Cluster Typologies and Firm Survival: Complementary and Substitutive Effects

Agglomerations, or clusters, are typically defined as the idea that firms can benefit from shared locations through mutual knowledge, labor pools, and suppliers, and have long been a subject of scholarly interest. However, research in geographic economics has identified a broad array of agglomeration externalities beyond such supply-side clusters, which problematizes the use of the term cluster to refer to any geographic grouping of firms. Clusters can be groups of firms from the same country ( country-of-origin clusters), demand side (clustering to lower search costs for customers), Jacobsian clusters (tight groups of diverse firms), internal (groupings of firms from the same parent company), or urban (focused in areas of high population density). Since the nature of inter-firm interactions should differ in each type of agglomeration, our study contributes to the agglomeration literature by identifying complementary and substitutive relationships between agglomeration typologies. Specifically, we extend prior work which has examined the mutual effects of Jacobsian and Marshallian externalities by attempting to answer our research question, i.e., what combination of agglomeration externalities consistently leads to firm survival? Using establishment-level data from the software and clothing industries in the state of Texas, we identify multiple combinations of cluster types (and their absence) which lead to firm survival on a consistent basis. The results find several combinations of causal mechanisms that lead to the equifinal outcome of firm survival. Our configurations exceed levels supported by prior literature with PRI scores over .7 and coverage scores between .05 and .109.https://digitalcommons.odu.edu/gradposters2023_business/1001/thumbnail.jp