The document outlines the smart specialization strategy (S3) and cluster policy in the Basque Country, detailing the importance of innovation and collaboration in enhancing regional competitiveness. It highlights the evolution of cluster policies since the 1990s, emphasizing the need for a participative process and effective governance in developing specialized industries while addressing the challenges of local agent capabilities. Conclusions drawn stress the intertwined nature of cluster policies and S3, advocating for synergy between existing frameworks and the importance of patience and long-term commitment in fostering successful innovation strategies.

1. Smart Specialization Path
in the Basque Country and
the Cluster Policy
Mari Jose Aranguren
Mikel Navarro
TRES Kick Off Meeting
27th March 2012
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2. Structure of the presentation
1. Some key issues
2. Which has been the Smart specialization Path in the
Basque Country?
3. How is cluster policy related to Smart specialisation
strategy?
4. What can be learned from the practice of cluster
policy for the construction of smart specialisation
strategies (SSS)?
5. Conclusions
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3. Some key issues: Territorial strategy
Firm Strategy Territorial strategy
1. GOALS (narrow or broad) 1. GOALS (narrow or broad)
2. POSITIONING AND BASIS 2. POSITIONING AND BASIS
• Which products • Which activities and
• Which clients and needs technological areas
• Which access (sector/clusters…)
• Which internal resources and • Which assets
capabilities • Which agents
• Which external relationships
• Which internal articulation
3. PROCESS 3. PROCESS
More or less participative, More or less participative,
but compulsory for all the but not compulsory for all
members of the firm the members of the territory
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4. Some key issues: Territorial strategy
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5. Some key issues: Smart Specialisation
Strategies (SSS)
“Smart specialisation is about placing greater emphasis on
innovation and focusing scarce human and financial RTDI
resources in a few globally competitive areas”. (p. 41)
“Smart specialisation strategies entail a process of
entrepreneurial discovery, identifying globally distinct niches
and steering the RTDI and business innovation efforts of all
stakeholders towards those areas” (p. 41)
European Commission. Commission Staff Working Document.
Document accompanying the Commission Communication on Regional Policy contributing to smart
growth in Europe 2020
COM(2010) 553 final
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6. Some key issues: S3 Content: activities
and assets
Goal: “specialised diversification”/“smart diversification and
upgrading”
Narrow view: = General Purpose Technologies (GPT)
= Leaders: invention; followers: co-invention
= Risks (monopolies, less variety...) and less
flexibility to adapt and built capabilities in
promising fields
Broad view: I&D and other innovation activities that make
possible to innovate and increase productivity (see the new
growth accountancy based on intangibles). Those non R&D
based activities are particularly important in less developed
regions, SMEs and creative industries.
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7. Some key issues: ways of “smart
diversification”
Retooling (modernisation): support to technological and human resource
upgrading within an already existing industry. How: applying GPT to a sector
(nano to pulp and paper industry) but also, by cluster initiatives, renewal or
restructuration…
Extending (diversification): some diversification of the knowledge base
developed based on synergies and commonalities between two or more
activities (e.g. moving from aeronautics to satellites and GPS technologies)
Emerging (radical foundation): the discovery of an entirely new niche
which is likely to be viable and economically important. By applying research
and innovation in a particular area (e.g. TICs in the maintenance of the
archaeological and historical heritage) an attractive and profitable business
activity appears.
Cross-sectoral (transition): a new combination of sectors helps generate
innovative ideas for new products and services (e.g. collaboration inter-clusters)
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8. Some key issues: S3 process:
entrepreneurial process
Narrow view: Government doesn’t select specialisation. Their role
is:
• Supplying incentives to (encourage) entrepreneurs who are involved in the
discovery of the right specialisations
• Identifying and supporting the complementary investments to the right
specialisations (e.g. educational and training institutions)
• Assessing the value of the identified specialisations, so that the support of a
particular line of business will not be discontinued too early nor continued
so long that subsidies are wasted
• Provide information and facilitate coordination and connections, within the
territory and with other territories
Broad view: beyond facilitating, takes part in the discovery process
• Sometimes local agents lack the capabilities needed for the discovery
process (usually, in less developed regions)
• Local agents can have to much power and capture the process
But regional government might lack the powers and capabilities as well
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9. Some key issues: The Cluster Concept
A cluster is a geographically proximate group of interconnected companies and
associated institutions in a particular field, linked by commonalities and
complementarities. Porter (1998)
• Roots in other concepts with a long trajectory of analysis:
– Agglomeration economies, industrial districts, innovative milieu ...
• Some practical problems:
– Geographical scope?
– Clusters versus cluster initiatives versus cluster organisations?
• ‘Chaotic’ concept, but commonly understood basis for policy:
– Geographic proximity of agents in related industries
– Hypothesised benefits from co-operative relationships, alongside competition
CURRENT PRACTICE:
Extremely wide adoption by policy-makers at different administrative levels, but
heterogeneity of approaches, lack of consolidation of clusters within Europe, and
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complex challenges in evaluating the effectiveness of policies

