World Encyclopedia of Entrepreneurship
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World Encyclopedia of Entrepreneurship

Edited by Léo-Paul Dana

This comprehensive reference work, written by some of the most eminent academics in the field, contains entries on numerous aspects of entrepreneurship.
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Chapter 21: Geographic Proximity in Entrepreneurship

Udo Staber


Udo Staber It has become an axiom in research on entrepreneurship that certain key assets in the entrepreneurial process, such as knowledge, informal rules and creative potential, acquire value only in the context of interpersonal and interorganizational exchange. Accordingly, much research has focused on social networks as a basic unit of analysis and an important competitive entity in the entrepreneurial process (Thornton, 1999). Drawing on insights in economic geography (Dicken and Malmberg, 2001) and regional development (Polenske, 2004), the social network view of entrepreneurship has recently been extended to the level of the organizational community as the resource environment in which networks evolve and in which knowledge concerning available business opportunities, institution building and so forth is created and diffused. Such communities, which are variously referred to as business clusters, industrial districts, hot spots, learning regions, or entrepreneurial districts, tend to be spatially concentrated (Porter, 2000; Sorenson and Audia, 2000). Wellknown examples of clusters include textiles in Northern Italy, software in Silicon Valley, advertising in London and new media in New York. The argument that entrepreneurial networks evolve in a localized cluster of interdependent organizational populations marks an important step towards a more inclusive theory of entrepreneurship as a spatial phenomenon, to show that knowledge networks are not randomly distributed in space. Entrepreneurial activity occurs in clusters not merely because of the efficiency benefits of co-location, relative to the competitive pressures of location in densely populated areas. New organizations are founded more frequently in clusters also because these locations help...

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