Cluster basics: Cluster Initiatives Around the World: Preliminary Findings from Greenbook II

cluster-research.org
Cluster Initiatives Around the World:
Preliminary Findings from Greenbook II
Christian Ketels
Göran Lindqvist
Örjan Sölvell
The 9th Annual TCI Conference
Lyon
13 October 2006
Center for Strategy and
Competitiveness – CSC

TCI Conference, Hong Kong, November 2005, Lindqvist
2
Cluster initiatives
A cluster initiative is an organized collaboration
between companies and government and/or academia
in order to enhance the competitiveness of a cluster
Companies
Academia
Government
CI

3
GCIS 2003 – The Cluster
Initiative Greenbook
• Results from the
2003 survey
(GCIS 2003)
• Available free of
charge at:
www.cluster-
research.org

4
GCIS 2005/06:
1400 CIs identified globally
149
10
30
26
34
30
1
199
2
284
25
48
12
25
139
26
310
Financed by:

5
GCIS 2005/06:
713 replies from 71 countries
Transition 76Transition 76
Slovenia 11
Estonia 7
Lithuania 5
FYR Macedonia 5
Also: Albania, Armenia,
Bulgaria, Bosnia and
Herzegovina, Czech
Republic, Georgia,
Croatia, Hungary,
Latvia, Poland, Russia,
Serbia and Montenegro
and transnational
Slovenia 11
Estonia 7
Lithuania 5
FYR Macedonia 5
Also: Albania, Armenia,
Bulgaria, Bosnia and
Herzegovina, Czech
Republic, Georgia,
Croatia, Hungary,
Latvia, Poland, Russia,
Serbia and Montenegro
and transnational
Note: Number of complete or partial replies
Developing 100Developing 100 Advanced 536Advanced 536
Germany 49
USA 44
Sweden 41
UK 32
Canada 31
New Zealand 31
Australia 20
Austria 19
Japan 17
Spain 16
Norway 14
Finland 10
Also: Argentina, Belgium,
Switzerland, Cyprus,
Denmark, France, Greece,
Ireland, Iceland, Israel,
Italy, Luxemburg,
Netherlands, Portugal,
Taiwan, and transnational.
Germany 49
USA 44
Sweden 41
UK 32
Canada 31
New Zealand 31
Australia 20
Austria 19
Japan 17
Spain 16
Norway 14
Finland 10
Also: Argentina, Belgium,
Switzerland, Cyprus,
Denmark, France, Greece,
Ireland, Iceland, Israel,
Italy, Luxemburg,
Netherlands, Portugal,
Taiwan, and transnational.
India 10
South Africa 7
Iran 5
Nicaragua 5
Also: Afghanistan,
Bangladesh, Bolivia,
Brazil, Chile, China,
Colombia, Dominican
Republic, Ecuador,
Egypt, Gabon, Grenada,
Indonesia, Jamaica,
Lebanon, Mexico,
Mongolia, Mauritius,
Pakistan, El Salvador,
Turkey, Uganda,
Venezuela, Vietnam,
and transnational.
India 10
South Africa 7
Iran 5
Nicaragua 5
Also: Afghanistan,
Bangladesh, Bolivia,
Brazil, Chile, China,
Colombia, Dominican
Republic, Ecuador,
Egypt, Gabon, Grenada,
Indonesia, Jamaica,
Lebanon, Mexico,
Mongolia, Mauritius,
Pakistan, El Salvador,
Turkey, Uganda,
Venezuela, Vietnam,
and transnational.

