27.02.2017 eesa

CLUSTER: THE EMERGENCE AND FUTURE PERSPECTIVES IN INDUSTRY

Authors / Autors / Автора:

Lidia Melnikova
Ph.D student, Economics of Enterprise and Industrial Management
State Saint-Petersburg University of Economics and Finance,
Russia, Saint-Petersburg

During the twentieth century clusters became the object of observation and attention from the government, business and academic world. In many countries it became a competitive strategy of development. Traditionally the first clusters were found in textile industries in northern Italy, shipbuilding in Glasgow, steel in Pittsburgh, car manufacture in Detroit. Nowadays, the clusters became a common phenomenon, which may be seen in different countries in different regions, for example, financial cluster in City of London, textiles in northern England (Kuah, A. T., 2002). The definition of cluster was given in 1998 by the UK Department of Trade and Industry as a “geographic concentration of competing, collaborating and interdependent companies and institutions which are connected by a system of market and non-market links”. The current activity of cluster formation proves that the role of location is still significant, in spite of the globalization, open access for the source for goods, capital and technology. Evidently, clusters are observed in terms of positive feedback, productivity and growth. However, there are several points of view, one of them states that due to globalization business and corporations do not face with barriers to international business, moreover there are some factors which influence it, such as improvements in telecommunication and transportation system, but still there is a factor of proximity of the production to the end-user, that adds value. Obviously, the competitive advantage is more achievable trough improvement, innovation and change, also it has to be supported by linkages, sharing knowledge. The another one definition of cluster was introduced by Porter (1990), as “groups of interconnected firms, suppliers, related industries and specialized institutions in particular fields that are present in particular locations”. In Porter’s work (1998) he states, that there are three main ways, in which clusters have an significant impact on competitive advantage, the first one is by increasing the productivity of companies based in cluster; the second one is by driving the direction and pace of innovation, which underpins future productivity growth; and by stimulating the formation of new businesses, which expands the strengthens the cluster, forming a virtuous circle or positive feedback.

Many regional and national government’s policies aim at imitating successful clusters in the belief that their local areas may also capture the benefits of new high-technology firm formation and expected economic growth (Cooke, 2001a; Feldman et al., 2005). In spite of this, there are not enough empirical studies that clearly present the link between economic performance and clustering (Stuart and Sorenson, 2003; Maine et al., 2010). However, three groups of explanations may be highlighted, the first one considers clusters as a concentration of resources, where, they produce knowledge spillovers and have well skilled employees. Another group of explanations sees clusters as emerging out of random seeding, accidental or deliberately generated positive externalities at an early stage. The third group of explanations sees the internal agglomeration dynamics as decisive and explore these by network and industrial organization analysis. (Asheim, B. T., & Parrilli, M. D., 2012).

The emergence of clusters is an significant issue in up to date studies. In the studies of Feldman (2001), the author found in his research that one of the significant key drivers of the cluster emerge is the entrepreneurship, it became a new stage in presenting the new definition as “clusterpreneur”. However, Marshall (1890) found that the profitability for locating close to other firms in related economic activities known as industrial districts.

More over it is important to highlight, the fact that there is a competition and cooperation among the clusters, it was discovered by Porter (1998), describing the idea, that without competition clusters will not be successful, while in related industries the cooperation is carrying out.

From clustering to innovative activity

It is very important to stress, that due to collaborations between clusters, the competitiveness of the territory is increasing dramatically and the communication channels become a significant part of connection development (Bathelt, Malmberg and Mskell, 2004). Obviously, innovation activity influence a lot on the competitiveness of the company and the region in general. In studies of Morgan (1997), the author states, that innovation is an interactive process, meanwhile arguing that “innovation is shaped by a variety of institutional routines and social conventions”. To take in advantage and the correct way of using of communication channels is a crucial issue for all the agents, thus different types of collaborations could be implemented.

