In Chapter 8 we discuss why companies want to locate near competitors and describe 9 industry sectors that do so– from fast food to wine making to software firms (see Table 8.3). The Wall Street Journal (Aug.22,2011) has just run a major article on this very topic, with the opening line: “Location matters”. The Journal points out that as a cluster grows, it brings benefits to all firms, including challenges to each other to innovate. “Specialization in a region increases patents, business formation and higher wages”, says one Harvard prof.
Here are 6 cities, according to the Journal, that are thriving as hubs for specific industries:
1. Indianapolis –Life Sciences. The former rust-belt city is in the center of a statewide life sciences boom, home to 825 
medical device companies, drug manufacturers and research labs. Eli Lilly and Well-Point lead the way, with $60 million in seed money to new startups.
2. San Antonio–Cybersecurity. There are over 80 IT and cyber-related businesses, in part because of abundant grads from UTSA’s Institute for Cyber Security.
3. Albany, NY–Nanotechnology. The state capital boasts 4,000 workers in the industry, thanks to funding from IBM and the presence of the U. of Albany’s College of Nanoscale Science.
4. Kansas City–Information Technology. Called the “Silicone Prairie”, the town is home to Sprint Nextel, Cerner, and to 2,900 more tech firms. Part of the lure is Google’s rollout of a high-speed fiber network, 100 times faster than current broadband. iCode’s founder calls the Google initiative “an excellent platform for innovation”.
5. Nashville, Health Care. With more than 250 health care companies in the city, there is a fertile ground for companies that make medical devices and patient care systems. “The entrepreneurial spirit is infectious”, says the IMI Health CEO.
6. Ogden,Utah–Outdoor Sports. The small town, 40 miles north of Salt Lake City, packs a concentrated punch in the outdoor and recreation industry. It offers a perfect spot to test new products and has a nearby airport with direct flights to Europe.
Discussion questions:
1. Why does clustering work?
2. Name some regions that used to be clusters and are no more.