TCI2013 Knowledge-driven entrepreneurship in clusters

1. Knowledge-driven Entrepreneurship in Clusters: A Comparative Study of Two Information Technology Clusters in Turkey and Finland Murat Akpinar & Melike Mermercioglu Academic Summit: Innovation and business models in clusters 4 September 2013

3. Outline 1. Objectives 2. Theoretical framework 3. Methodology 4. Results 5. Implications and future prospects

4. Objectives • Assess the knowledge potentials of clusters and identify dimensions that lead to enhanced entrepreneurial activity • Understand how clusters in advanced economies perform in their knowledge potential vs. clusters in emerging economies

5. Theoretical Framework The emerald model adapted from Sasson and Reve (2012)

6. Hypotheses Educational attractiveness Talent attractiveness R&D&I attractiveness Ownership attractiveness Environmental attractiveness Cluster attractiveness Knowledge dynamics Level of entrepreneurial activity / new business development Knowledge potential ++ + + + + + +

7. Cluster benchmarking (1) IT cluster in Sariyer, Istanbul IT cluster in Central Finland Location and cluster characteristics Emerging economy, large domestic market, constructed cluster (technopark at university campus), both SMEs and large companies Advanced economy, small domestic market, evolutionary cluster, mostly small companies Cluster size No. of companies: 86 Total employment: 3,832 Annual revenue: 86 million Euro No. of companies: 410 Total employment: 2,913 Annual revenue: 527 million Euro Educational attractiveness 5 universities, admitting 1,049 students per year to IT studies. Graduates per year: 701 (582 bachelor, 102 master, 17 doctoral) Equally Attractive 2 universities, admitting ca. 400 students per year to IT related studies. Graduates per year: 354 (223 bachelor, 115 master, 16 doctoral) Equally Attractive Talent attractiveness PPP adjusted (vs. Finland) average monthly salary: 6,136 Euro 49% more than average salary in Turkey More Attractive Average monthly salary: 4,500 Euro 42% more than average salary in Finland Attractive

15. Cluster benchmarking (1) IT cluster in Sariyer, Istanbul IT cluster in Central Finland Location and cluster characteristics Emerging economy, large domestic market, constructed cluster (technopark at university campus), both SMEs and large companies Advanced economy, small domestic market, evolutionary cluster, mostly small companies Cluster size No. of companies: 86 Total employment: 3,832 Annual revenue: 86 million Euro No. of companies: 410 Total employment: 2,913 Annual revenue: 527 million Euro Educational attractiveness 5 universities, admitting 1,049 students per year to IT studies. Graduates per year: 701 (582 bachelor, 102 master, 17 doctoral) 2 universities, admitting ca. 400 students per year to IT related studies. Graduates per year: 354 (223 bachelor, 115 master, 16 doctoral) Equally Attractive Talent attractiveness PPP adjusted (vs. Finland) average monthly salary: 6,136 Euro 49% more than average salary in Turkey More Attractive Average monthly salary: 4,500 Euro 42% more than average salary in Finland Attractive

16. Cluster benchmarking (1) IT cluster in Sariyer, Istanbul IT cluster in Central Finland Location and cluster characteristics Emerging economy, large domestic market, constructed cluster (technopark at university campus), both SMEs and large companies Advanced economy, small domestic market, evolutionary cluster, mostly small companies Cluster size No. of companies: 86 Total employment: 3,832 Annual revenue: 86 million Euro No. of companies: 410 Total employment: 2,913 Annual revenue: 527 million Euro Educational attractiveness 5 universities, admitting 1,049 students per year to IT studies. Graduates per year: 701 (582 bachelor, 102 master, 17 doctoral) 2 universities, admitting ca. 400 students per year to IT related studies. Graduates per year: 354 (223 bachelor, 115 master, 16 doctoral) Talent attractiveness PPP adjusted (vs. Finland) average monthly salary: 6,136 Euro 49% more than average salary in Turkey More Attractive Average monthly salary: 4,500 Euro 42% more than average salary in Finland Attractive

19. Cluster benchmarking (1) IT cluster in Sariyer, Istanbul IT cluster in Central Finland Location and cluster characteristics Emerging economy, large domestic market, constructed cluster (technopark at university campus), both SMEs and large companies Advanced economy, small domestic market, evolutionary cluster, mostly small companies Cluster size No. of companies: 86 Total employment: 3,832 Annual revenue: 86 million Euro No. of companies: 410 Total employment: 2,913 Annual revenue: 527 million Euro Educational attractiveness 5 universities, admitting 1,049 students per year to IT studies. Graduates per year: 701 (582 bachelor, 102 master, 17 doctoral) Equally Attractive 2 universities, admitting ca. 400 students per year to IT related studies. Graduates per year: 354 (223 bachelor, 115 master, 16 doctoral) Equally Attractive Talent attractiveness PPP adjusted (vs. Finland) average monthly salary: 6,136 Euro 49% more than average salary in Turkey Average monthly salary: 4,500 Euro 42% more than average salary in Finland Attractive

