Clusters and Smart Specialisation
The purpose of Smart Specialisation is to foster growth and structural change. Smart specialisation strategies (RIS3) builds upon a mix of horizontal and vertically based interventions, where the horizontal interventions aims at enhancing the regional innovation system and the vertical activities aim to bring about the potential in a limited number of prioritised economic domains. In the priority domains, the RIS3 process is about mobilising actors in defining visions of desirable futures and roadmaps of targeted activities and policy mixes to initiate and align efforts of the involved actors in making the envisioned potential happen (Foray and Goenaga, 2012). In relation to this, S3 practitioners can learn from the experiences made with clusters and cluster policies, both from framework cluster policies aimed at strengthening the cluster environment, but in particular the forming of cluster organisations, i.e. organisations aimed at strengthening the competitiveness of clusters.
Cluster organisations can serve as strong partners in the development of the priority areas, even serve as a basis for a governance mechanism for a priority area. They need to be flexible though and not too stuck in defending an incumbent economic structures, but be willing to work for an innovative structural change, be able to link up to actors outside of the region and connect to the aims of the Smart Specialisation strategy.
Many cluster organisations have experience in working cross sectorial and between domains. They quite often have the needed trustful relations, within triple helix constellations among regional stakeholders and are knowledgeable about existing competencies, potentials and needs in the economic domain. They are also experienced in setting up multi stakeholder projects.
The cluster organisations can be useful both in a RIS3 design phase in identification of priority domains, in engaging and mobilising actors to formulate the strategy, but also in the implementation by leading the area by pushing forward the activities and following up on the planned activities and the policy mix.
Clusters as a concept was popularised by Michael Porter (1990, 1998), but builds upon a long tradition of economic theories addressing the role of externalities from co-location of economic actors active in a related economic field. What these theories have in common is that they describe clusters or local agglomerations as positive for firm efficiency, innovation and competitiveness, by creating externalities that reduce transaction costs and create opportunities for innovation.
The basic definition of a cluster is “a cluster is a geographically proximate group of interconnected companies and associated institutions in a particular field, linked by commonalities and complementarities. The geographic scope of clusters ranges from a region, a state, or even a single city to span nearby or neighbouring countries (e.g., southern Germany and German-speaking Switzerland). The geographic scope of a cluster relates to the distance over which informational, transactional, incentive, and other efficiencies occur” (Porter, 1998).
Clusters are delimited by boundaries related to geographical space, economic activity area and critical mass, focusing on geographical concentration of resources in particular domains. All this is also to some extent the definitions of the priority areas for smart Specialisation, even though Smart Specialisation focuses more on future and potential domains and cluster on existing strengths.
Attributed to the clusters are a number of potentially beneficial effects and in particular with relation to innovation these include: i) in clusters competition is tougher and more transparent, which drives firms to innovate more and in more productive ways (Porter, 1998); ii) knowledge spill-over, i.e. there are secrets of the trade that diffuse in the air, by labour rotation and from informal contacts, which makes it easier to start new firms and to develop existing operations (Marshall, 1890; Storper and Venables, 2003); iii) greater opportunities for specialisation of labour and suppliers and higher productivity levels (Marshall, 1890; Piore and Sabel, 1984); iv) cluster locations provide opportunities for user-producer learning which is an important input for firm innovation activities (Dahmén, 1950; Hirschman, 1958, Von Hippel, 2005); and v) joint action, clusters are locations where it is easier for firms to collaborate in order to upgrade capabilities, goods and services and to undertake collaborative efforts (Piore and Sabel 1984; Malmberg and Maskell, 1999) and hence appropriate locations for deliberative innovation policies (Helmsing, 2001; Borrás, 2003).
Resources: The European Cluster Observatory provides data and analysis on clusters and cluster policy in Europe.
Many countries have carried out different forms of cluster policies in order to grow emerging and existing clusters and / or tried to revitalise the latter. These efforts have included different kind of changes to the economic framework to support clustering further, but also more targeted efforts to the needs of the specific domains of the clusters, and maybe most popularly to start a cluster organisation or a cluster initiative (Andersson et al. 2004; Borras and Tsagidis, 2009; Sölvell , 2009; Ketels et al., 2012).