10. Some key issues: Trajectory of Basque Cluster Policy
Launch (1990s): Consolidation (2000s): Adaption to New
* Concerns around Realities (from 2010):
* Strategic reflection
Basque competitiveness about the policy * New competitiveness
& consultancy report in plan (2010-2013)
early 1990s * Formalisation of policy
mechanisms for the * Changes in management
* Workgroups in 9 functioning of the public- and governance of the
priority clusters private relationship cluster policy
* Process leading to * Identification of three * Evolution of the policy to
creation of cluster core working areas for incorporate new activities:
associations supported the associations: quality, support for ‘pre-clusters’
by a cluster policy internationalisation and * Establishment of an
* Mixed private-public innovation ‘inter-cluster’ initiative to
finance to cover the cost * Emergence of 2 further reflect on the synergies
of the 10 resulting cluster associations between the activities of
cluster associations different clusters
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11. Activity Cluster Association Creation Number of Policy Support
Members
Home Appliances ACEDE 1992 8 Basque Gov (Industry)
Automotive ACICAE 1993 130 Basque Gov (Industry)
Energy Cluster de Energía 1996 88 Basque Gov (Industry)
Aerospace HEGAN 1997 37 Basque Gov (Industry)
Maritime Foro Marítimo Vasco 1997 163 Basque Gov (Industry)
Machine Tool AFM 1992 86 Basque Gov (Industry)
Manufacturers
Paper Cluster de Papel 1998 20 Basque Gov (Industry)
Environment ACLIMA 1995 82 Basque Gov (Industry)
Port of Bilbao UNIPORT 1995 144 Basque Gov (Industry)
Telecommunications GAIA 1996 240 Basque Gov (Industry)
Audiovisual EIKEN 2004 43 Basque Gov (Industry)
Transport and Logistics CLUSTERTIL 2005 88 Basque Gov (Transport)
Alimentation Cluster de la Alimentación 2008 31 Basque Gov (Industry)
Graphic arts Sector Association 2009 34 Basque Gov (Industry)
Iron and Steel foundry Sector Association 2009 68 Basque Gov (Industry)
Biosciences Biobasque 2006/2009 25 Basque Gov (Industry)
Habitat HABIC 2009 70 Basque Gov (Industry)
Forging and Casting Sector Association 2009 16 Basque Gov (Industry)
Construction Sector Association 2010 56 Basque Gov (Industry)
Hand Tools Herramex 2010 28 Basque Gov (Industry) 11

