Explaining industrial agglomeration: The case of the British high-fidelity industry

This paper examines the insights into debates about regional agglomeration provided by the British high-fidelity industry (BHFI). This geographical cluster of small specialist companies displays world leadership in the sphere of high-quality sound reproduction but only weak elements of institutional thickness, and limited inter-firm interactions. There is, however, some evidence in this industry of collective learning, untraded interdependencies and indirect institutional support in the form of government infrastructure in previous decades. Localised interdependencies, both of the traded and the untraded kind, play an important role in fostering clustering of these hi-fi companies but much of the propinquity can be attributed to inertia effects as founders establish new businesses near their old companies and, or, their place of residence. The clustering of hi-fi companies in the south-east is therefore largely a reflection of the concentration of elite technical personnel in this region. The analysis suggests that, in the case of the BHFI, the key elements of institutional thickness are constituted by the firm and the labour market.