What do we know about the impact of cluster presence and cluster initiatives on firms and regions? And what are lessons to draw for BioRN and the German Spitzenclustercompetition. Food for Thought at the 2014 BioRN Annual Conference in Heidelberg, Germany

1. World-class clusters
as a key driver of global competitiveness
BioRN Annual Conference 2014
Dr Christian H. M. Ketels
Institute for Strategy and Competitiveness, Harvard Business School
President, TCI Network
rafmozart@terra.com.br

2. 2 Copyright 2014 © Christian Ketels
• Evidence on clusters and economic performance
• Clusters, cluster efforts, and firms
• Cluster efforts, BioRN, and the German Spitzencluster-
Competition

3. 3 Copyright 2014 © Christian Ketels
How Important are Clusters?
• Close to 50% of European employment are in economic sectors
that ‘cluster’
• In these sectors, productivity, productivity growth, and patenting are
significantly higher than in the average of the economy
• Roughly 25% of European employment is in strong clusters; i.e.
regional clusters with significant critical mass
• There is significant variation in terms of cluster presence and cluster
portfolio composition across European regions

4. 4
Cluster Presence and Economic Outcomes
Prosperity Entrepreneurship Structural Change
Positive correlation between
share of regional
employment in strong
clusters (breadth of clusters;
related cluster strength) and:
• Wages
• Productivity
• Job growth/resilience
• Patenting
Positive correlation between
share of regional
employment in strong
clusters (strength of related
cluster) and:
• New business formation
in new/existing industries
• Survival of new firms
• Job growth in new firms
Path of structural change
(emergence of new clusters)
in regional economies is
driven by legacy of
composition (portfolio of
existing clusters)
e.g. Porter (2003), Greenstone (2008).
Delgado/Porter/Stern (2012), Ketels/Protsiv
(2013), Aharonson et al (2013)
e.g., Delgado/Porter/Stern (2011), Lindqvist/
Wennerberg (2008)
e.g., Neffke et al (2009);
Boschma et al. (2013)

5. 5 Copyright 2013 © Christian Ketels
Clusters and Business Environment Quality
WEAK
Business Environment
STRONG
Business Environment
Specialization measured by employment LQ
Impact of higher
employment LQ
on wages
Source: Ketels/Protsiv, 2013
1
3
2

6. 6 Copyright 2013 © Christian Ketels
How Important are Cluster Initiatives?
• The European Cluster Observatory lists more than 2000 cluster
initiatives and related organizations
• The highest number of cluster initiatives (absolute, per employee) is in
information technology and biotech
• All European countries and many European regions have cluster-
related policy programs; many other OECD countries as well
• Spending on cluster-related programs is meaningful but only a
modest percentage of total spending per policy area

7. 7 Copyright 2013 © Christian Ketels
Clusters, Cluster Initiatives, and Performance
CLUSTER
PRESENCE
CLUSTER
EFFORT
ECONOMIC
PERFORMANCE
+ =
+ =
+ =

8. 8 Copyright 2014 © Christian Ketels
• Evidence on clusters and economic performance
• Clusters, cluster efforts, and firms
• Cluster efforts, BioRN, and the German Spitzencluster-Competition

9. 9 Copyright 2014 © Christian Ketels
Firms in Clusters: How do they Engage?
Bystanders Participants DriversSceptics

10. 10 Copyright 2014 © Christian Ketels
Firms in Clusters: How are they Affected?
Costs Benefits

11. 11 Copyright 2014 © Christian Ketels
Firms in Clusters: Who Benefits?
From
Co-Location
From
BE Upgrading
From
Collaboration
Participants
Drivers
Bystanders
Sceptics

12. 12 Copyright 2014 © Christian Ketels
Firms in Clusters: A Look Ahead
• Globalization
• Knowledge-based
competition
• Innovation processes
• Fragmentation of value chains
• Location footprint as competitive
asset
• Innovation key driver of firm
performance
• All stages of innovation from
invention to market important
• Fragmentation of the innovation
process across organizations
• Innovation at the intersection of
industries and technologies
Clusters retain or even
increase their importance
Directly
Indirectly
(tool to upgrade BE,
magnet for global linkages)

13. 13 Copyright 2014 © Christian Ketels
Picking a location:
Where do we locate which activity in sync
with our strategic position?
Improving a location:
How do we improve the value of our location
in supporting our strategic position?
Leveraging a location:
How do we derive strategic benefits from
the characteristics of our location?
Location Strategy
A Strategic Approach to Clusters

14. 14 Copyright 2014 © Christian Ketels
• Evidence on clusters and economic performance
• Clusters, cluster efforts, and firms
• Cluster efforts, BioRN, and the German Spitzencluster-Competition

15. 15 Copyright 2014 © Christian Ketels
What Drives the Success of Cluster Efforts?
Setting
• Cluster with critical mass of existing
economic activities
• Broader policy environment focused on
competitiveness upgrading
Organization
Activities
• Capabilities of the Cluster Initiative Manager
• Private sector logic needs to drive the
organization, public sector critical to create
the right environment
• Strategic action agenda grounded in
understanding of the relevant market
• Operational effectiveness in individual activities
External
Internal

16. 16 Copyright 2014 © Christian Ketels
The BioRN Spitzencluster
Setting
Organization
Activities
• Management tools
• Gold Label (ESCA)
• BW Excellence Label
• BioRN Network
• BioRN Innovation Center
• BioMed X
• …
• Academic strength
• Cluster presence strength
(ECO)

17. 17 Copyright 2014 © Christian Ketels
The German Spitzencluster Competition
Setting
Organization
Activities
• Topic of evaluation and dialogue
• No systematic support for management
• (Too) academic assessment vs.
management information systems
• Focus on innovation and tech transfer
• Many other critical issues, especially skills
• Lack of broader competitiveness mandate
• Focus on strong clusters
• Funding for organization and activities
• Other support instruments

18. 18 Copyright 2014 © Christian Ketels
Current Issues
• Post-Spitzencluster
• From ‘collaborative innovation’-cluster to world class-cluster
• Dealing with emerging clusters

19. 19 Copyright 2014 © Christian Ketels
Want to know more?
• www.tci-network.org
• www.clusterobservatory.eu
• www.clustermapping.us
• www.isc.hbs.edu
• www.go-cluster.de