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date: 27 January 2020

Abstract and Keywords

How important is location for successful regional and firm performance? To answer this question the first part of the chapter reviews studies using sophisticated methods for defining and mapping clusters—geographical concentrations of related industries, firms, and supporting institutions. These studies show the importance of clusters for entrepreneurship, innovation, and other performance dimensions. The second part of the chapter examines the relationship between location and firm strategy and performance. Location within a cluster by itself does not ensure that a firm will benefit. Thus, a firm’s strategic positioning and its location choices are interrelated. I offer a framework that takes into account the role of internal agglomerations (intra-firm linkages that are facilitated by geographical proximity) and external agglomerations (inter-firm linkages in clusters) on the location choices and performance of firms.

Keywords: firm location choices, defining and mapping clusters, internal agglomerations, external agglomerations, innovation

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