clusters and cluster initiatives:clusters and cluster...

3rd International Cluster Conference3rd International Cluster Conference

Clusters and Cluster Initiatives:Clusters and Cluster Initiatives:Recent Developments and Current Challenges

rafmozart@terra com [email protected]

Dr Christian H. M. Ketels

Institute for Strategy and Competitiveness, Harvard Business SchoolPresident, TCI Network

An Old Concept….

2 Copyright 2015 © Christian Ketels

…with a Stable Set of Core Building Blocks…

Related Variety Proximityy y

Critical Mass

Collaboration


…in a New Economic Context

Rising Knowledge-Intensity

Falling Transportation/Communication Costs

Lower Trade Barriers

Agglomeration Dispersion

Globalization of production sitesAccelerated Technological Change

gg

g g

Globalization of markets

Clusters are becoming more Clusters are a critical facet

of modern economies

gspecialized

Clusters are becoming more


Clusters are becoming more connected

Research About Clusters

Case Studies Cross-sectoral quantitative Studiesq

• Show nature of clusters • Systematic comparison of clusters • Show nature of clusters

• Establish types of linkages that exist within clusters

across sectors and locations

• Measurement of the overall exist within clusters

• Identify patterns of cluster dynamics and their drivers

importance of clusters

• Tracking of cluster evolutiondynamics and their drivers

• Develop hypotheses on the impact of clusters on firms and regions

• Empirical tests of the impact of cluster presence on regional and firm level economic performanceg firm-level economic performance


“Cluster Mapping”

Clustermapping.US

Project Background Project Background -- Methodology Methodology -- Data Sources Data Sources -- PartnersPartners

ClustersClusters • Covers all sectors and regions

Regions Regions

regions• Puts cluster data in the

context of regional data

Other Examples

• European Cluster

OrganizationsOrganizations

• Allows systematic comparison across locations

European ClusterObservatory

C di Cl t D tgg

Research Research -- Policy Examples Policy Examples -- Case Studies Case Studies -- News News

• Easy-to-use interface to engage practitioners

• Organizational registry to

• Canadian Cluster Data Portal

6 Copyright 2015 © Christian Ketels66

Organizational registry to enable collaboration

Clusters and the Nature of Competition

Traded vs. Local Share of the U.S. EconomyEMPLOYMENT

INCOME

36% 64%

51% 49%

PATENTS 91% 9%

Local IndustriesTraded Industries• Present everywhere at

similar levels• Serve exclusively the local

• ‘Spiky’ across space; 2/3s of all traded industry employment is in strong clusters Serve exclusively the local

market• Little exposure to cross-

regional competition

g• Serve national and global markets• Exposed to competition from other

regions and nations regional competition • Important for jobs, but

lower wages; growth potential limited by size of

regions and nations• Critical for prosperity through

higher wages, productivity, and innovation; growth potential set by


potential limited by size of the local market

innovation; growth potential set by the global market

Clusters and Regional SpecializationChi IL IN WI

Boston, MA-NHEducation and Knowledge CreationFinancial ServicesIT and Analytical InstrumentsBi h ti l

Chicago, IL-IN-WIDistribution & E-CommerceTransportation and LogisticsFinancial ServicesUpstream Metal Manufacturing

Denver, COBusiness ServicesMedical DevicesHospitality and TourismOil and Gas Production

Pittsburgh, PAUpstream Metal ManufacturingCoal MiningElectric Power GenerationVulcanized and Fired Materials

Biopharmaceuticals

Seattle, WAAerospace Vehicles and DefenseIT and Analytical InstrumentsWater Transportation

San Jose-San Francisco, CAIT and Analytical Instruments

New York, NY-NJ-CT-PAFinancial ServicesMarketing, Design and PublishingPerforming ArtsM i d S d R di

pFishing and Fishing Products

L A l CA

IT and Analytical InstrumentsBiopharmaceuticalsVideo Production & DistributionMarketing, Design & Publishing

Music and Sound Recording

Raleigh-Durham, NCLivestock ProcessingVulcanized and Fired MaterialsLos Angeles, CA

Video Production & DistributionApparelMusic & Sound RecordingMedical Devices

Vulcanized and Fired MaterialsTextile ManufacturingEducation and Knowledge Creation

San Diego, CARecreational & Small Electric GoodsBiopharmaceuticalsWater TransportationMarketing, Design & Publishing

Atlanta, GATextile ManufacturingApparelCommunications EquipmentBusiness Services

DallasAerospace Vehicles and DefenseOil and Gas ProductionCommunications EquipmentTransportation and Logistics