20. Cluster benchmarking (1) IT cluster in Sariyer, Istanbul IT cluster in Central Finland Location and cluster characteristics Emerging economy, large domestic market, constructed cluster (technopark at university campus), both SMEs and large companies Advanced economy, small domestic market, evolutionary cluster, mostly small companies Cluster size No. of companies: 86 Total employment: 3,832 Annual revenue: 86 million Euro No. of companies: 410 Total employment: 2,913 Annual revenue: 527 million Euro Educational attractiveness 5 universities, admitting 1,049 students per year to IT studies. Graduates per year: 701 (582 bachelor, 102 master, 17 doctoral) Equally Attractive 2 universities, admitting ca. 400 students per year to IT related studies. Graduates per year: 354 (223 bachelor, 115 master, 16 doctoral) Equally Attractive Talent attractiveness PPP adjusted (vs. Finland) average monthly salary: 6,136 Euro 49% more than average salary in Turkey Average monthly salary: 4,500 Euro 42% more than average salary in Finland

22. Cluster benchmarking (2) IT cluster in Sariyer, Istanbul IT cluster in Central Finland R&D&I attractiveness No. of patents per year: 15 Annual R&D spending (Turkey in 2011): USD 839 million Not Attractive No. of patents per year: 67 Annual R&D spending (Finland in 2011): USD 3,185 million Very Attractive Ownership attractiveness FDI in IT sector (Turkey, 2007 – 2011): USD 455 million (0.6% of all FDI) Total of 10 venture capital investments since 2003 Not Attractive FDI in IT sector (Finland, 2007 – 2011): USD 2,719 million (12.8% of all FDI) Venture capital 4% of all investments Better public funding opportunities More Attractive Environmental attractiveness Waste per person per day: 2.58 kg Air pollution (PM10): 66 ug/m3 Constructing renewable energy cluster nearby Not Directly Relevant Waste per person per day: 0.73 kg Air pollution (PM10): 19 ug/m3 Leading bioenergy cluster nearby Not Directly Relevant

23. Cluster benchmarking (2) IT cluster in Sariyer, Istanbul IT cluster in Central Finland R&D&I attractiveness No. of patents per year: 15 Annual R&D spending (Turkey in 2011): USD 839 million No. of patents per year: 67 Annual R&D spending (Finland in 2011): USD 3,185 million Very Attractive Ownership attractiveness FDI in IT sector (Turkey, 2007 – 2011): USD 455 million (0.6% of all FDI) Total of 10 venture capital investments since 2003 Not Attractive FDI in IT sector (Finland, 2007 – 2011): USD 2,719 million (12.8% of all FDI) Venture capital 4% of all investments Better public funding opportunities More Attractive Environmental attractiveness Waste per person per day: 2.58 kg Air pollution (PM10): 66 ug/m3 Constructing renewable energy cluster nearby Not Directly Relevant Waste per person per day: 0.73 kg Air pollution (PM10): 19 ug/m3 Leading bioenergy cluster nearby Not Directly Relevant

24. Cluster benchmarking (2) IT cluster in Sariyer, Istanbul IT cluster in Central Finland R&D&I attractiveness No. of patents per year: 15 Annual R&D spending (Turkey in 2011): USD 839 million No. of patents per year: 67 Annual R&D spending (Finland in 2011): USD 3,185 million Ownership attractiveness FDI in IT sector (Turkey, 2007 – 2011): USD 455 million (0.6% of all FDI) Total of 10 venture capital investments since 2003 Not Attractive FDI in IT sector (Finland, 2007 – 2011): USD 2,719 million (12.8% of all FDI) Venture capital 4% of all investments Better public funding opportunities More Attractive Environmental attractiveness Waste per person per day: 2.58 kg Air pollution (PM10): 66 ug/m3 Constructing renewable energy cluster nearby Not Directly Relevant Waste per person per day: 0.73 kg Air pollution (PM10): 19 ug/m3 Leading bioenergy cluster nearby Not Directly Relevant

27. Cluster benchmarking (2) IT cluster in Sariyer, Istanbul IT cluster in Central Finland R&D&I attractiveness No. of patents per year: 15 Annual R&D spending (Turkey in 2011): USD 839 million Not Attractive No. of patents per year: 67 Annual R&D spending (Finland in 2011): USD 3,185 million Very Attractive Ownership attractiveness FDI in IT sector (Turkey, 2007 – 2011): USD 455 million (0.6% of all FDI) Total of 10 venture capital investments since 2003 FDI in IT sector (Finland, 2007 – 2011): USD 2,719 million (12.8% of all FDI) Venture capital 4% of all investments Better public funding opportunities More Attractive Environmental attractiveness Waste per person per day: 2.58 kg Air pollution (PM10): 66 ug/m3 Constructing renewable energy cluster nearby Not Directly Relevant Waste per person per day: 0.73 kg Air pollution (PM10): 19 ug/m3 Leading bioenergy cluster nearby Not Directly Relevant

