The document discusses how government policies should evolve to support clusters as they mature. It proposes that clusters can be measured on a maturity scale based on factors like industry scale, structure, and networks. Policies should focus on different areas depending on whether a cluster is emerging, growing, or mature. For emerging clusters, policies could improve factor conditions and demand. Growing clusters may benefit from initiatives to stimulate competition, cooperation, and skills. Mature clusters may need policies that eliminate rigidities and support innovation to avoid decline. The role of government is also seen as evolving from direct assistance to an indirect role of facilitating collaboration as clusters become more advanced.

1. Dynamising cluster support through its maturity
Prof. dr. Elvira Haezendonck and drs. Ellen Van Den Driessche
VUB
Affiliate member of Harvard Business School,
Institute for Strategy and Competitiveness

2. Problem statement
 Theory of cluster policy tells us that governments should aim
to reinforce the development and upgrading of all clusters,
not choose among them ( Industry policy)
 Appropriate government policies shift as clusters mature and
develop:
 Different policies prove to be successful in different stages of cluster maturity
 The role of cluster actors is dynamic as clusters mature and develop
 Research question: “Which support for clusters is appropriate
for each level of maturity?”
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3. Content
1.Cluster maturity measurement
2.Policies to support cluster competitiveness
3.Appropriate policies based on maturity levels
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4. 1. How to measure maturity levels? (1)
The maturity of a cluster: development status in the growth process
?
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5. 1. How to measure maturity levels? (2)
1.A critical mass of locally-based companies or subsidiaries of foreign
companies in the cluster who have met the market test
2.Some meaningful cluster-specific advantages generalized strengths that
are of particular importance to the cluster
• E.g., unique demand, specialized talent, favorable location, trusted and
appropriate regulatory framework
3.The presence of a world class multinational company in the cluster with an
important investment in the country/region and a commitment to upgrading
4.Strength in a closely related cluster or clusters
 Meeting at least two of these conditions is basic requirement for success in cluster
development
 Distinguishing emerging clusters from wishful thinking clusters
Pre-conditions for cluster activation and development:
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6. 1. How to measure maturity levels? (3)
Determinants of cluster’s maturity
Industry scale
o Number of firms
o Production scale
o Economies of
scale
Industry structure
o Value chain
o Industry position
o Related clusters
Cluster network
o Interconnections
o Specialisation
o Cooperation
o Social capital
network
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7. 1. How to measure maturity levels? (4)
• Level of global integration
 As clusters evolve, cluster participants tend to develop increasingly global
strategies (more export/import)
 Any effort to keep cluster participants local to protect competitive advantages is
misguided and counterproductive
• The ultimate test of the health or decline of a cluster is its rate of
innovation
 A cluster that is investing and innovating at home base versus one that
improves productivity only through shrinking and outsourcing
Other indicators of maturity
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8. 2. Policies to support cluster competitiveness (1)
Government plays a variety of roles in an economy
1. Achieve macroeconomic and political stability
2. Improve general micro-economic capacity of the economy by
improving the efficiency and quality of inputs identified in the diamond
and the institutions that provide them.
3. Establish the overall mircoeconomic rules and incentives to
encourages productivity growth (e.g. competition policies, tax system,
intellectual property laws)
 These roles are necessary for economic progress, however, they may not be
sufficient…
4. Facilitating cluster development and upgrading
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9. 2. Policies to support cluster competitiveness (2)
Economic policy at the cluster level
o Most relevant policy level: cluster level (≠ firm or industry level)
o Should aim to reinforce the development and upgrading of all clusters, not choose
among them.
o Should reinforce and build on established and emerging clusters, rather than
attempt to create entirely new ones
o Cluster development can be seeded and reinforced by inbound FDI: attracting multiple
companies in the same field by investing in specialised training, infrastructure, and other
aspects of the business environment
o Cluster upgrading involves recognizing the presence of a cluster and then removing
obstacles and eliminating inefficiencies that impede cluster productivity and innovation
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10. Do’s and don’ts for policies: push and challenge rather than help and support
• Government as essential helper and supporter: policies that convey short term cost advantages
such as subsidies, import protection, arranged mergers but often hurt companies in the long run as
they undermine innovation.
• Government as a catalyst and challenger: policies that succeed are those that create an
environment in which companies can gain competitive advantage. It is an indirect, rather than direct
role.
