The Effects of Clustering and Entrepreneurship on Industries and Regions

Brown, Michael

The Effects of Clustering and Entrepreneurship on Industries and Regions

Persistent URL

http://hdl.handle.net/10456/26249

Author(s)

Brown, Michael

Date Issued

April 4, 2012

Abstract

Economic clustering occurs when several companies in the same industry are operating within the same geographic region. These firms can be linked through competition, the supply chain, or in other indirect relationships. The resulting clustering effect has a unique effect on the firms, the industry, and the geographic location where the cluster is located. These results are almost impossible for an individual firm to achieve and are due largely to the economic environment created by clustering and the competition and cooperation that ensues. Clustering has become much more prominent in the business world since the start of the twentieth century, although much of the economic analysis of clustering did not begin until the latter half of the 1900’s. This paper shows how a cluster is formed and how it interacts with and shapes the region around it and its industry as a whole. Finally, it examines two of the best known U.S. cluster regions: Silicon Valley and Detroit. This case study and comparison will show the economic theories of clustering reviewed in this paper in effect in the real world.

First Reader(s)

Nonnenmacher, Tomas W.