This study examines the relationship between agglomeration and organizational performance, and also explores the moderating roles of product complementarity and market uncertainty on this relationship. This study uses Taiwan hospital industry from 1996 to 2002 as the research data. The results show that agglomeration increases organizational performance, and that high complementarity and high market uncertainty positively moderate the effect of agglomeration on performance. This study confirms the positive effect of agglomeration on performance and its contingencies. It contributes to the understanding of agglomeration theory by ferreting out the organizational and environmental conditions that favor agglomeration effects.