TALIA Policy Briefing n. 4 SOCIAL AND CREATIVE INNOVATION IN THE MEDITERRANEAN

1. TALIA Policy Briefing n. 4
CREATIVE CLUSTERS - DRAFT V4, 26.12.2017

2. TALIA Policy Briefing n. 4
CREATIVE CLUSTERS
The programme objective for all Interreg-MED initiatives under the
Innovation Axis reads as follows: “To increase transnational activity of
innovative clusters and networks of key sectors of the MED area”.
In order to reach this goal, especially in the context of Creative and Social
Innovation, practitioners and policy makers need to develop a shared
understanding of what a cluster is, why it is beneficial, and how it should
be promoted. This Policy Brief aims to provide an overview of the state of
the art and highlight work in progress in on-going MED initiatives.
Geographical clusters1
are but one form of territorial concentration of
economic activity, which also includes industrial districts and local
production systems2
. We can distinguish three forms of spatial
clustering3
:
• Pure Agglomeration – based on geographical proximity and agglomera-
tion economies (horizontal cluster).
• Industrial Complex – based on input-output linkages and co-location in
order to minimize transaction costs (vertical cluster).
• Social Network – based on high levels of embeddedness and social
integration. This opens to an alternative perspective on clustering – i.e.
relational proximity – that appears most suitable in transnational
contexts.
Most of existing studies on clusters focus on manufacturing, however,
rather than Cultural and Creative industries. In addition, the following
issues make the identification and study of cluster dynamics complex4
:
• Ambiguities in identifying a cluster’s core industries;
• Lack of inter-industry trade data at the regional level;
• Impossibility of collecting data across pre-given administrative and
political units;
• Difficulty in defining a cluster’s geographical boundaries;
• Uncertainty in indicator selection (employment, number of firms,
added value, or level of productivity);
• Arbitrariness of the criteria for distinguishing clusters.
Although more research is needed to overcome the current state of
fuzzy notions and differing understandings5
, there is some evidence
suggesting that creative industries are as likely to cluster geographically
as any other industry6
.
1 P����� M. (1990), “T�� C���������� A�������� �� N������”, H������ B������� R����� 68(2): 73-93.
2 M������� A. (1890) P��������� �� E��������, L�����: M��������; B�������� L. �� ��. (2003) F��� I��������� D�������� �� L���� D����������, E����� E����, C���������.
3 G����� I.R. ��� M�C��� P. (2000), “I��������� ��������: ���������, ������������� ���/�� ������ ��������?” U���� S������ 37: 513–532.
4 B��� R. �� ��. (2015) “M����-����������� �� �������� ���������� �������� �� E�����: F��� ��� ����� �� �����������”, P����� �� R������� S������, 94(4): 753-772.
5 B��������� P. �� ��. (2003) “C�������� ��������? M����� ����� �� ��� ������� �������� �� ������ ��� ��������”, E������� P������� S������ 11: 511–520.
6 L��������� L. �� �� (2008) “D� �������� ���������� �������? M������ �������� ����� ���������� ������� �� I���� ��� S����” I������� ��� I���������, 15(5): 549-567.

