DIMETIC, Maastricht 8/10-07_BD1 The Cluster Concept: Relevant, Outdated or Confusing? DIMETIC PhD...

DIMETIC, Maastricht 8/10-07_BD 1

The Cluster Concept: Relevant, Outdated or Confusing?

DIMETIC PhD course

8 October 2007 (1), Maastricht

Bent Dalum

DRUID/IKE, Dep. of Business Studies, CTIF

Aalborg University


Systems of innovationThe entire menu

• National: Freeman, Lundvall, Nelson, etc.• Regional: Economic Geography, such as

Storper, Maskell, Asheim, Gertler, Cooke, etc.

• Sectoral: Malerba/ESSY• Technological: Bo Carlsson & Jacobsson---• Porter’s cluster approach


Back to Marshall’s external economies

”Something is in the air” – i.e. benefits that are not represented as costs for the single firms:

– Labour market pooling

– Networks of supplier and auxiliary firms

– Localised knowledge spillovers


Tacit knowledge – the key to understand spatial concentration

(Asheim & Gertler, 2005)

• Tacit knowledge is difficult to exchange over long distances

• A growing importance of socially organized learning processes behind innovation


Two paradoxical characteristics(Asheim & Gertler, 2005)

• The more knowledge-intensive an activity is, the more geographically clustered it tends to be.

• The trend towards spatial concentration of knowledge-intensive activities has become more marked over time.


Propensity to cluster(Audretsch and Feldman, 1996)

• Greatest in industries with high dependence on new economic knowledge (R&D) and skilled labour (AER, 1996)

• Generation of new economics knowledge tend to result in greater propensity for innovative activity to cluster during the early stages of the industry life cycle (RIO, 1996)


A regional innovation system(Asheim & Gertler, 2005, p. 299-300)

• ”…can be thought of as the institutional infrastructure supporting innovation within the production structure of a region.”

• ”Further reinforcing the systemic character of the RIS is the prevalence of a set of attitudes, values, norms, routines, and expectations – described by some as a distinctive ”regional culture” - …”


Regional innovation systems – five key concepts

1. Region

2. Innovation

3. Network

4. Learning

5. Interaction


RIS and clusters - Cooke1. “A RIS usually usually exists

administratively at the meso-level between central or federal, and local government” (Cooke, 2005 p. 81).

2. “But what about clusters? A well-blessed RIS will not be dependent on a mono-industrial base. As well as multiple industry sectors, a region may have some clusters; naturally not all industry is organized in clusters” (Cooke, 2005 p. 82).


Regional innovation systems – empirical results (Cooke, 2005 p. 91-92)

11 regions tested in Europe:

• Baden-Württemberg +

• Wales +

• Basque Country +

• Styria +

• 5)….11) -


The Classic Regional Innovation System(Cooke, 2006)

Regional socioeconomic and cultural setting

Knoweldge, resources and human capital flows and interactions

Knowledge application & exploitation subsystem

Knowledge generation & diffusion subsystem

firms

collaborators

customers

Competitors

contractors

Technologymediating

organisations

workforcemediating organisations

Public Research organisations

Educational organisations

Fig 1. The Regional Innovation System: A schematic illustration


Inside the ‘Black Box’: RIS in the Creative RIS Region (Cooke, 2006)

Regional Innovation System

Regional Social capital

Regional knowledge

culture

Regional Institutions

Globalising Network Relations

Policy

Cluster Variety

BiotechCluster

Knowledge Transfer and R&D Outsourcing

Knowledge Transfer

R&D Outsourcing

Knowledge Community ICT

Cluster

Creative Cluster

The Creative Region


Knowledge Economy Problem Tendencies: Co-ordinated markets to Liberal-markets

(Cooke, 2006)

_________________________________________________________________ Institutional RIS (IRIS) Entrepreneurial RIS (ERIS) ___________________________________________________________________

Research & Development Driven Venture Capital Driven

User-Producer Relations Serial Start-ups

Technology-Focused Market-Focused

Incremental Innovation Incremental & Disruptive

Bank Borrowing Initial Public Offerings

External Supply-Chain Networks Internal EcoNets*

Science Park Incubators

___________________________________________________________________


Three types of RIS (Asheim & Gertler, 2005, p. 300-03)

• Territorially embedded (Cooke: ’grassroot RISs’ – the Italian district)

• Regionally networked (Germany, Austria and Nordic countries: a regional cluster of firms surrounded by a regional ’supporting’ institutional infrastructure

• Regionalized NSI (Cooke: ’dirigiste’ RIS – Sophia Antipolis)


A regional innovation system(Asheim & Gertler, 2005, p. 299-300)

• ”…can be thought of as the institutional infrastructure supporting innovation within the production structure of a region.”

