What to Know About Locating in a Cluster

As a study of two industry clusters in Denmark shows, factors that can make clusters attractive — easy people movement and knowledge spillovers — can also make it harder for inpidual companies to retain proprietary knowledge.

Willy C. Shih and Sen Chai

FALL 2015

There is ample evidence that geography matters for innovation. Innovation flourishes when workers are in close proximity to each other, where face-to-face encounters and job changes foster the flow of knowledge and the exchange of ideas. As Michael E. Porter of Harvard Business School and other scholars have noted, many companies choose to locate in industry clusters — regional concentrations involving a particular industry — on the presumption ...