Abstract: With the transformation and upgrade of industrial clusters and the introduction of more high-tech industries, knowledge spillover and other soft factors are gradually replacing the traditional causes such as natural resources, geographical advantages and so on to become the key factors affecting the enterprises to join in the clusters. Enterprise’s behavior of seeking the location of knowledge spillover, in nature, is to obtain the key resources to maintain its competitiveness at lower cost. However, while knowledge spillover in the clusters can help enterprises reduce the cost and risks of innovation, it will also increase the risk of knowledge loss and cause the enterprises to be short of stipulation in their self-dependent innovations. Therefore, enterprises with different characteristics will have different location choices. The decision of enterprises in choosing the location for industrial clusters actually depends on enterprise’s judging and weighing of the positive and the negative effects brought by knowledge spillover in the clusters.

Key words: knowledge spillover; enterprise’s location choice; industrial clusters