Educational institutions, trade associations, and government and regulatory agencies are part of the cluster's environment. Clusters are not unique to any one industry, and are present in both rural and urban areas. Although Silicon Valley is the poster cluster of the digital economy, firms in other industries tend to locate near their competition. Hollywood in motion pictures, Detroit in auto manufacturing, and Wall Street in financial services are examples of clusters. Yet several recent studies assert that high tech may have a greater tendency to cluster than other industries.
Clusters develop spontaneously when surrounded by the right resources.
Knowledge, specialized labor, and capital enable companies to expand and new ventures to form. Cluster growth is a self-reinforcing cycle. As one company's success brings new suppliers or inspires cooperation with local institutions, other companies are drawn to the area. The forces that lead to clustering include the attraction of nearby suppliers and customers, access to individuals with specialized skills and knowledge spillovers. When one firm makes an investment to develop a new product or process, a portion of the knowledge generated may be transmitted, or spill over, to competitors, through the informal networks or job-hopping of employees.