Innovation Europe > News > Innovation EU Vol1-1 > Clustering for success

You’re unlikely to get far in any discussion of innovation these days without mention of “clusters”. These regional agglomerations of industries with complementary services, resources and skills are very much flavour of the month. Competitive clusters, the argument goes, are powerful engines of economic development and drivers for innovation in Europe. They provide a fertile business environment for companies, especially SMEs, to collaborate with research institutions, suppliers, customers and competitors located in the same geographical area.

In today’s knowledge society, it is increasingly important for firms of all sizes to be part of such networks so as to access new knowledge and keep in touch with market demands. Cluster networks span the value chain, linking companies not just with each other but also with knowledge-producing institutions, intermediaries and related customers. In an increasingly interconnected world, European competitiveness is being driven more and more by these dynamic industry and technologybased clusters.

Timo Väliharju, CEO at Mediamaisteri Group, a Finnish software company, argues that clusters create manifold benefits for SMEs. “We see ourselves as ‘clusterpreneurs’ who actively promote the cluster and the idea behind it,” he says. “Joint R&D activities within the cluster broadens innovation capacity, and thus contributes to the competitiveness of our firms,” he explains. In addition, cluster membership paves the way for collaboration with other cluster initiatives and eases market 26 INNOVATION EUROPE 1 The Concept of Clusters and Cluster Policies and their Role for Competitiveness and Innovation: Main Statistical Results and Lessons Learned, http://ec.europa.eu/enterprise/policies/innovation/policy/clusters/index_en.htm entry in other European regions. For example, participation in NICE (Networking ICT Clusters in Europe, a network supported by the Europe INNOVA initiative), has enabled Timo’s company to leverage important international opportunities.

Clusters nurturing innovation

Clusters are predominantly a market-driven phenomenon. Most successful clusters are created spontaneously as a result of natural competitive advantages, market forces or simply by chance. Since the mid-1990s, however, an increasing number of public authorities across the EU have sought to nurture clusters as part of national or regional innovation strategies. Such policies have aimed to foster economic regeneration, revitalise certain industrial sectors such as maritime industries, and promote a climate conducive to research and innovation.

The EU has also been active in this area and clusters are now a central plank of the Community’s innovation policy. Activities have focused on promoting co-operation between cluster programmes in different member states and regions, and joint pilot projects in support of cluster activities.

As a result, today clusters are an important part of Europe’s economic landscape. A recent analysis by the European Cluster Observatory identified around 2,000 statistically significant clusters, employing around 38% of the European workforce.

In January 2008, regional and national authorities from across the EU launched the European Cluster Memorandum, marking an important milestone for Europe’s cluster policy. The Memorandum is addressed to ministries, regional development agencies and innovation agencies, and invites them to agree a number of common principles for future co-operation in supporting cluster development in Europe. This has been built upon by the European Cluster Alliance, which has brought together a large number of ministries and public administrations responsible for designing and implementing cluster policies. The Alliance goes beyond simply identifying good practices by promoting a dialogue between policymakers on how to develop a common cluster agenda for Europe.

Supporting transnational co-operation

Practical support for cluster development has been provided by the EU’s Europe INNOVA initiative. A series of 11 cluster networks were launched in 2006, aimed at improving the performance and competitiveness of European clusters in key sectors. These networks have mapped and benchmarked the cluster landscape in their sectors, and developed new or better management tools for use by cluster organisations. The initiative has also helped to increase business linkages between clusters in the EU by organising numerous study visits and matchmaking events, preparing partnerships, and advising and supporting the creation of new cluster organisations.

Study visits are an excellent way of establishing cooperation between different clusters, as they provide an opportunity to benchmark best practices and analyse barriers to innovation. The Agro-Biotech Clusters (ABC) Network organised successful benchmarking visits to the University of Davis, in California, which has a strong focus on agricultural, biological and life sciences, and to the Food Valley in Wageningen, the Netherlands, which has the largest concentration of agronomical research and food industries in the world.

“Cluster co-operation… focused our work on common challenges,” says Gianluca Carenzo, the co-ordinator of the ABC Network. “The experience gained has been invaluable to the partners. Learning from ‘the best’, what has been proven to work and adjusting the lessons learned to each different local situation, is a very practical way of building more efficient and competitive agro-biotech clusters in Europe.”

The first Europe INNOVA projects have provided valuable experiences on transnational co-operation between clusters, as well as important lessons for Europe’s future cluster policy.

What is striking is that not just hi-tech or “sunrise”industries benefit from working together in clusters. The benefits can be just as great for traditional industries, too. One such is technical textiles, where INNOTEX – another Europe INNOVA network – has been promoting a more entrepreneurial approach. “The complementarity between the clusters within the network has been a major factor in forging collaboration,” says Bosun Tijani, the INNOTEX Project Manager. “The project is acting as a catalyst in reviving and rejuvenating the textiles and polymer/composites sector in Europe and is the first of many effective partnerships between the member clusters,” he explains.

Another key message is that successful co-operation does not happen overnight. Coming from different cultural and economic backgrounds, clusters need time to develop trusted relationships. Dr Rolf Reiner, of the Stuttgart Region Economic Development Corporation, soon realised this when he set out to network European clusters involved in the automotive sector. “It takes time to create trust amongst regional authorities which are used to competing for foreign investment, jobs and tax-paying companies,” he says. “Nevertheless, after some in-depth discussions, we were able to establish the European Automotive Strategy Network based on personal relationships between key stakeholders.” Regional stakeholders, public authorities and cluster practitioners were attracted by the Network’s visiting schemes, whereas companies were interested in the matchmaking events.

A third lesson is the importance of cluster management, which is emerging as a new profession in its own right and needs to be carefully nurtured (see box).

Building world-class clusters

While Europe is performing well, it could do better. Clearly, Europe does not lack clusters, but few of them are truly world class. The persistent market fragmentation, weak industry-research linkages and insufficient co-operation within the EU mean clusters in Europe often lack the critical mass and innovation capacity necessary to be sustainable in the face of global competition.

A recent Communication from the European Commission tackles these issues head on2. Cluster support, it says, requires a more efficient framework. The Communication proposes to address this by further improving the functioning of the internal market and removing remaining barriers, in particular those hampering knowledge flows, mobility of qualified staff, and access to finance across borders.

A series of cluster-specific measures are also proposed at a variety of levels. A high-level European Cluster Policy Group has been set up to further explore ways on how best to assist Member States in supporting the emergence of world-class clusters. The policy dialogue among members states and EU regions initiated by the European Cluster Alliance will be expanded so as to exchange practices for designing better cluster policies. The European Cluster Observatory will be developed into a fully-fledged service to clusters and innovative enterprises to help them develop transnational partnerships. Lastly, a pilot scheme will be launched offering training programmes and a platform for co-operation of cluster managers. This could, the Commission says, help prepare a quality label for cluster organisations as new vehicles to support innovative SMEs.

The next few years look set to be exciting times for Europe’s clusters. The combination of practical experience and forward-thinking policy is bound to serve Europe well.

Cluster management – a new profession Today, it is widely accepted that it is not only a cluster’s structure but also its management that makes a difference in the cluster’s performance. Ten years of cluster management practice have led to professionalisation through:

Enhancements of management practices; Exchange of knowledge and expertise at European level; Capacity building;

This is also reflected in the following aspects:
In nearly every third cluster more than five persons are in charge of management issues; Interdisciplinarity of cluster management teams is gaining in importance; Cluster management activities tend to become standardised.