Influencing Factors of Product Diversification and Innovation: An Exploration of Geographic Clustering and Product Breadth

Abstract

Numerous scholars have considered the effects of the geographical clustering or agglomeration of firms. However, the debate over the relationship between firm clustering and firm outcomes has yet to be resolved. Based on our analysis, we propose that firms that are located in clusters benefit from a broader product offering or diversification. However, we also predict that increases in cluster size, beyond a certain point, yields a reduction in product breadth. Our aim in this article is to propose a roadmap for future research on product diversification, to more fully explicate the previous mixed cluster-performance results and strategic marketing implications