#6 Cluster initiatives
Around the world, Cluster initiatives are common means to develop clusters. Cluster initiatives are one of mechanisms to implement effectively the economic policy. Cluster initiatives started developing strongly since the mid-1990’s and, according to statistics, there were over 1400 CI by 2005.
The Cluster Initiative implementation can be compared to the symphony orchestra performance. An orchestra is a large instrumental ensemble, which combines different musical instruments and musicians, who perform music led by a conductor. There are different aspects to it. First, although classical music is a part of European culture, it is not difficult to use it in a business development context, on the contrary, it makes it more interesting and gives more room for imagination. Second, when a number of musical instruments is used, the melody cannot be born without any of these instruments, so in this sense businesses should be not only close to each other, but connected to each other. Third, as each musician has a specific duty, every participant of market relations also has his/her own duties. Fourth, the conductor leads all musicians according to musical sheets. Being a leading company in the field impacts the ability to earn income from export. In this way we can explain many actions following the orchestra example, which is a classical example of a cluster initiative.
”Cluster initiatives are organized efforts to increase the growth and competitiveness of clusters within a region, involving cluster firms, government and/or the research community.”
Örjan Sölvell, Göran Lindqvist and Christian Ketels, The Cluster Initiative Greenbook, Ivory Tower AB, 2003
Cluster initiatives are organized as collaborations between public and private sector actors, such as firms, government agencies, and academic institutions, have a specific cluster strategy and actions that are directed towards providing conditions for dynamic development. Although industries have multiple participants, in case any of the abovementioned three subjects is not in place, the entity is not considered a cluster initiative.
The Global Competitiveness Survey (2003) reported a great number of objectives (in average 25) put forward in different countries when developing cluster initiatives, and divided them into 6 segments:
- Cluster expansion
- Innovation and technology
- Education and training
- Commercial cooperation
- Policy action
- Research and networking
According to the survey findings, 32% of Cis are initiated by government, 27%- by industry, 35%- equally by both. As for financing sources, 54% comes from the government, 18%- from the industry and 25%- from both. Companies are the most influential parties in the governance of CIs, and financing from the cluster membership fees is becoming more widespread lately. However, in most developing countries financing by the government remains crucial.
Best practice of countries with successful Cis:
- 81% of Cis have met their goals, while only 4% had little change
- The national social, political and economic setting within which Cis are implemented is important for their performance. Key factors include a high level of trust in government initiatives and having local government decision-makers.
- Cis initiated through a competition process to get government financing perform better in terms of increasing international competitiveness.
- Cis with budgets sufficient to conduct significant projects without seeking separate funding perform better. For promoting cluster growth, establishing an exchange with other clusters in the same industry is beneficial.
- The role of a facilitator is important for the CI, but his/her qualities are more important for competitiveness performance than for growth performance.
- CIs need to build a clear, explicit framework, based on the cluster’s own strengths and spend time to share it with all parties
- Failure for CIs to generate changes are related to poor consensus, weak frameworks, facilitators lacking strong networks, lack of offices and sufficient budgets, and neglected brand-building.
- Government policy and other setting factors can influence performance indirectly. In countries, where local government decision-makers are important, CIs tend to pay more attention to competitiveness-related objectives, such as promoting new technology and monitoring technical trends.
Implementation of a cluster initiative basically has four stages. At the first stage the present condition of cluster participants is defined. At the second stage, a CI strategy is determined and the process starts. At the third stage a leader is important for cluster participants, so in order to save time, to organize different ideas, to save costs in the course of operation, to direct the business strategy of cluster participants to increasing competitiveness, a public-private dialogue on policy and institutional issues is set up and a decision is reached. At the 4th stage, a cooperation institution for successful implementation of a CI is developed and a basis for further sustainable work is set up.
Figure: Stages of a Cluster Initiative
Source: The Cluster Initiative Greenbook, 2003; p.13, Clusters for Competitiveness: A Practical Guide and Policy Implications for Developing Cluster Initiatives, p.4
Global Cluster Initiative findings showed:
- Industry projects and government-led programs might stifle commitment from the CIs
- CIs are often set up by government and it takes typically more than 3 years to build up momentum for the CI
- Financing changes over time with government seed money playing seed money playing a lead role in the first phase. In later stages membership fees become more important. Thus, surviving CIs move from a project-based organization to a membership-based organization.
- Although there is no obvious path where CIs move from simple to complex, or from a narrow to a broad set of objectives. However, commercial cooperation plays a less important role in later stages and incubators increase over time.
- In the later development stages, many CIs will turn into cluster-based nstitutions for collaboration.
Cluster Initiatives never start at zero, there is always a history of a cluster and once a CI is started, two transitions between different stages are critical: first, the analysis- action divide, moving from setting objectives to implementing solutions, requires a massive shift in participation of cluster members. Second, the initial project structure needs to evolve into a permanent institutional form, an institution for collaboration (IFC).
CIs reflect a new model to organize the economic policy as collaborative effort of different branches of the government, the private sector, the universities, trade associations and others.
As important as evolution of the CI is the legacy of CI. It can involve earlier industry or policy initiatives. Established organizations such as industrial associations, networks or other institutions for collaboration often have a great impact on CI formation.
After the formation period, an official CI is launched. CIs consolidate collaboration of government, industry, academia and some become more institutionalized, which turns the initiative into a formal, cluster-based institution for collaboration.