6
New findings:
advanced economies
(Analysis done by Göran Lindqvist
as part of his PhD thesis)

7
Topics
• What drives CI performance?
– Context: Policy, Cluster, Trust
– Objectives: Activities
– Process: Initiation, Funding, Resources, Evaluation
• Are there systematic differences across
groups of countries?
– Regions
– Economic policy philosophies

8
Dimensions of CI Performance
Activities
Organization
Cluster

9
Impact of Context: Policy
• Supportive policy environment positively
related to performance: Policy matters!
• Organization: Strong effect of cluster policies
and intense competitiveness debate
• Activities: Strongest positive effect on
strengthening innovation and business
environment upgrading
• Cluster: Strong effect of cluster policies and
intense competitiveness debate
• Findings from Greenbook I confirmed

10
Impact of Context: Cluster
• Cluster growth is strongly correlated with all
dimensions of CI performance, more so than
cluster size
• Activities: Success in commercialization of
academic research related to
– Innovative capacity
– Global reach
– NOT local focus
• Findings from Greenbook I modified

11
Impact of Context: Trust
• Trust is a critical determinant for CI
performance in terms of ‘organization’,
‘cluster’, and activities related to innovation
– Trust of firms in other firms and government in
firms have the broadest effect
– Success in strengthening the cluster most strongly
affected by firm-firm trust

12
Impact of Objectives: Activities
• High number of activities (breadth) is
positively correlated with all dimensions of CI
performance
• No dominant effect of single activities,
although some more frequent than others

13
Seven groups of activities
Value chain
• Joint purchasing
• Joint logistics
• Joint production
• Supply-chain
development
Process/HR
• Technical training
• Management training
• Technical standards
• Education system
• Production processes
Bus. environment
• Regulations and policy
• Infrastructure
investment
Firm formation
• Incubator services
• Spin-off promotion
• Business services
Joint R&D
• Joint R&D projects
Intelligence
• Market intelligence
• Technical trends
Joint marketing
• Joint product branding
• Joint region branding
• Joint foreign market
promotion

14
Impact of Process: Initiation
• Nature of initiator (government versus
private sector) has no significant impact on
performance
– Government initiated efforts somewhat more
successful (active?) in increasing innovation
• Some negative impact if initiator made all
initial decisions, i.e. participants,
objectives, activities

15
Impact of Process: Funding
• Source of financing has generally no
significant impact on CI performance
– Higher company funding, especially from services
sold, improves organizational performance
– Government funding good to acquire additional
government funds
– National government funding more related to
innovation, regional government funding more
related to cluster organizations
• Source of private sector funding is increasing
over time in ‘surviving’ CIs

16
Funding patterns over time
0
10
20
30
40
50
60
70
80
90
100
0 2 4 6 8 10 12
Age, years
Other
Support from international donors
Support from academic institutions
Support from organizations for
collaboration
Support from local/regional
government
Support from national government
Sales of services
Fees from firms, for example
membership fees
Note! Includes all respondents in all types of economies.
N=475 188 52 20

17
Impact of Process: Resources
• Better equipped CIs perform better on
organizational performance; weaker effects
on other performance dimensions
• Cooperation with other CIs, especially in
other regions, supports performance
– Effect particularly strong on business environment
upgrading
• Strong membership and strong penetration
of potential members positive for
– Participation of academic institutions particularly
important for increasing innovation

18
Impact of Process: Measurement
• Quantitative targets generally associated
with higher performance, especially in
activities and cluster upgrading
• Measuring outcomes is generally associated
with higher performance, especially in the
areas measured
• New issue

19
Regional ”flavours”
AusAus & NZ& NZ
JapanJapan
N AmN Am
N EurN Eur
W EurW Eur
S EurS Eur

20
Government initiation
Aus NZAus NZ
N AmN Am
NN EurEur
WW EurEur
SS EurEur
JapanJapan 100% by government*, national100% by government*, national
40% by government, mostly local/regional40% by government, mostly local/regional
* Could be an effect of single-source respondent search