Houston, TXOil and Gas ProductionConstruction Products & ServicesUpstream Chemical ProductsEnvironmental Services


Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Director. 8

Clusters and Economic Performance

Presence of Strong Clusters

Prosperity Entrepreneurship Structural ChangeProsperity Entrepreneurship Structural Change

• Wages • New business formation

• Path of structural change(emergence• Productivity

• Job growth• Resilience

formation • Survival of new firms• Job growth in new

change(emergence of new clusters)

Resilience• Patenting

gfirms


Putting Clusters into Context

FrameworkInnovation Systems

Framework Conditions

(Creative) SkillsSkills

Entrepreneurial EcosystemsClusters

ComplexitySocial Capital

Complexity

Urbanization


Urbanization

• Clusters emerge naturally • Clusters emerge and develop in a ffcontext deeply affected by policy

choices

• Collaboration within clusters provides benefits but requires purposeful collective actionpurposeful collective action

• Policies for upgrading business What role for policy?What role for policy?environment conditions can be more effective if they are cluster-specific but require information

What role for policy?What role for policy?

p qsharing and collective action

• Cluster-based policies enable

11

Cluster-based policies enable informed decision making and collective action

Two Opposing Approaches to Cluster Policy

BETTER (Competitiveness)• Long-term impact• New model of public-

private collaboration

• High risk• Traditional• Traditional

‘industrial policy’

FINISHFINISH

MORE (Agglomeration)


The Case for Cluster PolicyLevers

Create Platforms Create Platforms Organize Public Organize Public

Path

for Joint Action for Joint Action within Clusterswithin Clusters

Policy around Policy around ClustersClusters

dependency

Local Local ExternalitiesExternalities

Information asymmetries

Coordination failures


Current Status of Cluster Policies and Programs

• The European Cluster Observatory lists more than 2000 cluster initiatives and related organizations; many other countries and international organizations, too, deploy significant efforts

• The highest number of cluster initiatives (absolute, per employee) is in information technology and biotechinformation technology and biotech

• Most OECD countries and many regions have cluster-related policy y g p yprograms

S di l t l t d i i f l b t l• Spending on cluster-related programs is meaningful, but only a modest percentage of total spending per policy area


Cluster Initiatives: The Track Record So Far

• Large number of initiatives, many • Significant heterogeneity of impactLarge number of initiatives, many have shown sustainability over time

• Visible strengthening of networks d l l it f ll ti

Significant heterogeneity of impact

• Benefits for broader regional economic performance hard to

tifand local capacity for collective action

• Significant engagement of

quantify

• Government remains dominant funder of the majority of cluster g g g

companies, including private sector investment

• Positive impact on firm performance

j yinitiatives

• Tendency to strengthen existing structures; less successful in• Positive impact on firm performance

for participants in collaborative projects initiatited through cluster iniatives

structures; less successful in enabling structural change


iniatives

Cluster Initiatives: Organisational Models

Membership Organization

Government Government Existing Existing Economic DevEconomic Dev ClusterCluster

AgencyAgency Economic Dev. Economic Dev. OrganizationOrganization InitativeInitative

Service Provider


Critical Success Factors of Cluster Efforts

S tti• Cluster with critical mass of existing

economic activitiesSetting • Broader policy environment focused on competitiveness upgrading

• Capabilities of the Cluster Initiative Manager

ExternalInternal

Organization

p gand her/his staff

• Robust funding model• Governance structure that supports a private• Governance structure that supports a private

sector logic driving the organization

Activities• Strategic action agenda grounded in fact-driven

analysis of the relevant market and the cluster’s competitive position


competitive position• Operational effectiveness in individual activities

Current Cluster Policy Priorities in the European Union

CLUSTER DATAEXCELLENCE

EMERGING INTERNATIONALIZATIONEMERGING, CROSS-SECTORIAL

DOMAINS


DOMAINS

The ‘Bleeding Edge’: Three Issues for Cluster-Based Economic DevelopmentThree Issues for Cluster Based Economic Development

• Emerging clusters• Emerging clusters

• Impact assessmentp

• Clusters and competitiveness


What is Different about Cluster-Based Economic Development?Cluster Based Economic Development?

Cluster vs.Cluster vs.Narrow

Industries

RegionalPerspective

Public-PrivateCollective PerspectiveAction

CompetitivenessFocus

Build on Strengths

Policy Designwith Firm

Involvement


The TCI Network: A Global Community of Practice in Cluster-Based Economic DevelopmentCluster Based Economic Development

www.tci-network.org

www.tci2015.org

21 Copyright 2015 © Christian Ketels2121

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