A Comparison of Clustering Dynamics in the British Broadcasting and Financial Services Industries

This paper compares patterns of industrial clustering in the British broadcasting and financial services industries. Recent trends of deregulation, rapid technological change, and globalization in both industries suggest the significant and increasing importance of clustering effects. This study examines the evidence. It investigates the effects of cluster strength on the growth of the firm and on rates of surviving entry. We find positive, large, and statistically significant clustering effects. In both industries: (a) incumbent firms located in a cluster that is strong in their own sub-sector of their industry tend to grow faster than average; and, (b) new firms are attracted by industry strength in certain sub-sectors in a particular region. The results for these largely mature service industries are very similar to those observed in earlier studies that have examined clustering patterns in newer high technology manufacturing industries.