Technology clustering and their relationships with suppliers, buyers and producers of technology innovations possess many advantageous prerogatives for the span of the region. This results in agglomeration of economies, producing proximity-based beneficiary circumstances and opportunities for firms. Although sharing information has been simplified thanks to advancement of information technology, initial reluctance to share this knowledge give technology clusters the upper hand (Schilling, 2013). Therefore knowledge sharing is the primary resource for these clusters.
This transfer and exchange of knowledge from firm to firm becomes willing and malleable due to daily interaction. With high levels of interactions and frequency, complacent behaviors develop along with trust and reciprocity between firms. Technological spillovers then occur as research development becomes grounds for competence enhancing innovation.
A region that has a high saturation of innovation and productivity will incur attention from valuable assets such as talent, labor, services from distributors complement and rival firms that consistently challenge for better technology innovation. The domino effect continues as the increased revenue self-reinforces the cluster with better infrastructure, schools, and other goods and services.
However this high concentration of knowledge may have adverse effects. The highway of shared information becomes routine, that the firm risks negative externalities such as proprietary knowledge becoming victims of leaks, lack of pricing control over suppliers and buyers due to saturated market and competition space, and incurring rigidity for newer technology innovations (Schilling, 2013). Expensive housing, traffic congestion, and increased pollution become commonplace.
The diffusion of technology in these clusters and their base knowledge is reliant on context. Innovative activities may vary on the premise that knowledge concentration and degree of it is protected by copyrights and patents. Firm supplementers such as suppliers and market distributors respond to the communication and interaction channels of an industry. Intermittently, national laws, cultural behavior, population density, and infrastructure influence the level of effort, thus may only pertain to particular industries.