On the Company We Keep: Combined Scale-and-Scope Externalities in the Growth of IT Industry Co-agglomerations

Most information technology (IT) industry clusters exhibit the co-agglomeration of several industries. We propose that the synergies between industries do not only consist of separate scale effects and scope effects. They also exhibit combined scale-and-scope effects or externalities, so the scale of one industry affects others´ growth. Our study analyzes the co-agglomeration of four IT industries in 3,142 counties in the United States. Using econometric methods, we find that the co- agglomerated computer manufacturing industry benefits the growth of the semiconductors manufacturing industry. Similarly, collocated firms in the semiconductors manufacturing and computer systems design industries appear to benefit each other. We find little evidence like this for the software publishing industry though. Our study offers policy implications for industrial development planners in the global economy.