21
Activities
Aus NZAus NZ
N AmN Am
NN EurEur
WW EurEur
SS EurEur
JapanJapan
High on joint R&D, joint production, subsidiesHigh on joint R&D, joint production, subsidies
Low on regional brandingLow on regional branding
High on product brandingHigh on product branding
Very low on joint R&D, technical intelligenceVery low on joint R&D, technical intelligence
High on infrastructure lobbyingHigh on infrastructure lobbying
Low on joint R&DLow on joint R&D
High on education development, regional brandingHigh on education development, regional branding
Low on market intelligenceLow on market intelligence
(No dominance of specific activities)(No dominance of specific activities)
High on market intelligence, technical intelligenceHigh on market intelligence, technical intelligence
Low on regional brandingLow on regional branding
Compared to the others:

22
Policy models
• ‘Liberal market
economies’
• More focused on export
growth
• More CIs initiated by
companies
• ‘Coordinated market
economies’
• More focused on
upgrading innovation
• More CI staff
• More national cluster
policies
• More trust across
groups
• Stronger role of
government in CIs

23
New findings:
developing and
transition economies

24
Topics
• Differences of CIs by stage of host country
development
• Differences of CIs in developing/transition
economies if foreign donors are involved
• Context: Policy, Cluster
• CIs: Industry selection, Objectives,

25
Policy environment:
Stages of Development
1
7
Averageresponse
Dev. Trans. Adv.
1
7
Averageresponse
Dev. Trans. Adv.
Economic dev’t
policy is driven
by initiatives on
the national
gov’t level, not
local/regional
The national
government has
a clear
strategy for
improving
competitiveness
Cluster
policies are a
core element in
economic
development
policy
Competitive-
ness is a key
issue in the
economic
policy debate

26
Policy environment:
Donor-funded projects
1
7
Averageresponse
Bus. Gov't Donor
1
7
Averageresponse
Bus. Gov't Donor
Economic dev’t
policy is driven
by initiatives on
the national
gov’t level, not
local/regional
The national
government has
a clear
strategy for
improving
competitiveness
Cluster
policies are a
core element in
economic
development
policy
Competitive-
ness is a key
issue in the
economic
policy debate
Developing and transition economies.
Initiator:

27
Policy environment:
observations and issues
• There is a non-linear relationship from
developing to transition to advanced
• High degree of centralization in developing
and transition economies – what is the role
of local government?
• Transition economies are more focused on
macro economic issues – are micro economic
policy overlooked?

28
Social capital
1
7
Averageresponse
Dev. Trans. Adv.
1
7
Averageresponse
Dev. Trans. Adv.
Firm’s trust
in other firms
Firm’s trust
in government
Firm’s trust
in academia
Government’s
trust in firms

29
Social capital
1
7
Averageresponse
Bus. Gov't Donor
1
7
Averageresponse
Bus. Gov't Donor
Developing and transition economies.
Firm’s trust
in other firms
Firm’s trust
in government
Firm’s trust
in academia
Government’s
trust in firms
Initiator:

30
Cluster strength
1
7
Innovativecapacity
Competitive
position
Relatedandsup-
portingindustries
Levelsof
valuechain
Business
environ't
Global
marketreach
Growth
Clustermaturity
Economic
importance
Rivalry
Averageresponse
Dev. Trans. Adv.
1
7
Innovativecapacity
Competitive
position
Relatedandsup-
portingindustries
Levelsof
valuechain
Business
environ't
Global
marketreach
Growth
Clustermaturity
Economic
importance
Rivalry
Averageresponse
Dev. Trans. Adv.

31
Cluster strength
1
7
Number of firms Levels of
value chain
Economic
importance
Averageresponse
Bus. Gov't Donor
1
7
Number of firms Levels of
value chain
Economic
importance
Averageresponse
Bus. Gov't Donor
Developing only.
Developing

32
Cluster strength
1
7
Global
market
reach
Innovative
capacity
Competitive
position
Business
environ't
Averageresponse
Bus. Gov't Donor
1
7
Global
market
reach
Innovative
capacity
Competitive
position
Business
environ't
Averageresponse
Bus. Gov't Donor
Transition only.
Transition

33
Cluster strength
1
7
Firms' trust in
firms
Firms' trust in
gov't
Firm's trust in
academia
Gov'ts trust in
firms
Averageresponse
Bus. Gov't Donor
1
7
Firms' trust in
firms
Firms' trust in
gov't
Firm's trust in
academia
Gov'ts trust in
firms
Averageresponse
Bus. Gov't Donor
Developing and transition.