Developing collaborations through different ways

Intra-cluster

Due to the dynamically changes in the economy and the context the new approach regarding the innovation process is required. The identification of original and improved ways of competing in an industry carrying them to the market, leading to the competitive advantage could be defined as an innovation (Porter, 1990). The proximity of actors which interact continuously has a significant role in an interactive learning that leads to the process of innovation. Long-lasting co-operation relations, mutual trust are the factors which are crucial important for the innovation process (Lundvall and Johnson, 1994). Creation of knowledge requires the resource of investments, while the clusters could be considered as a source of knowledge (Maskell, 2001). Regarding the R&D activity requires high financial investments, while the creation of knowledge needs the collaboration and interaction activity. The perception of traditional agglomeration literature considers the following benefits for the companies: the first one is that the costs of collective resources are spread through the clusters firms; the second one, the local skilled labour are attracted by the agglomeration of companies; the third one, the logistics costs are reduced due to the proximity factor. Moreover, the cluster phenomenon enhance the learning process and the local exchange of complex information (Malmberg and Maskell, 2002).

Due to the collaboration the phenomenon “buzz” has appeared and was defined as a face-to- face collaboration, where co-presence has a crucial factor. Thus, the information flow is highly depended on the location, while the clusters improve the knowledge flow and learning process in general (Stroper and Venables, 2002). Moreover, the interactive learning process as itself, needs long-last cooperation, loyalty, mutual trust and understanding, within this perception the face-to-face interactivity is an essential key element for successful development.

Inter-cluster

The process of interactive learning and communication is influenced by factor of cognitive proximity, nevertheless it could imply collaborations not only within the companies of cluster but also it could be conducted within the firms from different clusters. However, the proximity is an essential element for collaborations and could be considered as a geographical distance, where the tacit knowledge could be more interactive due to the face-to-face collaboration (Moodysson and Jonsson, 2007). The last decades, in the field of innovation the concept of proximity was applied and has demonstrated the successful development of the region economy. However, the concept of proximity could be considered as a multi-dimensional concept, thus several groups could be distinguished, such as: institutional proximity, cultural proximity, social proximity and technological proximity (Knoben and Oerlemans, 2006).

However, according to Boschma (2005) the proximity could be classified into five groups, such as geographical proximity, cognitive proximity, organizational proximity and social proximity. Regarding the geographical proximity, this factor was already mentioned above. The cognitive proximity refers the absorption, interpretation and exploitation of a new knowledge. Considering the organizational proximity it is important to highlight that presence of mechanism that transfers improves the knowledge exchange in order to reduce the costs transactions. The social proximity is related with an economic effect, in terms of the influence of social context on economic performance, it could include experience, friendship, adding trust to relationship. According to the definition of the author the institutional proximity could be considered on the formal and informal level, where rules and laws may be considered as formal element and cultural habits as an informal.

 

The advantages of clusters activity and the ways of investigation

Porter (2000) in his works mentioned the advantages of clusters which have the capacity to develop innovations that leads to economic growth in future. The factor of proximity influence crucial the generation of economy and knowledge spillovers (Capello,1999). Also, it leads to the interaction and formation of interpersonal communication that impacts on creation of collective learning mechanisms. Knowledge spillovers and collective learning of clusters influence strongly the formation of “neo-Marshallian industrial districts” (Becattini, 1987), “new industrial spaces” (Scott, 1988) where the companies due to their interactions and collaboration activity coming to the innovation activity that leads to the economic growth. Thus, the companies that located physically to each other are more innovative and develop faster than the isolated companies (Baptista and Swann,1998).

