Hubs and nodes is a geographic model explaining how linked regions can cooperate to fulfill elements of an industry's

value chain A value chain is a progression of activities that a firm operating in a specific industry performs in order to deliver a valuable product (i.e., good and/or service) to the end customer. The concept comes through business management and was fir ...

and collectively gain sufficient mass to drive

innovation Innovation is the practical implementation of ideas that result in the introduction of new goods or services or improvement in offering goods or services. ISO TC 279 in the standard ISO 56000:2020 defines innovation as "a new or changed entit ...

growth. The model of hubs and nodes builds on Porter's cluster model which served well in the past, but as businesses and regions around the world have adjusted to the realities of

globalization Globalization, or globalisation (English in the Commonwealth of Nations, Commonwealth English; American and British English spelling differences#-ise, -ize (-isation, -ization), see spelling differences), is the process of foreign relation ...

, the concept of clusters is becoming outdated.

Disaggregation of clusters

Companies are realizing that they may not require a particular stage of production to be in close geographic proximity. As barriers to long-distance national and global transactions have fallen through advances in

technology Technology is the application of knowledge to reach practical goals in a specifiable and Reproducibility, reproducible way. The word ''technology'' may also mean the product of such an endeavor. The use of technology is widely prevalent in me ...

and

logistics Logistics is generally the detailed organization and implementation of a complex operation. In a general business sense, logistics manages the flow of goods between the point of origin and the point of consumption to meet the requirements of ...

, such as the growth of the

Internet The Internet (or internet) is the global system of interconnected computer networks that uses the Internet protocol suite (TCP/IP) to communicate between networks and devices. It is a '' network of networks'' that consists of private, pub ...

and overnight package services, it has become increasingly possible to relocate operations such as

research Research is " creative and systematic work undertaken to increase the stock of knowledge". It involves the collection, organization and analysis of evidence to increase understanding of a topic, characterized by a particular attentiveness ...

product development In business and engineering, new product development (NPD) covers the complete process of bringing a new product to market, renewing an existing product or introducing a product in a new market. A central aspect of NPD is product design, along w ...

, and

manufacturing Manufacturing is the creation or production of goods with the help of equipment, labor, machines, tools, and chemical or biological processing or formulation. It is the essence of secondary sector of the economy. The term may refer to ...

to countries and regions with relevant expertise and lower costs. It is common among

consumer goods A final good or consumer good is a final product ready for sale that is used by the consumer to satisfy current wants or needs, unlike a intermediate good, which is used to produce other goods. A microwave oven or a bicycle is a final good, b ...

, for example, to have concept generation centered in one locale, product testing and refinement in another, and manufacturing and distribution in still others. Elements of development, production and distribution are being more and more completed beyond the borders of historical clusters. As more companies progress beyond the cluster model, they increasingly expand and diversify their operations to locations where their investments will be most profitable. For companies adequately prepared for the rapid globalization process, their research and development, manufacturing, and distribution stages fare better as these businesses can reduce their costs and potentially realize new efficiencies, and increased speeds of product development. The spirit of the cluster model may remain intact, and the various stages of production will still be shared by several different entities, but geographical proximity need no longer bind the entities together {{DEFAULTSORT:Hubs And Nodes Economic geography