New research presents a challenge to the widely-held belief that businesses benefit from locating where there is a cluster of like-minded companies. The study of the semi-conductor and pharmaceutical industry clusters found no financial advantage for companies located within clusters:
“…the author looked at the financial advantages, and costs, that clusters provided for firms throughout the life cycle of two innovative industries — semiconductors and pharmaceuticals. He examined 31 years of data on 194 publicly traded companies, which enabled him to see how clustered and nonclustered firms performed at various points in an industry’s life cycle. Surprisingly, the author found no clear evidence that clusters enhance a firm’s financial performance.”
Sounds like more research is needed, and the study does not rule out the non-financial benefits that may be realized with clustering strategies, but it does have implications an idea that has been widely accepted as an economic development truth.
Read more here via Place Marketing Group.