The large number of case studies leads to the emergence of relation between clusters, innovation and economic growth, nevertheless Martin and Sunley (2003) states, that the consideration of positive connection between clusters, innovation activity and economic growth is not well documented. With a comparative approach there are not enough of studies conducted regarding the relation between the growth, clusters and innovation, while the quantitative analyses of assessment of positive relation between the clusters, innovation and growth is not conducted as well. Also, the clusters which are not succeed in collaborations had led to emergence of collective knowledge (Cooke, 2012). The studies conducted about this field include qualitative case-study analyses, including well-known clusters as well. A lot of these researches provide a profound knowledge of internal and external relationship. The systematic analysis was conducted by Crouch (2001) trying to comprise European clusters, however the quantitative analysis was underestimated. Due to the complicated interactions, the relationship between the institutional organizations and learning process in the clusters, emerge a difficulty in conducting the quantitative analysis. The last years there is a strong belief that the clusters are the pushing mechanism for innovations and economic growth in the academic and policy makers. It had a widespread thanks to Michael Porter that shades a light on the cluster concept and found a link between cluster conglomeration and economic dynamism. However, still there are many overlooked questions that need deeper consideration. Iammarino (2005) states that the institutions and dimensions depend on the context where the cluster is located. The difference of the context highlights that the one fits all model could not be implemented to colligate the successful development of the innovation systems (Doloreux and Parto, 2005). Also, the innovation framework may be applied beyond the identification of “regional innovation system”, that is theoretical concept without any equivalent on the ground (Cooke, 2012). However, Jacobsson (2006) tried to identify the clusters, implementing functional analysis, in order to measure and identify functions and observe the development of clusters. The systematic approach was implemented by European Commission (2006), via gathering best practices from European clusters within INNOVA initiative. Nevertheless, the European Cluster Observatory (ECO) made the greatest attempt in order to systematically map and measure the clusters in Europe (Paririlli, 2012). Considering socio-economic aspect, the following findings were defined: the existence of clusters is not that crucial, comparing to endowment of workforce and employees with high-technological skills which lead to generation, absorption of innovations and economic growth as well. The next finding is the correct proportion of employment and unemployment that has an impact on the economic and innovation growth. Fiscal incentives also are a useful tool for innovation activity (Cooke, 2012).

Basque country, perception of traditional and non –traditional industries

 One of the main representatives of the industrial traditional agglomeration in Spain is Basque Country. The consideration of this region of Spain was not chosen occasionally. The region went through intensive industrialization process from the first half of twentieth century, based on the industrialization of basic foundry, steel manufactory, production of pulp and paper and shipbuilding industry. In 1950 the concentration of machine tool producers in Urola, had created the business association, which became a starting point for the world largest cooperative, Mondragon Cooperative Corporation, which enhance the creation of firms in industrial sector such as Fagor electro domestics, Volkswagen, Mercedes. However, the last years the increased the number of new industries and agglomeration, such as electronics, ICTs, aircrafts, logistics, health and environmental industry. Moreover, it is important to highlight that even in the crises and recession in 1980s, the proactive autonomous government that was focused only on regional capacity, could reactivate the regional economy, effectively using the cultural and industrial capabilities. In the following abstracts the two particular medium-sized cities of the Basque Country are described. San Sebastian (200 000 inhabitants and 600 000 in province) and Bilbao (400 000 inhabitants and 1million in province). However, these two cities are representatives of local production systems, but they were not created within the base of ancient traditions and historical background, like Rome, Athens, Florence, Egypt. Nevertheless, the could mix two type of industries such as traditional and non-traditional, where each supports the other in a way of virtuous circles. For example, thanks to the creativity of cuisine industry in San Sebastian that supplies audiovisual industry by content of audiovisual products, where the last one supports the cuisine industry promoting its activity and success by means of specific audiovisual products. This case demonstrates the interactive cooperation of two not relevant industries, however due to the creativity that comes from the invisible sources the results are not documented. San Sebastian is one of the example of diversified creative industries, that showed a boost in its development of economy, while it took around 20 years to modernize the city.

Table 1.

