A paradigm shift was being observed from the perspective of the location of the firms in the late 1960s to incorporate the study of organizational behaviour of the firms since 1970s. However, a revival of the discussion on location of industries appeared once again in the past few years since late 1980s. The rise of "alliance capitalism" with the growing prominence of intellectual capital raised the issue of new economic knowledge production. However, such discussions are solely concentrated to the formal sector industries mostly of the developing nations. The present paper is an effort to analyze what strategies the small informal localized firms of the developing nations do adopt in order to get access in the new economic un-codified knowledge production in classical clustering to ensure their survival in the market. The established knowledge networks between small firms within an informal localization are sufficient enough to generate positive knowledge externality at the local level. To extract this, the tendency of a small informal firm is to locate within a spatial industrial cluster in order to incorporate successful knowledge spillover with other firms of the same industry. Such un-codified non-market knowledge exchanges among informal firms are sufficient to promote growth of the existing industry.