Local IDEAs

Local Indicator Database for Economic Analysis

Anchor Firms and Clusters

Executive summary

The main purpose of this report is to assess the relative impacts of industrial clusters and anchor firms on economic prosperity. Industrial clusters are known to provide economic benefits as infrastructure, labour markets, and knowledge spill-overs are optimized by the close physical proximity of related firms and industries. Anchor firms are also understood to deliver wider economic advantages as they act as hubs in supply chains, are more likely to be active in global trade, and invest more in research and development. This report uses a range of data sources in order to identify industrial clusters and anchor firms and assess their relative impact on economic outcomes. The sectors chosen for this study are food manufacturing, auto manufacturing, information and communications technologies (ICT) manufacturing, and bio-pharma. Secondary aims of this report include assessing whether specific physical proximity to an anchor firm delivers superior outcomes for smaller businesses as well as benchmarking Canadian clusters and anchor firms against their American counterparts.

The results of the analysis strongly suggest that both anchor firms as well as clusters boost economic performance. Furthermore, their effects are complementary when they are found to exist together in the same region. Specifically, incomes are significantly higher in regions that possess both a cluster and at least one anchor firm. Rates of educational attainment in the labour force (of related industries) are also higher. This suggests that there may be additional knowledge spill-over effects within regions with clusters and anchor firms. The main caveat attached to these results is that there are differences between the specific industries included in the study. The benefits of clustering and the impact of anchor firms are numerous and so it needs to be recognized that these benefits will be weighted differently by industry.

An additional finding of this report is that specific physical distance between smaller firms and anchor firms does not appear to have significant impacts on start-up rates and failure rates of businesses. The results of the analysis may be due to the relatively short (10 years) time frame rather than anything on a systematic level. That being said there are clear benefits to clustering in general, but these effects appear stronger at the regional level rather than by any specific unit of distance. This suggests that labour market and knowledge spillover effects, which tend to be regional in nature, are more powerful than logistical effects, which tend to be associated with specific distances and travel costs.

A third important finding of this report is that Canadian clusters that contain anchor firms compare favourably with their American equivalents. At least one Canadian cluster in each of the four industries ranks in the top ten in terms of total employment when US regions are included in the analysis. Additionally, incomes in Canadian clusters are generally in the same range as they are in American ones. There are not, however, any world leading clusters in Canada as their are in the US, such as Silicon Valley (ICT), Boston (bio-pharma), or Detroit (auto manufacturing). The closest Canada comes in this respect is the food manufacturing cluster in Toronto which ranks second in terms of size in North America after Chicago.

Download the report here:

Spencer, G.M. 2013. The economic impact of anchor firms and industrial clusters: an analysis of Canadian and American manufacturing firms and clusters. Industry Canada.

One comment on “Anchor Firms and Clusters

  1. Pingback: Cluster Research | Local IDEAs

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This entry was posted on May 28, 2014 by in Clusters, Data, Reports & Publications and tagged , , , .
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