28. Cluster benchmarking (2) IT cluster in Sariyer, Istanbul IT cluster in Central Finland R&D&I attractiveness No. of patents per year: 15 Annual R&D spending (Turkey in 2011): USD 839 million Not Attractive No. of patents per year: 67 Annual R&D spending (Finland in 2011): USD 3,185 million Very Attractive Ownership attractiveness FDI in IT sector (Turkey, 2007 – 2011): USD 455 million (0.6% of all FDI) Total of 10 venture capital investments since 2003 FDI in IT sector (Finland, 2007 – 2011): USD 2,719 million (12.8% of all FDI) Venture capital 4% of all investments Better public funding opportunities Environmental attractiveness Waste per person per day: 2.58 kg Air pollution (PM10): 66 ug/m3 Constructing renewable energy cluster nearby Not Directly Relevant Waste per person per day: 0.73 kg Air pollution (PM10): 19 ug/m3 Leading bioenergy cluster nearby Not Directly Relevant

31. Cluster benchmarking (2) IT cluster in Sariyer, Istanbul IT cluster in Central Finland R&D&I attractiveness No. of patents per year: 15 Annual R&D spending (Turkey in 2011): USD 839 million Not Attractive No. of patents per year: 67 Annual R&D spending (Finland in 2011): USD 3,185 million Very Attractive Ownership attractiveness FDI in IT sector (Turkey, 2007 – 2011): USD 455 million (0.6% of all FDI) Total of 10 venture capital investments since 2003 Not Attractive FDI in IT sector (Finland, 2007 – 2011): USD 2,719 million (12.8% of all FDI) Venture capital 4% of all investments Better public funding opportunities More Attractive Environmental attractiveness Waste per person per day: 2.58 kg Air pollution (PM10): 66 ug/m3 Constructing renewable energy cluster nearby Waste per person per day: 0.73 kg Air pollution (PM10): 19 ug/m3 Leading bioenergy cluster nearby Not Directly Relevant

32. Cluster benchmarking (2) IT cluster in Sariyer, Istanbul IT cluster in Central Finland R&D&I attractiveness No. of patents per year: 15 Annual R&D spending (Turkey in 2011): USD 839 million Not Attractive No. of patents per year: 67 Annual R&D spending (Finland in 2011): USD 3,185 million Very Attractive Ownership attractiveness FDI in IT sector (Turkey, 2007 – 2011): USD 455 million (0.6% of all FDI) Total of 10 venture capital investments since 2003 Not Attractive FDI in IT sector (Finland, 2007 – 2011): USD 2,719 million (12.8% of all FDI) Venture capital 4% of all investments Better public funding opportunities More Attractive Environmental attractiveness Waste per person per day: 2.58 kg Air pollution (PM10): 66 ug/m3 Constructing renewable energy cluster nearby Waste per person per day: 0.73 kg Air pollution (PM10): 19 ug/m3 Leading bioenergy cluster nearby Not Directly Relevant

33. Cluster benchmarking (2) IT cluster in Sariyer, Istanbul IT cluster in Central Finland R&D&I attractiveness No. of patents per year: 15 Annual R&D spending (Turkey in 2011): USD 839 million Not Attractive No. of patents per year: 67 Annual R&D spending (Finland in 2011): USD 3,185 million Very Attractive Ownership attractiveness FDI in IT sector (Turkey, 2007 – 2011): USD 455 million (0.6% of all FDI) Total of 10 venture capital investments since 2003 Not Attractive FDI in IT sector (Finland, 2007 – 2011): USD 2,719 million (12.8% of all FDI) Venture capital 4% of all investments Better public funding opportunities More Attractive Environmental attractiveness Waste per person per day: 2.58 kg Air pollution (PM10): 66 ug/m3 Constructing renewable energy cluster nearby Waste per person per day: 0.73 kg Air pollution (PM10): 19 ug/m3 Leading bioenergy cluster nearby

35. Cluster benchmarking (3) IT cluster in Sariyer, Istanbul IT cluster in Central Finland Cluster attractiveness Two-star cluster Employment: 3,832 (4% of the region) Regional agglomeration (LQ): 15.1 National agglomeration: 0.6 Attractive Two-star cluster Employment: 2,913 (4.6% of the region) Regional agglomeration (LQ): 7.5 National agglomeration: 1.4 Attractive Knowledge Dynamics Moderate level of competition Moderate level of cooperation (mostly with customers) Low level of employee turnover Moderately Attractive High level of competition High level of cooperation with customers and suppliers, moderate levels with research institutes, governmental organizations and related industries, and lowest level with competitors Moderate level of employee turnover More Attractive

