Clustering has long been recognized as a key tool for fostering regional growth and economic development. However, like ‘innovation’ clustering has become a somehow blurry concept that many talks about and use in various connections. In this presentation, Jakob will take you through an essential ‘clusters what and why session’ discussing some of the key questions, which are crucial for all being involved in with cluster development: What are clusters more exactly, how do they occur, what are the dynamics and key factors driving strong clusters, can we create clusters, and what are the differences between ‘clusters’ and ‘cluster initiatives’? Most importantly, Jakob will also discuss if clusters and clustering really matters: Do clusters actually forge economic and regional development and why should we aim for cluster development at all?

1. Does clustering really matter?
A presentation on ‘Clusters - What & Why’
By Jakob Stoumann, CEO of Oxford Research

2. Cluster Initiatives are
mushrooming in all
parts of Europe!

3. Need money?
Say cluster
initiative…

4. Even heard that they are crazy about ‘klasters’ in Krakow…

5. But why all this fuzz about
clusters?

6. The key questions I will
try to answer:
• What are clusters more exactly?
• How do they occur?
• What are the dynamics and key
factors driving strong clusters?
• Can we create clusters?
• And does clustering actually
matters?

7. YES! Clusters do matter – a lot….
▪ Companies in strong clusters are more innovative than other companies!
▪ Regions with strong clusters attract more venture capital than areas without strong clusters
▪ Strong clusters creates a higher level of entrepreneurship
▪ Clusters are magnets for skilled labour
▪ Clusters result in higher wage levels as well as added value growth

8. YES! Clusters do matter – a lot….
▪ 38% of European jobs are based in clusters
(regional sectoral strongholds)
▪ There are about 2000 statistical observable
clusters in Europe, of which 150 are considered
to be world-class in terms of employment, size,
focus and specialization
▪ According to the European Cluster Excellence
Scoreboard, for a number of selected emerging
industries and regions in the period 2010-2013,
33.3 % of firms in clusters showed employment
growth superior to 10%, as opposed to only
18.2% of firms outside clusters.
Source: European Cluster Observatory

9. Companies in strong clusters are more
innovative than other companies!
In his study of the Silicon Valley case,
Chong‐Moon Lee, former Stanford professor,
clearly shows the close connection between
processes of clustering and innovation.
Due to the very high density of specialized
companies and prevalence of networking and
knowledge sharing, Silicon Valley became one of
the most collaborative and innovative business
and research environments in the US and the
world.
Proove: HP, Oracle, Cisco Systems, NetScape,
EBay, Sun, Apple, Google and many others
were founded in the valley
YES! Clusters do matter – a lot….

10. Why did we start focusing on clusters?
Michael Porter introduced the modern
cluster theory:
• “Clusters are the cornerstone of innovative economies”
• He focused on how clusters contributed to developing
internationally competitive companies and industries
• One reason why cluster policy has become so popular might be
that the concept was introduced in a period where more
selective trade policy was removed due to international
legislation.
• Clustering was a new lens that made possible moving the focus
from subsidizing specific industries and firms to more soft
industry policies and indirect support measures in order to
enhance innovation and competitiveness within sectors and
across value chains.

11. What are clusters?
Porter defines clusters as
“Geographic
concentrations of
interconnected companies
and institutions in a
particular field”
Source: Clusters and the New Economy of Competition, Michael E. Porter in
Harvard Business Review, Nov/Dec98, Vol. 76 Issue 6,

12. What are clusters?
Leading
companies
Related companies
R&D
Labour
market
Infra-
structure
Finance
etc.
Support functions
A geographical
concentration of specialized
companies and related
companies,
research & development
institutions, education,
finance institutions, public
actors,
and with relations and
cooperation between these
actors

13. Clustering - the cross field of agglomeration
and networking
Agglomerations
The physical placement
within a region of (many)
companies and
organsiations within the
same sector, economic or
technical field
Networks
The network and social and
economic relations and
cooperation between
related companies and
organisations
Clusters
Agglomeration of related
companies and
organisations with strong
networks and culture of
collaboration

14. Some world famous clusters

15. Some world famous clusters

16. Some world famous clusters

17. Some world famous clusters

18. Some world famous clusters

19. Upgrading mechanisms
- The dynamics that makes clusters strong and the cluster companies grow
Complementarity
Joint pool of qualified labour, specialised local suppliers
and supporting firms
Innovation pressure
Company rivalry, strong local buyers
Knowledge development and dissemination
Local buzz, network, getting fast access to the
newest knowledge and ideas, spin-offs
Collective action
Pre-competitive joint projects and alliances: R&D,
education, internationalisation, etc.
Global pipelines
Strategic partners located outside the cluster, link to
global innovation and production networks
Innovation and
competitiveness

20. Cluster lifecycles
- clusters are not born big they emerge, grow, mature and change
From a regional policy point of view, potential and
emerging clusters attract particular attention as new
sources of regional growth that through the right
initiatives and public support can grow into strong,
mature clusters.
This leads to the next subject – cluster initiatives...

