Clusters and Cluster Policy - Regional Development, Universities and Strategies for Cluster Promotion

David Charles

CURDS

University of Newcastle upon Tyne Business

school

Three themes

• Defining clusters and cluster policy– Communities of practice and multi-scalar policy

• Clusters and higher education– Using clusters to resolve priorities and policy

difficulties

• Creative industry clusters– Stretching the concept

What do we mean by clusters and clustering?• Varied definitions and approaches • ‘Clusters’ vs the process of ‘clustering’ • Clusters as self-generating groupings• Processes of facilitating clusters• Importance of linkages and interdependence• External economies and un-traded

interdependencies• Real phenomena or heuristic devices?

Dimensions and characteristics

• Multisectoral• Interaction/synergy• Spatial concentration• Hierarchical inter-regional linkages• Institutions and identity• New forms of governance – frameworks for

policy analysis and development

Clusters as innovation systems

• OECD Cluster focus group– Innovation seldom takes place in isolation but is

systemic. The notion of a cluster as a ‘reduced scale innovation system’

– Clusters are networks of production of strongly interdependent firms linked to each other in a value-adding production chain.

– Clusters mostly also encompass strategic alliances with universities, research institutes, knowledge-intensive business services, bridging institutions (brokers, consultants) and customers.

Issues in identifying clusters

• Spatial scales – Local– Regional– National

• Levels of interaction• Breadth of sectoral coverage• Focus on firms or sectors

Geographical scope and intensity of interaction

National

Local

Tight interaction

Loose agglomeration

Danish small scale clusters

Flanders Language Valley

Pegasus, Argonautics etc

Japanese style supply chains

Cambridge Biotech

Scottish Enterprise Clusters

Danish mega- clusters

Motorsport Valley

Silicon ValleyNOF

Finnish Telecoms cluster

Uniqueness

• Each country or region has its own unique cluster forms

• Variation in selection and variation processes– Between countries/regions– Technologies– Policy systems

• No ‘ideal’ cluster or form – no best practice• Cluster ‘innovation styles’

An alternative approach

• Cluster as knowledge community• Node of knowledge generation and dissemination• Focus on agglomeration of skilled people rather

than firms• Dominant designs, genres and movements• Competition and co-operation• Conventions and institutions• Shared assets

Knowledge community

• a knowledge community is ‘a group of people (principally designers, managers, and engineers in this case) often in separate organisations but united by a common set of norms, values and understandings, who help to define the knowledge and production trajectories of the economic sector to which they belong’. (Henry & Pinch, 2000, p194)

Music cluster/production network

Tour management Artists

Recording companies

Promotion and

distribution

CD manufactureStudios

Session musicians

Producers

Engineers

Artist management

Legal

Song writing

Music publishing

customer

Instrument retail

Instrument manufacture

Stage

Lighting

Sound

Logistics

Ticket sales

Venuesmerchandise

Merchandise manufacture

customer

Creative industries cluster?

Creative individuals

Creative firms

Specialist business services

Specialist manufacturing support

Business support agencies

Education and training

Local authorities

Creative knowledge pool

Associations

Cultural and creative support

agencies

Retail

Audience

Projects and venues

Australia, the Brand - a tourism cluster

SportSurfingSporting excellence

Aussie team sportswear

Surfware

WildlifeKangaroosKoalasCrocodilesSea lifeBirds

Images

Animal products

Stuffed toy animals

Indigenous peoplesDesignsCulture/ stories

ArtefactsDidgeridoosBoomerangs

Aboriginal designs

Music and stories

Outback lifeFarmingBushcraftMateship

ClothingAkubra hatsDrizabone

LiteratureFilms

FoodWine

Urban lifeArchitecture and iconsMulti-culturalism

Images

Souvenirs

Urban lifestyle experience

ImagesPosters calendarsT-shirts

Surfboards and equipment

The countryRed CentreBeachesBarrier ReefRainforest

Scales of policy action

• Cluster policies taken up a core element of industrial and innovation policies, but not always labelled as such

• National cluster policies– Foresight, Mega-clusters, Cluster as policy tool

• Regional clusters– Regional Development Agencies, RIS/RITTS initiatives– Turning sectoral strategies into clusters?

• Local clusters/micro clusters– Local authority initiatives– Building on company networking

Cluster development - micro/meso interaction

Potential Latent Working

Shading indicates strength of social infrastructure

Interactions among firms inside and outside regional cluster

Firm

UK policy on clusters and universities

'The role of our universities in the economy is crucial. They are powerful drivers of innovation and change in science and technology, the arts, humanities, design and other creative disciplines. They produce people with knowledge and skills; they generate new knowledge and import it from diverse sources; and they apply knowledge in a range of environments. They are also the seedbed for new industries, products and services and are at the hub of business networks and industrial clusters of the knowledge economy.' (DTI/DfEE, 2001)