34
Cluster strength:
• There is a general focus on export oriented
clusters – are regional trade or local services
overlooked?
• Donors end up with smaller and weaker
clusters with less trust

35
A simple industry grouping
TourismTourism
Aerospace; Biotechnology;
Entertainment, media; Environment
services; Finance; ICT; Medical
equipment; Pharmaceuticals;
Photonics; Printing and publishing;
Transports and logistics
“High tech”,
advanced services
Automotive; Chemicals; Forest
products, paper; Metal
manufacturing; Oil, petrochemical;
Plastics; Power equipment
Capital intensive
manufacturing
Agriculture; Fishing; Furniture;
Jewelry; Leather; Shoes; Textiles;
Wine
Agriculture,
food, basic
manufacturing

36
Industry selection
65%
34%
65%
0%
20%
40%
60%
80%
100%
Argriculture,
food, basic
manuf.
Capital
intensive
manuf.
"High tech",
advanced
services
Tourism
Shareofrespondents
Dev Trans. Adv.
65%
34%
65%
0%
20%
40%
60%
80%
100%
Argriculture,
food, basic
manuf.
Capital
intensive
manuf.
"High tech",
advanced
services
Tourism
Shareofrespondents
Dev Trans. Adv.

37
55%
69%
58%
0%
100%
Bus. Gov't Donor
55%
69%
58%
0%
100%
Bus. Gov't Donor
42%45%43%
0%
100%
Argriculture,
food, basic
manuf.
Capital
intensive
manuf.
"High tech",
advanced
services
Tourism
42%45%43%
0%
100%
Argriculture,
food, basic
manuf.
Capital
intensive
manuf.
"High tech",
advanced
services
Tourism
Industry selection
Shareofrespondents
Transition
Developing

38
Industry selection:
• Business takes initiative where they can, i.e.
when trust is high
• In transition economies, business focuses on
“high tech”, government on capital intensive,
and donors on basic industry

39
Objectives
0%
20%
40%
60%
80%
100%
Increase
value-added
Increaseexports
Supportinnovation
Supplychaindev't
Incr.employment
Improve
bus.environ't
Attractfirms
andinvestment
Reduce
prod'ncosts
Seekfunds
Commercialize
academicresearch
Shareofrespondents
Dev. Trans. Adv.
0%
20%
40%
60%
80%
100%
Increase
value-added
Increaseexports
Supportinnovation
Supplychaindev't
Incr.employment
Improve
bus.environ't
Attractfirms
andinvestment
Reduce
prod'ncosts
Seekfunds
Commercialize
academicresearch
Shareofrespondents
Dev. Trans. Adv.

40
0%
100%
Bus. Gov't Donor
0%
100%
Bus. Gov't Donor
0%
100%
Increase
value
added
Increase
exports
Increase
employ-
ment
Support
innovation
Com'lize
academic
research
0%
100%
Increase
value
added
Increase
exports
Increase
employ-
ment
Support
innovation
Com'lize
academic
research
Objectives
Shareofrespondents
Transition
Developing

41
Objectives:
• Surprisingly low focus on attracting FDI;
expected to be higher in transition economies
• Donors have innovation-oriented objectives
in developing economies, but firm-oriented
objectives (value chain, export) in transition
economies

42
15%
37%
46%
0%
20%
40%
60%
80%
100%
Dev. Trans. Adv.
Shareofrespondents
1-10 companies 11-20 companies
21-50 companies 51+ companies
15%
37%
46%
0%
20%
40%
60%
80%
100%
Dev. Trans. Adv.
Shareofrespondents
1-10 companies 11-20 companies
21-50 companies 51+ companies
Company participation
Median:
18
Median:
25
Median:
40

