cluster basics: cluster initiatives around the world: preliminary findings from greenbook ii

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Cluster Initiatives Around the World:Preliminary Findings from Greenbook II

Christian KetelsGöran Lindqvist

Örjan Sölvell

The 9th Annual TCI ConferenceLyon

13 October 2006

Center for Strategy andCompetitiveness – CSC

TCI Conference, Hong Kong, November 2005, Lindqvist

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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

CompaniesAcademia

Government

CI


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GCIS 2003 – The Cluster Initiative Greenbook

• Results from the 2003 survey (GCIS 2003)

• Available free of charge at:

www.cluster-research.org


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GCIS 2005/06:1400 CIs identified globally

149

10

30

26

34

30

1

199

2

284

25

4812

25

13926

310

Financed by:


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GCIS 2005/06:713 replies from 71 countries

Transition 76Transition 76

Slovenia 11Estonia 7Lithuania 5FYR Macedonia 5

Also: Albania, Armenia, Bulgaria, Bosnia and Herzegovina, Czech Republic, Georgia, Croatia, Hungary, Latvia, Poland, Russia, Serbia and Montenegro and transnational

Slovenia 11Estonia 7Lithuania 5FYR 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 49USA 44Sweden 41UK 32Canada 31New Zealand 31Australia 20Austria 19Japan 17Spain 16Norway 14Finland 10Also: Argentina, Belgium, Switzerland, Cyprus, Denmark, France, Greece, Ireland, Iceland, Israel, Italy, Luxemburg, Netherlands, Portugal, Taiwan, and transnational.

Germany 49USA 44Sweden 41UK 32Canada 31New Zealand 31Australia 20Austria 19Japan 17Spain 16Norway 14Finland 10Also: Argentina, Belgium, Switzerland, Cyprus, Denmark, France, Greece, Ireland, Iceland, Israel, Italy, Luxemburg, Netherlands, Portugal, Taiwan, and transnational.

India 10South Africa 7Iran 5Nicaragua 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 10South Africa 7Iran 5Nicaragua 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.


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New findings: advanced economies

(Analysis done by Göran Lindqvist as part of his PhD thesis)


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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


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Dimensions of CI Performance

Activities

Organization

Cluster


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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


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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


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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



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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



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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


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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



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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



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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 forcollaborationSupport from local/regionalgovernmentSupport from national government

Sales of services

Fees from firms, for examplemembership fees

Note! Includes all respondents in all types of economies.

N=475 188 52 20


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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



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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


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Regional ”flavours”

Aus Aus & NZ& NZ

JapanJapan

N AmN AmN EurN Eur

W EurW EurS EurS Eur


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Government initiation

Aus NZAus NZ

N AmN Am

N N EurEur

W W EurEur

S S EurEur

JapanJapan 100% by government*, national 100% by government*, national

40% by government, mostly local/regional40% by government, mostly local/regional



* Could be an effect of single-source respondent search


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Activities

Aus NZAus NZ

N AmN Am

N N EurEur

W W EurEur

S S EurEur

JapanJapan High on joint R&D, joint production, subsidiesHigh on joint R&D, joint production, subsidiesLow on regional brandingLow on regional branding

High on product brandingHigh on product brandingVery low on joint R&D, technical intelligenceVery low on joint R&D, technical intelligence

High on infrastructure lobbyingHigh on infrastructure lobbyingLow on joint R&DLow on joint R&D

High on education development, regional brandingHigh on education development, regional brandingLow 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 intelligenceLow on regional brandingLow on regional branding

Compared to the others:


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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


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New findings:developing and

transition economies


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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,


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Policy environment:Stages of Development

1

7Ave

rage r

esp

onse

Dev. Trans. Adv.

1

7Ave

rage r

esp

onse

Dev. Trans. Adv.

Economic dev’tpolicy 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


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Policy environment:Donor-funded projects

1

7Ave

rage r

esp

onse

Bus. Gov't Donor

1

7Ave

rage r

esp

onse

Bus. Gov't Donor

Economic dev’tpolicy 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:


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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?


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Social capital

1

7Ave

rage r

esp

onse

Dev. Trans. Adv.

1

7Ave

rage r

esp

onse

Dev. Trans. Adv.

Firm’s trust in other firms

Firm’s trust in government

Firm’s trust in academia

Government’s trust in firms


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Social capital

1

7Ave

rage r

esp

onse

Bus. Gov't Donor

1

7Ave

rage r

esp

onse

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:


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Cluster strength

1

7

Innova

tive

capaci

ty

Com

petitive

posi

tion

Rela

ted a

nd s

up-

port

ing indust

ries

Leve

ls o

fva

lue c

hain

Busi

ness

envi

ron't

Glo

bal

mark

et

reach

Gro

wth

Clu

ster

matu

rity

Eco

nom

icim

port

ance

Riv

alr

y

Avera

ge r

esp

on

se Dev. Trans. Adv.

1

7

Innova

tive

capaci

ty

Com

petitive

posi

tion

Rela

ted a

nd s

up-

port

ing indust

ries

Leve

ls o

fva

lue c

hain

Busi

ness

envi

ron't

Glo

bal

mark

et

reach

Gro

wth

Clu

ster

matu

rity

Eco

nom

icim

port

ance

Riv

alr

y

Avera

ge r

esp

on

se Dev. Trans. Adv.


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Cluster strength

1

7

Number of firms Levels ofvalue chain

Economicimportance

Ave

rage r

esp

onse

Bus. Gov't Donor

1

7

Number of firms Levels ofvalue chain

Economicimportance

Ave

rage r

esp

onse

Bus. Gov't Donor

Developing only.