Universities and clusters

Firm strategy, structure and rivalry

Factor Conditions

Demand conditions

Related and supporting industries

Chance

Government

Provision of skilled labourResearch on better exploitation of physical resourcesKnowledge resources

Science-based discoveries

HE as consumer of specialist inputsHE foresight on future demands

Direct assistance to firm management capabilitiesNew business formation

HE projects on supply chain developmentSpreading knowledge across supply chains

Advice on policy and regulationGovernment funding for HE research

University commercialisation strategies

• Dilemmas of diversity of knowledge• Need for specialisation in commercialisation• Combining responsiveness and opportunity-

seeking with focus and business development• Specialist centres and cluster discourses as

means to resolve dilemma

Scale of university engagement with clusters• National – national research programmes and

centres of excellence• Regional – RDA initiatives with dedicated

cluster programmes• Local/micro-clusters – small scale initiatives

with local funding or university-initiated• Internal to the university – structures for

industrial liaison or research organisation

North East England cases

• National – central government initiatives, university innovation centre for nanotechnology

• Regional – ONE clusters and centres of excellence

• Local/micro-clusters – local initiatives, Digital Media Network

• Internal to the university – Newcastle HEROBaC programme and restructuring

ONE - Strategy for Success

• Science and Industry Council• 5 centres of excellence

– New and renewable energies– Life sciences– Process industries– Digital media– Nanotechnology, microsystems and photonics

• NorthSTAR

Links to CELS

via BioNE2t

Academic BioscienceKnowledge/Research

Base

BiosciNorth

FunctionalGenomicsPlatform

NorthSTAR

GeneticsKnowledge

Park

UniversityTechnology

Transfer

BioNE2t

Centre of Excellence

in Life Sciences

Regional Bioscience

Cluster

Funding from ONE,

DTI, DoH etc

ICfL

External Bioscience

Firms

International Centre for Life

Significance

• Universities being enrolled by regional agencies on cluster initiatives at unprecedented scale. Universities also shaping agenda

• Universities assembling portfolios of funds for networked support programmes

• Regional agencies convinced of importance of universities to clusters. Move to a regionally-coordinated system, but aimed at international excellence

• The regional agenda is not necessarily linked with ‘sub-national quality – see US universities

Comparisons with Australia

• State level intervention and growing interest at Commonwealth level

• Queensland ‘Smart State’ strategy• Prioritisation of growth ‘sectors’• Biotechnology and ICT, but also advanced

mining, ‘new era’ foods• Local level interest in micro-clusters• Universities seeing reduction in proportion of

core funding

Queensland support for biotechnology• Bioindustries Taskforce• Establishment of the Institute for Molecular Bioscience (IMB) at the

University of Queensland, and attracting key researchers• Establishment of a Centre for Biomolecular Science and Drug

Discovery and research commercialisation centre at Griffith University• Bachelor of Biotechnology Innovation degree at QUT• Centre for Immunology and Cancer Research at Princess Alexandra

Hospital• BioStart initiative to encourage and support start-ups • BioLink networking program • Supporting missions to major biotechnology conferences• International biopartnering initiatives• Government-wide mechanism to identify the key priorities for R&D

spending

Culture and creative industries in Brisbane• Growing cultural and creative sector• Physical development on riverside

– South Bank• Adjacent university developments

– QUT, Griffith• QUT Creative Industries strategy

Creative Industry Precinct

Creative industries

• Precinct with teaching facilities, wired exhibition space, black box performance space, art house cinema, enterprise centre, CIRAC, studios for design and animation, performance and music, visual arts, sets and props

• Office and workshop space for firms• Linked with City Council emerging industries strategy• Wider state film and tourism developments• Au$ 5 bn industry

Conclusions on universities, regions and clusters• Overcoming problems of fragmentation of university

initiatives• Focus on future opportunities for regions and for

universities to play a leading role• Mechanisms to identify priorities – importance of

universities in regional governance structures• Shift in notion of success from attraction of firms to

the capacity for regional clusters to evolve and be self-sustaining

Creative Industries

Those activities which have their origin in individual creativity, skill and talent and which have the opportunity for wealth and job creation through the generation of intellectual property (DCMS, Creative Industries Mapping Document,1998,page 3)

Economic Significance of CIs

CreativeIndustries

PerceptionMindshare

Identity

TourismAttractor

Amenity/Infrastructural

Value

DirectEconomic

Benefit

Production System

I. Originalproduction,commissioningand directing

II. Productionof the meansof production/infrastructure

III.Reproduction,and massdistribution

IV. Sites ofexchange ofrights toconsume

ContentOrigination

IPRCommercial-isation

Distribution Markets

Culture exports

Internet delivery

Radio

TV

(internet)

Exhibition Performance

Exhibition Performance

Touring

Broadcast

Serving tourists in NE

Culture exports

Physical goods

Publishing

Magazines

Books

Games

Film

Video

Artworks

Craft

Designer goods

A Three Legged Stool?

Grant aidedCommercial

Voluntary

‘professional’

‘semi-professional’/‘prosumer’

‘amateur’

A spectrum of activities...

