Abstract.
In many industries, production resides in a small number of highly concentrated regions; for example, several high tech industries cluster in Silicon Valley. Explanations for this phenomenon have focused on how the co-location of firms in an industry might increase the efficiency of production. In contrast, this article argues that industries cluster because entrepreneurs find it difficult to access the information and resources they require when they reside far from the sources of these valuable inputs. Since existing firms often represent the largest pools of these important factors, the current geographic distribution of production places important constraints on entrepreneurial activity. As a result, new foundings tend to arise in the same areas as existing ones, and hence reproduce the industrial geography. In support of this thesis, the article reviews empirical evidence from the shoe manufacturing and biotechnology industries.
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JEL Classification:
L11, M13, R30
Adapted from a plenary talk delivered at the 8th annual meetings of the International Schumpeter Society in Gainesville, FL. Constança Esteves and Lee Fleming provided comments useful to developing this written version.
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Sorenson, O. Social networks and industrial geography. J. Evol. Econ. 13, 513–527 (2003). https://doi.org/10.1007/s00191-003-0165-9
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DOI: https://doi.org/10.1007/s00191-003-0165-9