21. A cluster initiative is …
… an organised collaboration with
• firms
• government
• and academia
within a concentrated geographical area
• Cooperating towards common
goals
• Establishing close linkages and
working alliances
… to improve the cluster’s and the companies’ competitiveness

22. Clusters vs. cluster initiatives
• Clusters evolve and exist naturally without any public intervention
• The development of clusters can be stimulated by a cluster initiative
• Important: ‘We’ cannot start or run a cluster - but a cluster initiative
22
A cluster initiative is not a cluster itself but an organisation
that supports and facilitates the development and success
of an actual cluster. In this way, cluster initiatives can be
said to be part of a cluster’s supporting institutions or soft
infrastructure.

23. Different understandings of the cluster concept
• The concepts of clusters and innovation systems
are used in different situations:
• As theoretical perspectives to describe
mechanisms that create economic growth
• As a tool to analyse and describe complex
systems
• As a process tool to organize regional development
• As a policy framework for innovation and value creation
• Remember: The final goal of a cluster initiative will not always be the fully
fledged mature cluster. Clustering and cluster initiatives should basically be seen
as tools to enhance innovation and competitiveness within a region or a specific
group of companies.

24. Cluster development is a centre stage strategy
rather than ”another project”
Cluster development is a comprehensive framework or a platform for a range of
economic development agendas, including:
• RDI interventions
• Skills, training, workforce development
• SME development; New business start-ups
• Investment attraction; attracting experts
• Export development, internationalisation
Clustering

25. 1. Cluster development is long term
• Don’t over promise, no quick fix
• Requires long term action
• And patience
And its not a quick fix….

26. What characterises successful cluster initiatives?
Important steps and focal points in the process of establishing cluster
initiatives:
▪ When there is a ”natural cluster” existing with proven strengths and growth
potentials to build on
▪ When the cluster initiative focuses on the shared needs and challenges of the
companies
▪ When there is a clear and common understanding of what cluster development
is among the key stakeholders:
▪ That by standing together in joint actions we can improve the regional
framework conditions and hereby create advantages for the individual
companies
▪ When there is a shared vision and clear strategy for the cluster initiative.
▪ When there has been build trust between the stakeholders in the cluster and
show engagement and ownership to the initiative and the activities

27. Oxford Research’s cluster work
Oxford Research is currently among the leading knowledge providers and practitioners in clustering in Scandinavia and Europe and we
have undertaken a wide range of regional, national and international cluster actors such as the EU Commission, the European Cluster
Observatory, Cluster Excellence Denmark, Copenhagen Capacity, ministries, regions, municipalities, and directly with cluster
organizations and cluster initiatives. References include:
• International cluster management training since 2006
• International cluster study trips to Denmark for international clients since 2009
• Strategy development, cluster interventions and advisory services for cluster
initiatives E.g. ERECI Egyptian Renewable Energy Cluster, Logistics in Wallonia,
Copenhagen Fintech Innovation & Research, Merit – Helsinki Maritime Cluster
• EU Cluster Policy Mapping for the European Cluster Observatory
• Baseline study for the Norwegian Centre of Expertise programme
• Monitoring and evaluation of Copenhagen Cleantech Cluster
Oxford Research has worked intensively with clusters, cluster development, and cluster policies since 1995. Oxford Research's founder
and Chairman, Kim Møller, was involved at the inception of cluster research in the 1980s, working along with Harvard professor Michael
E. Porter's research team on the famous 'Ten Nation Study' that laid the foundation for the modern cluster concept. Oxford Research is a
member of the global cluster development forum TCI - The Competitiveness Institute and Associated Partner of the national Danish
cluster support function Cluster Excellence Denmark.

28. Our cluster services
Oxford Research is able to offer a wide range of consulting services
related to clusters, cluster development, and cluster policies:
• Inventories and analyzes of clusters and value chains: Oxford Research
specializes in identifying potential as well as mature clusters, mapping the
various clusters actors and value chains to assess their strengths, opportunities,
and challenges.
• Monitoring and evaluation of clusters and cluster initiatives: In order to keep a
cluster initiative on track and get the maximum return on investment, ongoing
monitoring and evaluation is important. Oxford Research has implemented
baseline measurements, monitoring systems, and evaluations for many of the
largest clusters and cluster programs in Scandinavia.
• Development of strategy and action plans for cluster organizations and
business policy makers: creating sustainable and successful cluster initiatives is
not easy and requires a clear strategy that is both rooted in the real actors and
based on sound analysis.
• Cluster Training and Cluster Management Courses: Since 2006, Oxford Research
has offered workshops and courses in cluster development for facilitators and
professionals working with clusters. Through interactive and practice-based
learning, participants will be equipped with knowledge and tools they can use in
their daily work to build innovative and sustainable clusters and cluster
initiatives.

29. Contact
Oxford Research has more than 50 specialized
consultants placed in Copenhagen, Stockholm,
Oslo, Helsinki, Tallinn, Poznan, Brussels and
New York. Head office is in Copenhagen -
Denmark.
For cluster projects and enquiries please
contact:
Jakob Stoumann
Managing Director
Head of Clustering, innovation and Regional
Development
Oxford Research A/S
Falkoner Allé 20, 4. sal
2000 Frederiksberg, Denmark
Switchboard: +45 3369 1369
Mobile/direct: +45 2447 5927
Email: jas@oxfordresearch.dk
www.oxfordresearch.dk

30. 30
Thank you for the attention!
…and please remember: Success tends to cluster