Is Geography Destiny For New Ventures?

The search for novelty - that innovative and valuable product or service - is the essence of most technology-driven new ventures. Novel ideas that lead to the success of a new venture often combine knowledge, skills and ideas gleaned from the environment. This reasoning underpins a stream of research that has found that significant advantages accrue to ventures located in a geographic region in which a cluster of similar firms and supporting organizations are located. Specifically, ventures in a cluster benefit from a larger labor pool, specialized suppliers and knowledge spillovers. Benefits of being located in a cluster include improved access to capital, higher rates of survival, and more patenting and new product introductions.