ABSTRACT
Introduction In this age of ubiquitous broadband connectivity, one might expect that the effect of separation distance on communication might have disappeared or at least be diminished. If this is true, then one of its effects would be to disarm the arguments for similar firms, especially those newly formed and technology-based, to cluster geographically. Now there are many arguments for the benefits of geographic clustering, not the least of which is that a concentration of firms will attract resources, particularly of the human kind into an area. Still, the potential for synergy among like firms is considered a strong factor for locating in what often becomes a high rent district. It is widely believed that propinquity will stimulate communication and scientific exchange among firms, especially among small firms formed on the basis of a common technology. This is one of the basic premises supporting the argument for the geographic clustering of newly-formed high technology firms (Powell et al. 1996). Extensive research in recent years has demonstrated economic benefits for firms sharing a common technology within the same geographic cluster. Researchers identify different benefits to be derived from clustering. It will be easier to attract specialized staff, because the qualified pool of applicants is much larger. It is also easier to find venture capital, suppliers, and support services within a cluster (Saxenian 1994). Claims have also been made for the synergistic benefits of firms sharing scientific knowledge, especially if there are university laboratories near the cluster (Saxenian 1994). Several studies have inferred inter-firm communication from the evidence of co-publishing and co-patenting across firms, (Schilling and Phelps 2005, Porter and Powell 2006, Porter et al. 2005, Powell et al. 1996). This is certainly a valid and effective way of detecting inter-firm communication, however a good amount of scientific exchange may occur that does not result in such products and does not therefore appear in such publicly accessible records. This less formal scientific exchange across firms, while resulting in a patent or paper, may still produce value for the communicating companies. Of course, the arguments for communication being related to proximity, in other contexts have been around for a long time. Allen (Allen and Henn 2006),
for example, has shown the probability of regular technical communication among engineers to decline as the inverse square of the distance between their work stations. Of course, this decline was predicated on the need for face-to-face contact. So it does nothing to dispel the belief that modern media have diminished that need. This is in spite of the fact, that Allen and Hauptman (1987) showed face-to-face to be the preferred medium for complex or abstract messages, such as those typifying scientific communication. We are now in a new millennium and their work is more than 20 years old. Technology has advanced since their time and, probably more importantly, a new generation of scientists, more at home with modern media, has arrived on the scene. So today we may find less need for companies to cluster geographically. Scientists can potentially communicate effectively across firms through media other than face-to-face. Many contemporary observers are now telling us that the day has arrived when we can forget about distance in its effect on communication. In fact, an eminent economist, Frances Cairncross has declared (in the title of her book) that distance is dead, ‘new communications technologies are rapidly obliterating distance as a relevant factor in how we conduct our business and personal lives’ (Cairncross 2001).
