Rising Giants: Industrial Clusters Are Changing the Face of Chinese Manufacturing

Introduction:

Over the past 30 years, most economists have come to believe that advanced economies are less likely to be driven by strong, lone companies than by complex ecosystems, or clusters, centered in a particular industrial sector. The evidence shows that outsized economic growth often requires an outsized pool of talent and specialized capital in a single geographical region. Intuitively, this makes sense -- the public might like the idea of the heroic entrepreneur, but from Wall Street to Madison Avenue to Silicon Valley, the biggest success stories in American business are often less about an individual's or company's triumphs than the strength of interdependent, regional communities within an industry.

Teaching each other, helping each other, pushing each other -- the evidence all suggests that companies tend to profit from proximity, though what is good for business in general may not always maximize the fortunes of a particular company.

Source: Knowledge@Wharton

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