typically “banal” or 

normal ones, reflective of the everyday life of organizations. Therefore a main task for 

qualitative studies is to explain the way people in certain situations understand, account 

for, take action and manage their day-to-day situation (Miles & Huberman 1994: 7). 

 

Qualitative research aims to produce rounded understandings based on the rich, 

contextual and detailed data as in qualitative analysis the analysis is done with words. 

These words are then organized to allow the researcher to contrast, compare, analyze 

and draw out pattern based on them. The researcher plays a key role in the research as 

he attempts to capture data on the perceptions of local actors “from the inside” through 

a process of deep attentiveness, of empathetic understanding of suspending or 

“bracketing” preconceptions about the topics under discussion. (Miles & Huberman 

1994: 6-7).  

 

 

4.2. Research strategy 

 

The decision to use qualitative method in the present thesis implies als