Abstract
This paper integrates knowledge-based theories of the firm with geograph-ical studies of industrial agglomeration to produce a model that helps explain the competitive advantages enjoyed by proximate firms located in geographical clusters. We propose a hierarchy of specialized knowledge stocks at both firm and cluster levels and suggest that the comparative advantage conferred by knowledge resources at each level is protected, in part, by asymmetries in knowledge flows from level to level. The paper argues that codified component knowledge is more easily spread than firm-specific architectural knowledge. Nevertheless, over time, agglomerations may develop a cluster-specific form of architectural knowledge that facilitates the rapid dissemination of knowledge throughout the cluster by increasing the learning capacity of proximate firms and thereby conferring cluster-specific competitive advantages.
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