• ”Further reinforcing the systemic character of the RIS is the prevalence of a set of attitudes, values, norms, routines, and expectations – described by some as a distinctive ”regional culture” - …”


Systems of innovationThe entire menu

• National: Freeman, Lundvall, Nelson, etc.

• Regional: Phil Cooke/Economic Geography

• Sectoral: Malerba/ESSY

• Technological: Bo Carlsson & Jacobsson

---

• Porter’s cluster approach


Porter’s cluster definition

• Clusters are geographic concentrations of interconnected companies, specialised suppliers, service providers, firms in related industries, and associated organisations (such as universities, standard agencies, trade associations) in a particular field linked by commonalities and complementarities. There is competition as well as cooperation.


Cluster definition - Giuliani and Marshall

• Cluster…” refer to a geographical agglomeration of firms operating in the same industry” (Guiliani 2005, p. 272).

• Industrial district…a concentration of “large numbers of small businesses of a similar kind of the same locality” (Marshall 1920).


Martin and Sunley’s critique (2003) of Porter’s cluster definition

• “First, a concept so elastic as the cluster can not provide a universal and deterministic model on how agglomeration is related to regional and local economic growth” (p. 28).

• “Second,….just because there is an association between some high-growth industries and various forms of geographical concentration does not mean that this concentration is the main cause of their economic growth or relative success” (p. 29).


Porter’s ‘cluster brand’ – Martin and Sunley (2003 p. 29)

• “…the cluster brand at its core is based on an image of a high-productivity, knowledge-rich, decentralized, entrepreneurial and socially progressive economy within the reach of local policy-makers (a regional version of the American Dream, perhaps?)”


The location paradox (1) (Porter, 2000)

• Global sourcing mitigates disadvantages, but does not create advantages in itself – a defensive manoeuvre

• Distant sourcing is normally a second-best solution compared to accessing a local competitive cluster

• Paradoxically, the most enduring competitive advantages in a global economy seem to be local


The location paradox (2)(Porter, 2000)

• Widely recognised that changes in technology and competition have diminished many of the traditional roles of location

• But new influences of clusters on competition have taken a growing importance in an increasingly complex, knowledge-based and dynamic economy


The location paradox – solved? (1)(Porter, 2000)

• The existence of clusters suggests that a good deal of competitive advantage lies outside companies and even outside their industries, residing instead in the locations at which their business units are based

• Companies have a stake in the business environments where they are located in ways that go far beyond taxes, wages rates, etc.

• The health of the cluster is important to the health of the company


The location paradox – solved? (2) (Porter, 2000)

• In more advanced economies and increasingly elsewhere, the more decisive aspects of the business environment for competitiveness are often cluster specific, such as the presence of particular types of suppliers, skills or university departments


Porter’s ’diamond’Firm

Strategy and Rivalry

Firm Strategy

and Rivalry

DemandConditionsDemand

Conditions

Related and Supporting Industries

Related and Supporting Industries

Factor(Input)

Conditions

Factor(Input)

Conditions


Regional clustering dimensions

•Geography

•Size

•Breadth

•Depth

•University research and education

•Ownership structure

•Etc.

(Source: Michael Enright, 2001)


Clusters affect competition through(Porter interpretation, 2000)

1. Increasing the current (static) productivity

2. Increasing the capacity for innovation and productivity growth

3. Stimulating new business formation


Ad. 2. Location in a cluster increases the capacity for innovation

(Porter interpretation, 2000)

• New buyer needs perceived more rapidly

• New technological, operating or delivery possibilities perceived more rapidly

• Pressure to innovate higher


Ad. 3. Stimulating new business formation (Porter interpretation, 2000)

• Inducement to entry higher with a cluster because of better information

• Barriers to entry lower than elsewhere

• Companies located elsewhere may relocate to the cluster

• Foreign MNEs may establish subsidiaries in the cluster – to ’plug-in’


Typology of industrial districts(Markusen 1996)

• Classical Marshallian industrial districts and their Italianate variant, NID (socalled New Industrial District)

• Hub-and-spoke district

• State-anchored district

• Satellite platform district


Typology of industrial clusters(Iammarino & Cann 2006)

• Pure agglomeration

• Industrial complex

• Social network - New SN

• Social network – Old SN


Typology of industrial clustersin terms of absorptive capacity

(Giuliani, 2005)

• Static cluster

• Dynamic cluster

• Leading cluster

DIMETIC, Maastricht 8/10-07_BD1 The Cluster Concept: Relevant, Outdated or Confusing? DIMETIC PhD...

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