Embedded Clusters in a Global Context: Findings from the ISRN Research Initiative

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Embedded Clusters in a Global Context Findings
from the ISRN Research Initiative

• David A. Wolfe, Ph.D.
• Program on Globalization and Regional Innovation
  Systems
• Centre for International Studies
• University of Toronto
• Presented to the 8th Annual Meeting of
• the Innovation Systems Research Network
• Kingbridge Centre, King City, May 4, 2006

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Objectives

• Encourage the creation of linkages and the
  exchange of ideas and information among the
  academic community, private sector firms and
  associations and government policy makers
• Develop agendas for research on the relationship
  among innovation, the new knowledge-based
  economy, and regional economic clusters
• Foster a multidisciplinary approach to research
  that includes a variety of disciplines such as
  business, economics, urban planning, public
  administration and science and technology
  management
• Encourage the development of graduate students
  with the interests and skills necessary to
  contribute to future research in this area and/or
  to practice as managers of science-based
  innovation and
• Improve innovation systems, thereby influencing
  public policy and corporate strategy.

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Design Features

• Nodal Structure
• Five subnetworks
• Multidisciplinary membership
• Structure mirrors regions being studied
• Research methodologies tailored to regions being
  studied
• Research dissemination
• Regional workshops
• National meetings
• Web sites and electronic newsletters
• Annual publication
• Links with extensive network of government
  partners
• Policy advice tailored to the regions

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MCRI Project on Industrial Clusters Core
Research Questions

• To what extent and in what ways do local,
  extrafirm relationships and interaction enable
  firms to become more innovative and successful?
• What is the relative importance of local,
  national and global relationships and knowledge
  flows in spurring the development of regional
  clusters over time?

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Cluster Case Studies

• Size and composition of the cluster
• History of the clusters evolution, including key
  events (intentional and accidental)
• Relationships between firms
• Relationships between firms, research
  infrastructure, other institutions/organizations
• Geographical structure of these relationships
• Role of finance capital (especially angel
  investors and venture capitalists)
• Role of local social capital and civic
  entrepreneurs

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MCRI Case Studies (2001-2005)

• Biotech/Biomed Montreal, Toronto, Vancouver,
  Ottawa, Saskatoon, Halifax
• ICT/Photonics/Wireless/e-Commerce Vancouver,
  Calgary, Waterloo, Ottawa (Telecom and
  Photonics), Quebec City, New Brunswick, Cape
  Breton)
• Mechanical Engineering Aerospace (Montreal)
  Steel (S. Ontario), Auto Parts (Windsor,
  Waterloo)
• Multimedia Montreal, Toronto, Vancouver
• Food and Wine Specialty Foods (Toronto) Wine
  (Niagara, Okanogan)
• Resource Industries Wood Products (BC) Mining
  Supply/Services (Sudbury)

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Path Dependence and Cluster Formation

• Initial conditions and trigger events
• Entrepreneurial intervention
• Role of lead or anchor firm
• Spin-offs and technological spillovers
• Key role of public sector institutions
• Institutional and cultural dynamics
• Random acts of entrepreneurialism not fully
  explained by local circumstance
• Chance, however, often has local antecedents,
  making its role less than it first appears
  (Porter)
• Cluster emergence inextricably intertwined with
  local institutions

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ISRNs Cluster Life Cycle
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Clusters and Industrial Structure

• Emerging contribution to cluster literature
• excessive tendency to generalize from one
  industrial sector across all others
• i.e. Silicon Valley and ICT sector
• Tendency to apply one analytic model across wide
  variety of different geographic settings
• Clusters are industrially specific
• Key characteristics determined by
• Age of cluster
• Maturity of underlying technology
• Supply chain linkages and/or disaggregation
• Production model
• Links to local labour markets

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ISRN CLUSTER TYPOLOGY
Knowledge Dimensions Industrial Structure and Cluster Linkages Industrial Structure and Cluster Linkages Industrial Structure and Cluster Linkages
Lead Anchor Firm Global Supply Chain Local Value Chain
Synthetic Ontario Steel Montreal aerospace Waterloo auto parts Sudbury Mining SS Windsor auto parts/ Machine tool die
Analytic NB-IT Ottawa photonics/telecom Calgary/Vancouver wireless Saskatoon biotech Waterloo ICT Mtl, Tor, Van, Hal Biotech/life science Cape Breton IT Mtl, Tor, Van media Quebec photonics Ottawa biotech
Hybrid Ontario, BC wine BC wood products Ontario food
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The Local and the Global

• Key elements of the literature maintain the
  importance of the local supply network and demand
  conditions for cluster development
• ISRN findings contradict this
• Both key suppliers and customers are often
  non-local
• Cluster firms are well integrated into global
  supply chains and knowledge networks
• This is more true for ICT, bio-life sciences and
  mechanical engineering
• In multimedia, food and wine clusters, local
  demand conditions and supply base are more
  critical
• Clusters are anchored to their locality by
  agglomeration economies,
• especially the labour market

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Research Infrastructure

• In contrast to most celebrated international case
  studies
• Research institutions play supporting, not causal
  role
• Clusters are not spun-off from research
  institutions
• Waterloo and Ottawa ICT are clearest exceptions
• Research (especially PSE) institutions are
  excellent market readers
• Expand research and teaching activities to meet
  needs and demands of local clusters
• Contribute to development of a thick labour market

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Role of Talent and Local Labour Market

• Depth and breadth of labour market
• key ingredient for cluster development
• Depends on strength of educational institutions
• Underlying quality of place
• Key question is what factors influence the growth
  of strong local labour market
• How do you retain talent in the local labour
  market

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Local Dynamics

• Local knowledge circulation
• Intra-cluster knowledge flows
• Linkages between research infrastructure and
  cluster firms
• Learning at three levels
• Within firm
• Within cluster
• At level of broader community
• Strong social networks at community level
• New institutions of civic governance
• Value of inclusive civic engagement

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Policy Implications

• Importance of social factors and institution
  building
• Linkages between elements of the system
• Especially research infrastructure and clusters
• Institutional alignment
• Importance of demand side of innovation system
• Absorptive capacity
• Knowledge is not a free good
• National policies impact at the local level
• Growing role of networks and clusters
• Talent as a key attractor
• Combination of educational resources and quality
  of life factors

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Policy Implications II

• Broad mix of policies
• Support for upgrading innovative capacity of
  firms
• Infrastructure to promote rapid diffusion of
  technologies
• Support growth of SMEs through networking and
  interaction
• Role of financial system
• Stimulate both supply of and demand for new
  knowledge
• Critical role of strategic planning and regional
  foresight and the local and community level
• Coordinate federal agencies at local level