36. Cluster benchmarking (3) IT cluster in Sariyer, Istanbul IT cluster in Central Finland Cluster attractiveness Two-star cluster Employment: 3,832 (4% of the region) Regional agglomeration (LQ): 15.1 National agglomeration: 0.6 Two-star cluster Employment: 2,913 (4.6% of the region) Regional agglomeration (LQ): 7.5 National agglomeration: 1.4 Attractive Knowledge Dynamics Moderate level of competition Moderate level of cooperation (mostly with customers) Low level of employee turnover Moderately Attractive High level of competition High level of cooperation with customers and suppliers, moderate levels with research institutes, governmental organizations and related industries, and lowest level with competitors Moderate level of employee turnover More Attractive

37. Cluster benchmarking (3) IT cluster in Sariyer, Istanbul IT cluster in Central Finland Cluster attractiveness Two-star cluster Employment: 3,832 (4% of the region) Regional agglomeration (LQ): 15.1 National agglomeration: 0.6 Two-star cluster Employment: 2,913 (4.6% of the region) Regional agglomeration (LQ): 7.5 National agglomeration: 1.4 Knowledge Dynamics Moderate level of competition Moderate level of cooperation (mostly with customers) Low level of employee turnover Moderately Attractive High level of competition High level of cooperation with customers and suppliers, moderate levels with research institutes, governmental organizations and related industries, and lowest level with competitors Moderate level of employee turnover More Attractive

40. Cluster benchmarking (3) IT cluster in Sariyer, Istanbul IT cluster in Central Finland Cluster attractiveness Two-star cluster Employment: 3,832 (4% of the region) Regional agglomeration (LQ): 15.1 National agglomeration: 0.6 Attractive Two-star cluster Employment: 2,913 (4.6% of the region) Regional agglomeration (LQ): 7.5 National agglomeration: 1.4 Attractive Knowledge Dynamics Moderate level of competition Moderate level of cooperation (mostly with customers) Low level of employee turnover High level of competition High level of cooperation with customers and suppliers, moderate levels with research institutes, governmental organizations and related industries, and lowest level with competitors Moderate level of employee turnover More Attractive

41. Cluster benchmarking (3) IT cluster in Sariyer, Istanbul IT cluster in Central Finland Cluster attractiveness Two-star cluster Employment: 3,832 (4% of the region) Regional agglomeration (LQ): 15.1 National agglomeration: 0.6 Attractive Two-star cluster Employment: 2,913 (4.6% of the region) Regional agglomeration (LQ): 7.5 National agglomeration: 1.4 Attractive Knowledge Dynamics Moderate level of competition Moderate level of cooperation (mostly with customers) Low level of employee turnover High level of competition High level of cooperation with customers and suppliers, moderate levels with research institutes, governmental organizations and related industries, and lowest level with competitors Moderate level of employee turnover

43. Cluster benchmarking (Summary) IT cluster in Sariyer, Istanbul IT cluster in Central Finland Educational attractiveness Equally attractive Equally attractive Talent attractiveness More Attractive Attractive R&D&I attractiveness Not Attractive Very Attractive Ownership attractiveness Not Attractive More Attractive Environmental attractiveness Not Directly Relevant Not Directly Relevant Cluster attractiveness Attractive Attractive Knowledge Dynamics Moderately Attractive More Attractive

44. Cluster benchmarking (Summary) IT cluster in Sariyer, Istanbul IT cluster in Central Finland Educational attractiveness Equally attractive Equally attractive Talent attractiveness More Attractive Attractive R&D&I attractiveness Not Attractive Very Attractive Ownership attractiveness Not Attractive More Attractive Environmental attractiveness Not Directly Relevant Not Directly Relevant Cluster attractiveness Attractive Attractive Knowledge Dynamics Moderately Attractive More Attractive

45. Main Findings and Suggestions for Policy-makers • Environmental attractiveness is not necessarily a relevant dimension for assessing IT cluster’s knowledge potential. • R&D&I attractiveness, ownership attractiveness, and knowledge dynamics seem to be the most influential dimensions to drive entrepreneurial activity and new business development in a cluster. • Constructing a cluster is not enough. There must be a dynamic innovation ecosystem with policies, programs and institutions in place to support entrepreneurial activities.

46. Suggestions for Future Research • More attempts to reveal the connection between clustering and entrepreneurship (e.g., case studies with in-depth interviews) • Similar studies in other industries and other IT clusters

47. THANK YOU! Your ideas, comments and questions Want to conduct joint research in this area, please contact us at mmermercioglu@ku.edu.tr murat.akpinar@jamk.fi

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