3. CLUSTERS AND CREATIVE INDUSTRIES
There are several approaches to explaining why creative industries tend
to concentrate in specific places, forming local creative production
systems7
. One of the first explanations comes from studies in the field of
cultural economics, suggesting that the presence of cultural and artistic
heritage in a territory is a key driver for the development of cultural
clusters8
and cultural quarters9
. Sometimes these elements are related to
the historical role of a City as a regional, national, or international
capital.
Nonetheless, the key reasons for the clustering of creative industries are
still recognised as based on the traditional concept of agglomeration
economies10
, broadly defined as advantages on costs or quality due to
the spatial concentration of productive resources and actors (population,
firms, institutions, infrastructure or social capital). These act as centripe-
tal forces, attracting other creative industries in places with specific
characteristics (localization economies) or in large cities and metropoli-
ses with the presence of diverse sectors (urbanization economies)11
. This
fosters the incubation of pools of specialised labour markets, knowledge
spillovers, sustained relationships between individuals and firms and
institutional thickening.
Another concept drawn from studies on evolutionary economics and
economic geography has been identified as key for the clustering proces-
ses of creative industries: the notion of “related variety”12
. This idea
highlights the importance of emergent industrial sectors that are related
because of shared or complementary competences, leading to effective
communication and learning among different industries. The main
outcome is the effective absorption of innovation and knowledge
transfer.
A last important element in understanding the dynamics of clusters in
cultural and creative industries is social capital. Also referred to as
‘relational capital’, this concept describes the pattern and intensity of
networks among people and the shared values and institutions that arise
from those networks, contributing to economic and social development13
.
In this sense, social capital can be seen as a territorial characteristic that
facilitates the type of experimental, risk-taking behaviour that is essential
for entrepreneurs to be innovative14
. Social capital externalities can help
explain the concentration of creative activities in concrete points in
space.
TALIA Policy Briefing n. 4
7 C���� P. ��� L��������� L. (���.) (2008) C������� C�����, C������� C������� ��� L���� E������� D����������, E����� E����, C���������; L��������� �� ��. (2008) �� ���.
8 V�� ��� B��� L. �� ��. (2001) “G����� �������� �� E������� ������: A� �������� ��������” U���� S������, 38(1): 185-205; M������ H. (2004) “C������� ��������
��� ��� ����-���������� ����: ������� ��� ��������� �� ����� �������� ������” U���� S������, 41(3): 507-532.
9 L����� C. ��� B�������� F. (1995) T�� C������� C���. D����, L�����.
10 L������� M. ��� F���������� L. (2008) “W�� �� �������� ���������� �������? L�����������, ������������, �������� ��� ��������”, �� C���� ��� L���������
��.���.: 155-179; T������ J. ��� B��� R. (2008) “K�������� ������������� ��� �������� �� ������ �� ��� �������� ����������”, �� C���� ��� L��������� ��.���.: 211-237.
11 G������ E.L. �� ��. (1992) “G����� �� C�����”, J������ �� P�������� E������, 100(6): 1126-1152.
12 B������ R.A. ��� F������ K. (2003). “E����������� E�������� ��� I������� L�������”, R����� �� R������� R�������, 23(2): 183-200.
13 �� D�������� L. �� �� (2013) “R������� C������� �� I��������� A������� �� E�����: A�� S����� C������ ��� G����������� P�������� K��
D�����������?”,A������ E��������, 45(17): 2325-2335.
14 W�������, H. ��� B����� R. (2003). “L���� S����� C������ ��� E���������������”, S���� B������� E��������, 21(2), 77-113.

4. As stated above, one of the key objectives of the MED Programme is
to support the development of transnational innovation clusters.
More specifically, two on-going projects are exploring the role of
clusters in relation to Cultural and Creative Industries from
complementary perspectives:
• The Co-Create Project starts from clusters in traditional sectors –
mechanics, construction and furniture – and aims to promote
cross-fertilisation of innovative business concepts through interaction
with cultural and creative actors.
• The ChIMERA project instead focuses on clusters in the cultural and
creative industries, looking to develop common models for
networking, business development and investment funding.
Co-Create is promoting cooperation with new methodologies and tools
addressed to cluster managers, SMEs and policy makers. Co-Create is
also contributing to the development of more competitive clusters in the
Med space, through the development of a cross fertilization
methodology and toolkit to support and manage cross-cluster initiatives.
For further information: https://co-create.interreg-med.eu/
Co-Create’s objective is to support cross-fertilization processes between
creative industries and traditional clusters, contributing to test co-design
and creative methods applied to entrepreneurs and cluster managers.
Mechanics, building and furniture are traditional MED sectors with a great
impact in terms of GDP and employability, yet they are suffering from a
lack of innovation able to strengthen their competitiveness in domestic
and international markets. The generation of ideas for new products and
services in response to social and technological trends is thus one of the
main challenges for these clusters.
CREATIVE CLUSTERS IN THE MED PROGRAMME
THE CO-CREATE PROJECT
TALIA Policy Briefing n. 4