43
0%
20%
40%
60%
80%
100%
Dev. Trans. Adv.
Shareofrespondents
< 10%
10-25%
26-50%
51-75%
76-90%
> 90%
0%
20%
40%
60%
80%
100%
Dev. Trans. Adv.
Shareofrespondents
< 10%
10-25%
26-50%
51-75%
76-90%
> 90%
Company participation
Participation
rate:

44
0%
20%
40%
60%
80%
100%
Dev. Tra. Adv. Dev. Tra. Adv. Dev. Tra. Adv.
Shareofrespondents
0-9%
10-
50%
51-
100%
0%
20%
40%
60%
80%
100%
Dev. Tra. Adv. Dev. Tra. Adv. Dev. Tra. Adv.
Shareofrespondents
0-9%
10-
50%
51-
100%
Size of participating firms
Micro
(1-9 empl.)
Small
(10-50 empl.)
Informal
sector
Share of
partici-
pating
firms:

45
0%
20%
40%
60%
80%
100%
Dev. Tra. Adv.
Shareofrespondents
0-9%
10-25%
26-100%
0%
20%
40%
60%
80%
100%
Dev. Tra. Adv.
Shareofrespondents
0-9%
10-25%
26-100%
Foreign-owned participants
Share of
participating
firms:

46
Participants:
• Fewer companies are participating in
developing and transition economies – simply
because clusters are smaller, or by design to
have “manageable” CIs?
• We expected the share of foreign-owned
companies to be higher, especially in
transition economies

47
39%33%
0%
80%
Bus. Gov't Donor
39%33%
0%
80%
Bus. Gov't Donor
55%
34%
0%
80% 55%
34%
0%
80%
47%49%
0%
80%
Initiate
CI
Select initial
participants
Decide initial
activities
47%49%
0%
80%
Initiate
CI
Select initial
participants
Decide initial
activities
Influence: short run
Shareofrespondents
Transition
Developing
Advanced

48
Influence: long run
Business sector's current influence on activities
2003-
2005
2003-
2005
2000-
2002
2000-
2002
2003-
2005
2000-
2002
1
7
Business initiated Government
initiated
Donor initiated
Averageresponse Business sector's current influence on activities
2003-
2005
2003-
2005
2000-
2002
2000-
2002
2003-
2005
2000-
2002
1
7
Business initiated Government
initiated
Donor initiated
Averageresponse
Transition and developing.

49
Control and influence:
• Conflicting observations: in the initiation
phase, donors hand over less influence over
to business than government; in the long run
they hand over more
• Donors appear to be reluctant to involve
government

50
Measuring impact
0% 20% 40% 60% 80% 100%
Number of companies
Production and sales volume
Employment
Exports
Innovation
Business environment
Imports
Gov't funding and subsidies
FDI
Wages
Prices, value-added
Prod. cost and productivity
Share of respondents
Dev.
Tra.
Adv.
0% 20% 40% 60% 80% 100%
Number of companies
Employment
Exports
Innovation
Imports
FDI
Wages
Prices, value-added
Dev.
Tra.
Adv.

51
Measuring impact
0% 20% 40% 60% 80% 100%
Employment
Exports
Number of companies
Imports
Wages
FDI
Innovation
Prices, value-added
Dev.
Tra.
0% 20% 40% 60% 80% 100%
Employment
Exports
Number of companies
Imports
Wages
FDI
Innovation
Prices, value-added
Dev.
Tra.
Donors

52
Measuring impact:
• More measuring in transition than in
developing – need or ability?
• Donors measure below average in developing
but above average in transition economies

53
Next Steps
• Analysis of the interaction of different factors
in driving performance
• Analysis of industry effects
• Publication….

Cluster basics: Cluster Initiatives Around the World: Preliminary Findings from Greenbook II

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