12. Which has been the Smart Specialisation
Path in the Basque Country
1980-1990 period
•New regional administration restructured the traditional metal industry by non R&D based
activities: investment in equipments and organisational improvements (retooling)
•The completely new administration play a crucial role in the process, because firms were not
able. Adjustments were negotiated or consulted with unions.
1991-1998 period
•There is a formal industrial strategy. Regarding traditional sectors clusters are actively
fostered by the Basque Government (BG).
•The outset of a diversifying policy: towards aeronautics and city renewal
(Bilbao/Guggenheim) (extendings not based on R&D)
•The BG designed the overall strategy top-down, led the clustering process, and backed the
renewal of cities and the firms’ initiative in aeronautics.
From 1999 until now
•Clustering is widened and upgraded (retooling). In 2011 cross-cluster initiatives are launched
(cross-sectoral)
•Besides, an R&D based diversifying strategy is launched in bio, nano and energy
•General strategic plans are designed in a more participative process. The role of BG varies
depending on the strength of other agents 12

13. Which has been the Smart Specialisation
Path in the Basque Country: R&D based
diversification strategies
Characteristics Biobasque Nanobasque Energibasque
Previous conditions and Lack of previous Some research More than 350 firms
assets traditional conditions for capabilities in were already
being a bio-region universities and projects established including
in firms industrial world- leaders
Ways of specialisation 1st step: creating a bio- Introducing nano and Upgrading and
sector (radical micro applications in diversifying of existing
foundation) traditional sectors activities (retooling and
Next steps: Diversifying (retooling). extending) and being
the machine-tool sector present in future new
(extending) and sectors (emerging)
applications in other
sectors (retooling)
Entrepreneurial process Role of other agents Need of external Strategy based on firms’
and role of other agents different to BG is now conditions. Role of other and research centres’
being developed agents (mainly, activities
university research
groups) higher than in
bios
Role of government Crucial and unique role Launched the strategy Coordination and
of the BG (Industry support of activities
department) developed by firms and
other agents 13

14. How is cluster policy related with S3: Some
Similarities in Practice
• Both imply forms of cooperation between firms and other agents
working in related/complementary sectors
• Both imply an underlying entrepreneurial process of discovery of
synergies, opportunities and possibilities
• Both are place-specific: They rely on place-based assets, context
and institutions, and are limited in working across territories
• Both are transformative, but subject to debate around the
appropriate role of government in this transformation
• Both are systemic & require new types of leadership/governance
• Both are characterised by extreme difficulties in evaluating the
effectiveness of associated policies 14

15. What can be learned from the practice of cluster
policy for the construction of S3?
• Working across sectors is challenging, both within the
framework of a cluster policy and with regards a SSS
• Experience with cluster policies shows that process is critical:
– Which agents are involved?
– How they are involved and how decisions are made?
– What training/tools do they receive to understand the policy/concept?
– Over what timescale have they been involved?
• Challenges in making cluster policies more sophisticated and in
consolidating S3 are strongly related and reflect:
1. The need to better articulate the synergies between the two policies
2. The need to be patient with long-term processes
Bringing abstract concepts such as clusters or SSS alive in a policy context is not
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something that can happen overnight: the agents involved need to learn over time

16. Conclusions
• In a region more than a strategy might be launched, involving different roles
from government and other agents
• Not all S3 must be drawn upon R&D or technological innovation, mainly in less
developed regions, SMEs and creative industries
• Even when the usual conditions are not in place, by levering in other related
local assets, a determined and persistent plan with a flexible focus, might prove
to be successful
• R&D based diversifying strategies required a great deal of resources and
government capabilities, maintained for long periods, lacking in most of the
regions.
• Clusters and S3 are inherently related concepts
• Important to exploit synergies between existing cluster policies and the
construction of S3
• There are many lessons for S3 from experience with cluster policy: above all, the
importance of process, governance and time
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17. Thank you
Emails: mjarang@orkestra.deusto.es
and mnavarro@orkestra.deusto.es
San Sebastián University of Deusto Bilbao CRAI Library,
Campus University of Deusto
Mundaiz, 50 Ramón Rubial, 1, planta 8, aula 7
20012 Donostia/San Sebastián 48009 Bilbao
www.orkestra.deusto.es
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