The desire to build or upgrade a core competency is one reason entrepreneurial and other fast-growing firms often tend to locate close to their competitors. They form clusters geographic concentrations of interconnected companies and industries. Examples in the United States are computer technology in Silicon Valley in northern California; light aircraft in Wichita, Kansas; financial services in New York City; agricultural equipment in Iowa and Illinois; and home furniture in North Carolina. According to Michael Porter, clusters provide access to employees, suppliers, specialized information, and complementary products. Being close to one’s competitors makes it easier to measure and compare performance against rivals. Capabilities may thus be formed externally through a firm’s network resources. An example is the presence of many venture capitalists located in Silicon Valley who provide financial support and assistance to high-tech startup firms in the region. Employees from competitive firms in these clusters often socialize. As a result, companies learn from each other while competing with each other. Interestingly, research reveals that companies with core competencies have little to gain from locating in a cluster with other firms and therefore do not do so. In contrast, firms with the weakest technologies, human resources, training programs, suppliers, and distributors are strongly motivated to cluster. They have little to lose and a lot to gain from locating close to their competitors.