 Basic principles:
o Focus on specialized factor creation
o Avoid intervening in factor and currency markets
o Enforce strict product, safety and environmental standards
o Sharply limit direct cooperation among industry rivals
o Promote goals that lead to sustained investment
o Deregulate competition
o Enforce domestic antitrust policies
2. Policies to support cluster competitiveness (3)
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11. 2. Policies to support cluster competitiveness (4)
Clusters and economic policy
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12. 2. Policies to support cluster competitiveness (5)
Source: Toussaint-Comeau et al., 2016
Cluster-Based Development Strategies for Inner Cities
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13. 2. Policies to support cluster competitiveness (6)
Cluster upgrading policies for IFC, based on Diamond of M. Porter (1990)
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14. • Institutions for collaboration are formal and informal organizations that - facilitate
the exchange of information and technology - and - foster cooperation and
coordination.
• The overall incidence of IFCs seems to be rising, as the knowledge and skill intensity
of competition is rising (maturity stage).
• Examples:
o Universities
o Autonomous government entities offering services to companies
o Professional associations
o Joint private/public advisory councils
o Industry associations
o Cluster organizations
o Incubators
2. Policies to support cluster competitiveness (7)
Role of Institutions For Collaboration (IFCs):
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15. 1. Birth Clusters or start-up clusters
Motivation for the formation of early companies:
o Availability of pools of factors
o Unusual, sophisticated local demand
o Prior existence of supplier and/or related industries
o One or two innovative companies that stimulate the growth of many others (spin-
offs)
 Policies should mainly focus on:
o Factor conditions: e.g. advanced and specialized factor development
o Demand conditions: e.g. by creating streamlined product innovation regulatory
standards
3. Appropriate policies based on maturity level (1)
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16. 2. Growth clusters
Three particular areas deserve special attention:
o Intensity of local competition
o Overall environment for new business formation
o Efficiency of formal and informal mechanisms for bringing cluster participants
together
 Policies should mainly focus on:
o Context for rivalry: e.g. eliminate barriers to local competition, attract FDI
o Related and supporting industries: stimulate cooperation and knowledge diffusion
among firms, institutions, related industries and other cluster participants
 Importance of existence of IFC
o Attract skilled people through offering greater opportunities: seeking out people,
technologies and even suppliers from elsewhere.
3. Appropriate policies based on maturity level (2)
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17. 3. Mature clusters
What may cause mature clusters to go in decline: endogenous, and
exogenous elements:
o Internal sources: Local rigidities that diminish productivity and innovation
 e.g. restrictive union rules, or regulatory inflexibility
o External sources: External threats to cluster’s productivity and innovation
 e.g. technological discontinuities, a shift in buyer needs
 To avoid decline stage, policies should mainly focus on:
o Context for rivalry: eliminating barriers to competition
o Related and supporting industries: focus on cooperation and innovation
 Indirect role of government
3. Appropriate policies based on maturity level (3)
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18. 3. Appropriate policies based on maturity level (4)
FLEMISH BIOTECH CLUSTER
CLUSTER MAP
08-05-19 | 20
Related industries
Biotechnology companies
Medical technology
suppliers
Supporting industries
Institutions for collaboration
Research centers
Government agencies
• Research institutes
- VIB
- IMEC
• Universities
• FIT
• VLAIO
• EuropaBio
• Bio.be
• Flanders.bio
Suppliers
Pharma Chemistry Agribusiness Transport
Cluster organisations
Bio-
pharmaceutical
Agricultural
Industrial
• Venture capital
• Business service providers
- Patent attorneys
- R&D consultants
- Management consultants
- …
• Contract research organisations
• Contract manufacturing
organisations
Bioinformatics
Engineering
suppliers
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19. 3. Appropriate policies based on maturity level (5)
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20. • Early priorities involve improving infrastructure and eliminating diamond
disadvantages
• Later roles revolve more around removing constraints and impediments to
innovation
• Important role for other cluster actors/participants (IFC) especially as cluster
matures
• Our current research focuses on:
o Cluster maturity framework development
o Evolution cluster’s needs
o Assess the role of cluster participants
3. Appropriate policies based on maturity level (6)
Government policies should evolve together with cluster’s needs based
on cluster’s maturity level
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21. Thank you.
For more information:
ellen.van.den.driessche@vub.be
or elvira.haezendonck@vub.be
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