Resources: The EU Cluster Portal The Innovation Policy Platform - Cluster Policies, a web portal by the OECD and the World Bank.
Cluster initiatives and Cluster Organisations
Cluster initiatives are "… organized efforts to increase the growth and competitiveness of a cluster within a region, involving cluster firms, government and/or the research community" (Sölvell et al., 2003). Cluster initiatives are most often led by a cluster organisation, which initiates and strengthens joint activities among its members related to: innovation (new technology, new business models, and new processes), networking, influencing the business environment and human resource upgrading,
The purpose of cluster organisations is to strengthen the competitiveness of the clusters themselves. The origins of these organisations vary (both initiated by the public and private sector) and these can be seen as thematically oriented network that mostly respond to members from a delimited geographic space (yet, there are many examples of international networks of clusters). The structure of these initiatives, their roles, funding and activities varies, but in broad and idealised term they most often:
- Are based on a form of triple helix (Etzkowitz, 2008) membership, with private sector, academic and public sector members.
- They work to cater to the needs of the different members, both directly in current identified needs, but also sometimes initiate activities with a more long term perspective and of more radical innovative character.
- They have good networks in all these three spheres, have an understanding of the culture and how these domains operate and are skilled in bridging between them.
- They initiate projects including actors from these different spheres.
- They lobby and try to influence legal frameworks and standard setting to better match the needs of the cluster members.
- The arrange matchmaking and network meetings.
- They often carry out business intelligence.
- They often work with internationalisation arranging with business opportunities and setting up international R&I projects.
Resources: European Cluster collaboration platform European Cluster collaboration – Cluster Organisation Mapping TCI Network - The Competitiveness Institute - Cluster Initiative Database
References Andersson, T., Schwaag Serger, S., Sörvik, J. and Wise Hansson, E. (2004), The Cluster Policies Whitebook, Malmö: IKED Borrás, S. (2003), The Innovation Policy of the European Union, from Government to Governance, Edward Elgar, Cheltenham UK. Borrás, S., and Tsagdis, D. (2008), Cluster Policies in Europe: Firms, Institutions, and Governance, Edward Elgar, Cheltenham UK. Dahmén, E. (1950), Entrepreneurial Activity and the Development of Swedish Industry 1919–1939, American Economic Association Translation Series, Homewood. Etzkowitz (2008), The Triple Helix: University-Industry-Government Innovation In Action London: Routledge Foray D. and Goenaga, X. (2013), The Goals of Smart Specialisation, S3 Policy brief series No1/2013, EUR 26005 – Joint Research Centre – Institute for Prospective Technological Studies Helmsing, A. H. J. (2001), Externalities, Learning and Governance: New Perspectives on Local Economic Development, Development and Change, 32, p. 277–308. Hirschman, A. O. (1958), The Strategy of Economic Development, Yale University Press, New Haven. Ketels, C., Lindqvist, G., Sölvell, Ö. (2012). Strengthening Clusters and Competitiveness in Europe – The Role of Cluster Organizations. Stockholm: Center for Strategy and Competitiveness Malmberg, A. and Maskell. P. (1999), The Competitiveness of Firms and Regions: ‘Ubiquitification’ and the Importance of Localized Learning, European Urban and Regional Studies, 6 (1), p. 9–25. Marshall, A. (1890), Principles of Economics, Macmillan, London. Porter, M. E. (1990, 2008b), the Competitive Advantage of Nations, in Porter (2008b) Porter, M. E. (1998, 2008b), On Competition, in Porter (2008b). Porter, M.E. (2008b) On Competition, Updated and Expanded Edition, Harvard Business School Press. Storper M. and Venables, A. J. (2003), Buzz: Face-to-Face Contact and the Urban Economy, CEP Discussion Papers dp0598, LSE. Sölvell, Ö., Lindqvist, G. and Ketels, C. (20023), The Cluster Initiative Greenbook, Ivory Tower Publishers Sölvell, Ö. (2009) Clusters - Balancing Evolutionary and Constructive Forces. Stockholm: Ivory Tower Publishers von Hippel, E. (2005) Democratizing Innovation, Cambridge, MA: MIT Press (April).
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