5. The main objective of ChIMERA is to improve innovation capacities of public
and private actors in the Cultural and Creative Industries (CCIs), through
strengthened cooperation among companies, research bodies, public
authorities and civil society. CCIs represent highly innovative SMEs and a
strategic sector for many Regional Innovation and Smart Specialisation
Strategies (RIS3s). This potential is however hampered by a lack of
information on CCIs’ local environment, innovation and market barriers and
a lack of tailored support to stimulate innovation, internationalization
and cross fertilization.
ChIMERA follows an integrated approach to support RIS3s and the
development of CCI Clusters. In this process, the transnational approach is
essential to maximising synergies among regional CCI specializations and to
promoting the internationalization of innovative CCI clusters. Thanks to
ChIMERA, CCI key actors will improve their innovation capacities, regions
will strengthen innovative CCI clusters cooperating in a transnational
network, cluster members will benefit from tailored services meeting their
innovation needs, and regions will concretely pursue innovation strategies
on CCIs.
For further information: https://chimera.interreg-med.eu/
THE CHIMERA PROJECT
TALIA Policy Briefing n. 4

6. One of the key issues in promoting Cultural and Creative Industries is to
ensure the financial support of these activities. To this end, venture
capitalists and private investors need to understand the ‘business model’ of
the organisation they are required to back. This means getting a clear idea
of what the service or product is about, its competitive advantage and route
to market. In addition, it is important to understand the price points,
margins and financial projections.
Crowdfunding is seen as an innovative approach to provide CCIs with the
required finance. Crowdfunding offers many options: donations- or
rewards-based, peer-to-peer lending, equity and mixed models, adapting to
diverse and peculiar needs with a broad range of possibilities.
According to a report by the European Commission15
, some aspects of
crowdfunding are particularly suitable for Cultural and Creative Industries:
• CCI financing needs usually relate to small or micro sized projects
(<25,000 €). It is often difficult to cover these financial needs with
traditional banking instruments while they are appropriate for
crowdfunding.
• Literature highlights that the benefits of a strong crowdfunding campaign
include strengthened stakeholder engagement, community building and the
communication of the business vision and model.
• CCI are characterised by a huge diversity of actors. Some are highly
dependent on public funding and donations (e.g. museums), while others
have more opportunities to generate income from the market (e.g. popular
music). Also, some actors are locally embedded whereas others are active in
global value chains (e.g. film). These varied profiles can all find a tailored
solution with crowdfunding.
FUNDING CREATIVITY
TALIA Policy Briefing n. 4
15 E������� C��������� (2017) C�����������: R�������� ��� C����’� E��������� �� C������. L���������: P����������� O����� �� ��� E������� U����.
The Apulia Region can be considered a frontrunner for policies
supporting creativity for a new generation of services and enterprises.
The association “Distretto Produttivo Puglia Creativa”
[http://www.pugliacreativa.it] covers the full range of cultural and
creative activities from dance to multimedia, providing new
opportunities for young people and start up businesses in an uncertain
economic context. Launched in 2011 and supported by a number of
projects funded by the Apulian ICT Living Labs Programme, the District
aims to:
• Enhance the relationship between SMEs working in the cultural sector;
• Build a cooperation network for skills exchange;
• Spread social innovation in the cultural environment;
• Network with other intercultural European creative hubs.
Using the Living Lab model to shape interaction for creative
entrepreneurship, the District is engaged in protecting, enhancing and
promoting territorial identity and hence cultural goods and activities in
innovative ways, thus stimulating growth, employment,
competitiveness, and social and territorial cohesion. In a similar vein,
the Apulia Region’s Strategic Plan of Culture
[http://www.piiilculturapuglia.it] promotes the full involvement of the
local productive system, community participation, creative talents, and
the formation of public-private partnerships to integrate cultural,
tourism and territorial marketing.
CASE STUDY: THE CREATIVE APULIA DISTRICT

7. A regional policy for the Cultural and Creative Industries first needs a
framework to identify the different local creative sectors and their
activities. A report produced for the UK DCMS by Frontier Economics16
suggests a model based on concentric ‘layers’ representing stages in the
creative value chain: content creation is at the ‘core’ and other functions
such as distribution and production of complementary outputs are in the
‘periphery’.
In addition, ‘Geographical Levels of Analysis’ are essential when evaluating
agglomerations of cultural and creative activities. These can be aligned
with official administrative borders or follow a more economically defined
logic. In this context, agglomeration indicators or ‘location quotients (LQ)
have shown to be effective for identifying the presence of creative clusters.
The LQ measures, for a given unit of geographical analysis, whether there
is an agglomeration of creative firms which is larger than the national
average, meaning that an LQ greater than 1 indicates a relative
specialisation in a given sector for the selected area.
Using these approaches, policy makers can see which areas in their region
have a high concentration of creative firms and which sectors are most
present. Patterns of creative sector co-location can be identified in the
relations between different creative sectors at different geographical
levels, highlighting instances of simultaneous specialisation (or
diversification) between the creative sectors in a given area.
POLICY TIPS
MAPPING CREATIVE CLUSTERS IN YOUR REGION
TALIA Policy Briefing n. 4
16 UK D��������� �� C������, M���� ��� S����� (2007) T�� C������� E������ P��������: A S������ �� P������� C�����������
�� 2006/7, DCMS, L�����.