 The diversified industries in San Sebastian province (Eustat 2011)

Activities Number of firms (2000) Number of firms (2008) Employment (2000) Employment (2008)
Traditional industry Printing and publishing 476 529 2179 2613
Architecture and engineering 1566 2285 2577 4247
Film, video and performing arts 522 937 1674 2492
Non-traditional industry
Software and computer services 274 419 1581 2675
Advertising 221 365 568 1192
R&D in social science and natural science and engineering 51 282 891 2452
Total creative industries 3110 4817 9470 15671

The results of non- traditional and traditional industry, which are presented in the Table 1., demonstrate the necessary of deeper investigation and conducting of benchmarking for future analyses of other regions. Moreover, it is important to highlight that the results show the double boost of employment and balanced spread between the industries, where 60 per cent is for traditional and 40 per cent for new creative industry. These facts, stand that the creative skills and capabilities do not have to be based on the ancient origins and traditions, but on the industrial activities which may be surrounded by the local historic development. The number of technological centers, excellence centers, universities, R&D departments in companies are the elements of the boost of creative industries. Regarding San Sebastian, the activity of clusters is noticed in the sphere of electronics, ICTs, aerospace, automotive, logistics, transportation and environment, which demonstrates the knowledge intensive business, that is crucial important for the modernization of industrialized economy.

The new vision of cluster: when the art of cuisine becomes a creative cluster

 The reflection of statistics results are not completely able to describe and measure social and economic life. Moreover, there is a sector which was underestimated, such as gastronomy, but in fact it appears creative. There are 8 restaurants in San Sebastian and its province which are awarded within the Michelin stars, where the total number of Michelin stars is 15, that presents the maximum concentration per capita in the world. This is the result of high quality and creativity of preparation of food that is focus on satisfaction and assistance of the customer. The combination of cooperation and competition in cuisine leads to emergence of special events such as “research meetings” , in which participate the well-known chefs, where they try to study and combine the flavours and products. Obviously, afterwards they are invited for presentation of their work to television programmes, such as high quality documentaries. Among the number of institutions and public initiatives, Basque Culinary Center includes an international faculty in gastronomic science and a research and innovation center of food and gastronomy that is supported by University of Mondragon and famous chefs. One of the famous events of the city is the annual conference “San Sebastian Gastronomika” plays an important role in the image of the city. Moreover, the synergy effect is of software and audiovisual cluster adds a value for the economic element.

However, except of the awarded restaurants many other restaurants are participating in improving of quality and originality of food, increasing the competition and cooperation of local cuisine development. Also, such part of creative industry as software and audiovisual, enhance the traditional non-creative industry, by providing software products and informatics. Nevertheless, the roots of the sector are founded in the tradition of “gastronomic circles”, which include families, friends and neighbors that participate in the association, sharing common place and having a dinner. However, in spite of the fact that the society is strongly developed as a matriarchal it is not reflected in the circles. The circles have their own rules, where the only men are to cook in the kitchen, while the women can try the dishes. It is important to highlight, that the this sector was not included neither in traditional creative nor in non-traditional creative, which stands that the creative industries can be developed in a sophisticated manner and to not be reflected in statistical results. Despite of it, the industry remains the source of jobs and economic development.

Conclusions

The object of the article is to shade a light at the opportunity of the local development, using novel solutions in order to increase the competitiveness of such countries as Russia, in conditions of global crisis. Also, the case is focused on the medium sized city, which has developed its own strategy, using strategic mix of traditional and non-traditional activities, that led to emergence of diversified local production system. The methodology and approach was taken from the approved experience of Lazzeretti (2008). Moreover, the efficiency and effective development of the region is more successful when there is a combination of traditional and non-traditional creative industries. For instance, the presence of arts and traditional creative in Athens, Rome and Florence and non-traditional such as cuisine and R&D in San Sebastian. The mix of industries’ types might influence on formation of local economy using the cultural, human, artistic and traditional agents as well. Furthermore, the case of San Sebastian demonstrates the power and advantages of diversified creative local production systems, the integration and benefits that they provide one type to another one, for example commercialization of documentaries of Basque cuisine (Cooke, 2012).The results of statistics are not sufficient and leave a gap in the investigation of subtle sectors such as cuisine, where the quantitative and qualitative knowledge may be implemented.

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