Developing


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Cluster strength

1

7

Globalmarketreach

Innovativecapacity

Competitiveposition

Businessenviron't

Ave

rage r

esp

onse

Bus. Gov't Donor

1

7

Globalmarketreach

Innovativecapacity

Competitiveposition

Businessenviron't

Ave

rage r

esp

onse

Bus. Gov't Donor

Transition only.

Transition


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Cluster strength

1

7

Firms' trust infirms

Firms' trust ingov't

Firm's trust inacademia

Gov'ts trust infirms

Ave

rage r

esp

onse

Bus. Gov't Donor

1

7

Firms' trust infirms

Firms' trust ingov't

Firm's trust inacademia

Gov'ts trust infirms

Ave

rage r

esp

onse

Bus. Gov't Donor

Developing and transition.


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Cluster strength:observations and issues

• 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


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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 intensivemanufacturing

Agriculture; Fishing; Furniture; Jewelry; Leather; Shoes; Textiles; Wine

Agriculture, food, basic

manufacturing


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Industry selection

65%

34%

65%

0%

20%

40%

60%

80%

100%

Argriculture,food, basic

manuf.

Capitalintensivemanuf.

"High tech",advancedservices

Tourism

Share

of re

spondents

Dev Trans. Adv.

65%

34%

65%

0%

20%

40%

60%

80%

100%


manuf.



Tourism

Share

of re

spondents

Dev Trans. Adv.


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55%69%

58%

0%

100%Bus. Gov't Donor

55%69%

58%

0%


42%45%43%

0%

100%


manuf.



Tourism

42%45%43%

0%

100%


manuf.



Tourism

Industry selection

Shar

e of

resp

onden

ts

Transition

Developing


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Industry selection:observations and issues

• 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


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Objectives

0%

20%

40%

60%

80%

100%

Incr

ease

valu

e-a

dded

Incr

ease

exp

ort

s

Support

innova

tion

Supply

chain

dev'

t

Incr

. em

plo

yment

Impro

vebus.

envi

ron't

Att

ract

fir

ms

and inve

stm

ent

Reduce

pro

d'n

cost

s

Seek

funds

Com

merc

ializ

eaca

dem

ic r

ese

arc

h

Share

of re

spondents Dev. Trans. Adv.

0%

20%

40%

60%

80%

100%

Incr

ease

valu

e-a

dded

Incr

ease

exp

ort

s

Support

innova

tion

Supply

chain

dev'

t

Incr

. em

plo

yment

Impro

vebus.

envi

ron't

Att

ract

fir

ms

and inve

stm

ent

Reduce

pro

d'n

cost

s

Seek

funds

Com

merc

ializ

eaca

dem

ic r

ese

arc

h

Share

of re

spondents Dev. Trans. Adv.


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40

0%


0%


0%

100%

Increasevalueadded

Increaseexports

Increaseemploy-

ment

Supportinnovation

Com'lizeacademicresearch

0%

100%

Increasevalueadded

Increaseexports

Increaseemploy-

ment

Supportinnovation

Com'lizeacademicresearch

Objectives

Shar

e of

resp

onden

ts

Transition

Developing


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Objectives:observations and issues

• 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


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15%

37%

46%

0%

20%

40%

60%

80%

100%

Dev. Trans. Adv.

Share

of re

spondents

1-10 companies 11-20 companies

21-50 companies 51+ companies

15%

37%

46%

0%

20%

40%

60%

80%

100%

Dev. Trans. Adv.

Share

of re

spondents

1-10 companies 11-20 companies

21-50 companies 51+ companies

Company participation

Median:18

Median:25

Median:40


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0%

20%

40%

60%

80%

100%

Dev. Trans. Adv.

Share

of re

spondents < 10%

10-25%

26-50%

51-75%

76-90%

> 90%

0%

20%

40%

60%

80%

100%

Dev. Trans. Adv.

Share

of re

spondents < 10%

10-25%

26-50%

51-75%

76-90%

> 90%

Company participation

Participation rate:


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0%

20%

40%

60%

80%

100%

Dev.Tra. Adv. Dev.Tra. Adv. Dev.Tra.Adv.

Share

of re

spondents

0-9%

10-50%

51-100%

0%

20%

40%

60%

80%

100%

Dev.Tra. Adv. Dev.Tra. Adv. Dev.Tra.Adv.

Share

of re

spondents

0-9%

10-50%

51-100%

Size of participating firms

Micro (1-9 empl.)

Small (10-50 empl.)

Informalsector

Share of partici-patingfirms:


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45

0%

20%

40%

60%

80%

100%

Dev. Tra. Adv.

Share

of re

spondents

0-9%

10-25%

26-100%

0%

20%

40%

60%

80%

100%

Dev. Tra. Adv.

Share

of re

spondents

0-9%

10-25%

26-100%

Foreign-owned participants

Share of participating firms:


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Participants:observations and issues

• 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


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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%

InitiateCI

Select initialparticipants

Decide initialactivities

47%49%

0%

80%

InitiateCI

Select initialparticipants

Decide initialactivities

Influence: short run

Shar

e of

resp

onden

ts

Transition

Developing

Advanced


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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 Governmentinitiated

Donor initiated

Ave

rage r

esp

onse

Business sector's current influence on activities

2003-2005

2003-2005

2000-2002

2000-2002

2003-2005

2000-2002

1

7

Business initiated Governmentinitiated

Donor initiated

Ave

rage r

esp

onse

Transition and developing.


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Control and influence:observations and issues

• 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


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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.


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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


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Measuring impact:observations and issues

• More measuring in transition than in developing – need or ability?

• Donors measure below average in developing but above average in transition economies


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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

Health & Medicine

hong kong

cluster cluster growth

trust trust

annual tci conferencelyon13

activities process

firmfirm trust findings

preliminary findings

trust objectives