A New View on Management Decisions that Lead to Locating Facilities in Industrial Clusters

Abstract

Industrial clusters are geographical groupings of firms in a similar industry. Much work has gone into describing individual clusters and into understanding some of the forces that affect clusters. This paper coalesces this research into a typology of clusters that is based on the reasons for managers lo locate operations within a cluster. The three types of clusters are cost based, resources based, and innovation based Many clusters are a combination of these types of clusters. Cost-based clusters are easily supplanted by other lower cost locations, but innovation-based clusters are the most robust: This typology can be used by both managers and policy makers to improve economic decisions.