Archive for February, 2001

Why clusters facilitate innovation (OECD)

February 17, 2001

The OECD’s Working Group on Innovation and Science Policy recently circulated a report arising out of its work on national innovation systems. The key points are: 

·         Innovation seldom takes place in isolation but is systemic. The notion of a cluster is centered around linkages between (firm and non-firm) actors needed for bringing about innovation.

·         Clusters are networks of production of strongly interdependent firms (including specialised suppliers) linked to each other in a value-adding production chain.

·         Clusters mostly also encompass strategic alliances with universities, research institutes, knowledge-intensive business services, bridging institutions (brokers, consultants) and customers.

·         Proximity to shared resources (e.g. technological competence, key client, specialised labour) can be of importance to the functioning of clusters, although clusters are not exclusively or by definition regional or local

·         The cluster approach focuses on the linkages and interdependencies among networked actors for bringing about innovation (systemic activity that requires an active search process).

·         The cluster approach offers a menu-approach …those involved in upgrading clusters can pick and choose, depending on the needs of the actors in a cluster.

·         Cluster studies can in practice be used as a working method for policymaking (i.e. policy learning) and as an economic development tool for strategic business development. IT clusters feature high on the agenda of both policymakers and innovation researchers…they can different from each other.

The cluster in Finland in which Nokia play a pivotal role (in its value chain 4,000 other firms are involved) is highly dissimilar from the case of Ireland (switch from FDI-based development strategy to developing an indigeneous ICT cluster), the UK (various regional clusters historically strongly influenced by defence and spatial planning policies).  

The need for a closer link between cluster analysis and cluster policy practice is to make the whole process of cluster identification, cluster selection, cluster actions (and knowing when to stop) more transparent and verifiable. These 2nd or 3rd generation cluster policies are designed in such a way as to increase credibility in policy environments and allow for measuring the effectiveness of cluster policy-making.