Audienceto

Content

Contentto

audience

Virtuous

cycle

WritersPerformers

ContentDesign

Venues,Events,Festivals

ProductsServices

TourismEntertainment

DistributionBroadcastingNew Media

… in a wider context

TourismCreative

Industries Digital Media

Audience toContent

Content toAudience

Heritage Cafes Restaurants Theatre Radio Internet PublishingMuseums Galleries Live Music/Dance Television Multimedia

Music cluster/production network

Tour management Artists

Recording companies

Promotion and

distribution

CD manufactureStudios

Session musicians

Producers

Engineers

Artist management

Legal

Song writing

Music publishing

customer

Instrument retail

Instrument manufacture

Stage

Lighting

Sound

Logistics

Ticket sales

Venuesmerchandise

Merchandise manufacture

customer

Theatre/performance cluster

Theatre company

Actors

Agents

Training providers

Rehearsal space

Performance venue

Musicians

Ticket sales

merchandiseCatering and bars

Video TV and radio

Writing

Publishers

Education outreach

Wardrobe

Stage sets

Lighting

Marketing

Audience

Consumers

Broadcasting

Video distribution and salessound

Tour logistics

Legal services

Creativeindividuals

Creativefirms

Specialistbusinessservices

Specialistmanufacturing

support

Businesssupport

agencies

Educationand training

Localauthorities

Creativeknowledge

pool

Associations

Cultural andcreativesupport

agencies

Retail

Audience

Projects andvenues

ResearchInstitutes

Investors

Content Origination (omitting Software Consultancy and Supply) by GOR

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

North East North West Yorkshireand TheHumber

EastMidlands

WestMidlands

Eastern London South East South West Wales Scotland

1991 1995 1999

Regional distribution of employment

Content Origination (omitting Software Consultancy and Supply) as % of Total Employment

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

North East North West Yorkshireand TheHumber

EastMidlands

WestMidlands

Eastern London South East South West Wales Scotland

1991 1995 1999

Proportion of employment

Newcastle and other core city regions

Content Origination (omitting Software Consultancy and Supply) as % of Total Employment by City Region

- 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00

Birmingham

Bristol

Sheffield

Leeds

Liverpool

Manchester

Newcastle

1991 1995 1999

Content Origination (omitting Software Consultancy and Supply) as % of Total Employment

- 0.20 0.40 0.60 0.80 1.00 1.20 1.40

Middlesbrough

Plymouth

Portsmouth

Stoke

Hull

1991 1995 1999

Middlesbrough and comparators

Critical Mass and Growth in Content Origination (minus Software Consultancy and Supply)1995-1999

Scotland

Wales

South West South East

London

Eastern

West Midlands

East Midlands

Yorkshire and The Humber

North West

North East

0

10

20

30

40

50

60

0 5 10 15 20 25 30 35 40 45 50

Proportion of Total GB CO Employment 1995

% G

row

th o

f C

O E

mp

loy

me

nt1

99

5-1

99

9

Grows Core Arts (Artisticand Literary Creationand Interpretation,Art facilities)

Publishing

Other BusinessActivities NotElsewhere Classified(includes somedesign)

Static Radio Television andNews Agencies

1991-1995

Declines

Manufacturing(Jewelery, ImitationJewelery, MusicalInstruments, Gamesand Toys)

Architectural andEngineering Activities

Film and VideoProduction,Distribution andExhibition

Advertising

PhotographicActivities

Declines Static Grows

1995-1999

How others see the North East• DCMS: Creative Industries the Regional Dimension

(2000)– CI’s (DCMS minimum set) employ around 17,000, 1.9% of

regional workforce (cf. 4.3% GB)– High proportion of SMEs, esp. Microbusiness, and part-

timers– Region is small (lacks critical mass?)

• Trends Business Research, Business Clusters in the UK: A First Assessment (2001)– The region’s position in the creative industries such as TV,

film, advertising and fashion is limited, although in common with other regions niche opportunities are being developed

Conclusion on NE culture

• Not yet a cluster of competitive advantage but...– Strong growth in core content origination over last decade

– Increasingly professional support infrastructure and key hubs for development (NCSP, NGC, NWN, Generator, CBV,

…) – New investments (Music Centre, Baltic, Middlehaven, ...) – Core strengths in ‘storytelling’ and ‘visual art’ + some narrow

niches (e.g., folk music, glass)– and some evidence of micro and location-based “clustering”

(e.g., COBALT, Ouseburn, Pink Lane)

Issues for policy (1)

• Combining cluster policy scales• Cluster analysis and cluster policies• Permeable boundaries of cluster policy• Attention on the negative effects of policy• Customised mixes of policies• Frameworks for policy co-ordination• No standard recipe

Issues for policy (2)

• Policies vary with stage in lifecycle• Avoid high tech myopia• Avoid standard cluster models and tools• Balance between new and existing clusters• Importance of experimentation and learning• Persuasiveness and perseverence