Demand- and Supply-Side Agglomerations: Distinguishing between Fundamentally Different Manifestations of Geographic Concentration

31 Pages Posted: 27 Apr 2009  

Brian T. McCann

Purdue University - Krannert School of Management

Timothy B. Folta

Purdue University - Krannert School of Management

Abstract

Agglomeration research investigates the benefits that firms receive from locating in close geographic proximity. Despite a substantial surge in interest in this topic over the past 20 years, a lack of distinction among unique manifestations of spatial concentrations of similar firms threatens continuing progress in this stream of research. We argue that agglomerations of related firms that draw benefits from the supply-related externalities of increased access to specialized labour, specialized inputs, and knowledge spillovers are fundamentally different from those that draw benefits from heightened demand realized through reduction in consumer search costs. Extending agglomeration theory, we explicate the differences between these distinct phenomena, discuss how the nature of key theoretical relationships varies across these agglomeration types, and demonstrate significant implications for research. We discuss how the differences affect a host of theoretical relationships and empirical research decisions.

Suggested Citation

McCann, Brian T. and Folta, Timothy B., Demand- and Supply-Side Agglomerations: Distinguishing between Fundamentally Different Manifestations of Geographic Concentration. Journal of Management Studies, Vol. 46, Issue 3, pp. 362-392, May 2009. Available at SSRN: https://ssrn.com/abstract=1378332 or http://dx.doi.org/10.1111/j.1467-6486.2008.00815.x

Brian T. McCann (Contact Author)

Purdue University - Krannert School of Management ( email )

403 W. State Street
West Lafayette, IN 47907
United States

Timothy B. Folta

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States
765-494-9252 (Phone)

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