(2) SME enterprises work on low cost labour, traditional skills, technological obsolescence, change in techniques, leaving the enterprises far behind and firms who isolate themselves will not be able to cope with these problems individually.
(3) Research findings in the trend of development in the field of SME have recognized the importance of social and inter-organizational linkages with which a small firm is linked. These linkages help to provide various types of technical, commercial and legal services. This enables the SMEs to overcome some of their inherent disadvantages like economies of scale, sourcing and acquisition of technology and specialized production functions.
(4) Industrial districts functioning on somewhat similar lines have shown marked improvement in economic competitiveness. The pattern of inter-firm collaboration both at horizontal and vertical levels raise technical know-how, accelerate innovation and improve the ability of small producers to respond to external market developments.
(5) Where large number of industrial units is located producing somewhat similar products with varying degrees of quality levels cannot be defined as cluster groups because of the following deficiencies:
a. These are promoted by the initiative of some institutions like SIDBI and are mainly industries enterprises;
b. The efforts are mainly on technology and integration of various other factors is not in their agenda;
c. The limited initiatives in technology are in isolation, and
d. The involvement of all the beneficiary firms in all the initiatives is quite limited.