8. Many regions have included the Living Lab as an implementation model
in their Smart Specialisation Strategies. This can also be leveraged for the
development of innovative cluster policies, since a Living Lab is a
network by definition: “physical regions, or innovation platforms, in
which stakeholders from Public-Private-People Partnerships (4Ps) of
companies, public agencies, universities, users and other stakeholders,
all collaborating for the creation, prototyping, validating, and testing of
new technologies, services, products, and systems in real-life contexts”17
.
The networked nature of Living Labs means that these can easily
establish cross-border Living Lab networks18
, creating a transnational
innovation ecosystem. This approach can effectively bring several
advantages for CCI clusters:
• creation of new business opportunities;
• experimentation, implementation & validation of new ideas and
technologies;
• learning about emerging users’ needs;
• creative added value from users;
• inter-sectoral knowledge and innovation transfer;
• intra and inter-cluster interaction;
• ecosystem creation;
• transnational networking and projection.
A good understanding of a territory’s creative strengths makes it easier to create
the right conditions for further growth. Building on this knowledge base,
LIVING LABS AS A CLUSTER AGGREGATION MODEL policymakers concerned with local economic development can take the
following suggestions into account19
:
• Catalyse latent clusters rather than try to build new ones from scratch.
Building clusters from scratch is notoriously difficult; far better to identify
whether there are any latent clusters ‘hidden’ in their regions or localities that
would benefit from networking and awareness-raising.
• Think about related variety. Research suggests that important synergies can be
established between some creative sectors, but not all. The same thing happens
between creative sectors and knowledge intensive business services, and
high-tech manufacturing. Local policymakers should harness these
complementarities, and avoid potentially wasteful ‘one-size-fits-all’ strategies
for creative clusters.
• Help remove barriers to collaboration. Even if they are aware of each other,
local creative businesses may be keen to protect their valuable ideas and be
wary of collaborating for fear of disclosing sensitive information. Local bodies
need to take this into account when they design initiatives to encourage
networking and knowledge sharing.
• Help local clusters build ‘global knowledge pipelines’. Evidence shows that
successful clusters are those capable of building connections with neighbouring
actors and convergent thematic players across the regional and country borders,
notably via the initiative of creative agents, the formation of trans-local
communities and knowledge platforms, and the creation or strengthening of
innovative businesses and value chains20
.
Above all, policy makers can leverage the pro-active engagement of a region’s
people and organisations in the Interreg-MED programme, and use the
opportunities offered by the TALIA Project to connect with transnational
activities that enhance and reinforce the effectiveness of regional policies
supporting cluster dynamics in the cultural and creative sectors.
Want to stay up to date with activities and events related to Creative and Social
Innovation in the MED programme? Sign up to the TALIA newsletter at
https://tinyurl.com/y8u46zv6
RECOMMENDATIONS FOR CLUSTER PROMOTION
TALIA Policy Briefing n. 4
17 L������ S. (2013) “C����������� ��� ������������� �� ������ ��� ��������”, T��������� I��������� M��������� R�����, 3(11): 5.
18 L������ S. ��� W��������� M. (2012) “T������ I��������� �� L����� L��� N������”, I������������ J������ �� P������ D����������, 17(1/2): 43–59.
19 D� P������ L. �� ��. (2009) T�� G�������� �� C���������, NESTA, L�����.
20 B������ H. ��� C������� P. (2014). “T�� �������� �� ���������: L���� ��������, ������ ��������� ��� �������� �����������—T����� �� ������”,
J������ �� E������� G��������, 14(5): 869-882.

9. TALIA Policy Briefing n. 4
CREATIVE CLUSTERS - DRAFT V4, 26.12.2017