Secret Capitals of Small Business – Clusters that Work

Helicopters, guns, cardiac devices, weight-loss centers, and more.

Most business capitals shout their names from the hilltops—literally, in the case of Hollywood. Everyone knows which industry dominates that town, and which ones rule Detroit and Houston. But how many could name the capital of socks? Or medical imaging technology? Or firearms? These are among dozens of hidden capitals of vital U.S. industries, each populated by and dependent upon dozens of small companies that both compete and collaborate.

This idea of industry capitals, or "clusters," as academics call them, might seem like a quaint tourist draw for small towns, an excuse, say, for Gilroy, Calif., to throw its annual garlic festival. But they serve an important function in the economy. Overlapping businesses in the same region gain a number of advantages, drawing in more suppliers and customers along with financial institutions that understand the industry. Meanwhile, the labor pool grows to include more workers with special skills and experience. Even on a local scale, sticking together makes economic sense: An "auto mile" of car dealerships or an entertainment district with bars and restaurants can draw more customers, share parking, and pool its marketing dollars to promote the neighborhood.

Full Story: http://www.fortune.com/fortune/smallbusiness/articles/0,15114,1095013,00.html