Does location matter? a study of automotive clusters in India

Abstract

Researchers have become increasingly interested in the agglomeration of firms into industry clusters and the effects of such clusters on firms. We analyze the effects of exposure to original equipment manufacturers (OEMs) and industry clusters on supplier performance, focusing on the avoidance of operations disruptions and the support of a smooth production ramp-up at the OEM, by assessing the suppliers of a multinational automotive OEM in India. We study how the exposure of suppliers to the focal OEM and to clusters affects the ability of suppliers to continuously provide their parts to the OEM within pre-agreed schedules and specifications.