Abstract
The purpose of this paper is to introduce supply chain management researchers to industry cluster theory within the context of supply chain management decisions. Industry cluster theory emphasizes the explicit and implicit benefits that accrue to various economic players due to geographic proximity. As such, it provides a contrasting view to the current pressure on supply chains to seek out the “best” partners, regardless of location. We review the theory behind industry clusters, and illustrate it using the example of the New England cotton textile industry. Incorporating these concepts into future research has the potential to improve our understanding of how decisions regarding supply chain location and sourcing decisions are currently made, and what role location‐based benefits should play in these decisions.