Archive for December, 2004

Government is important in clusters, says US experts

December 17, 2004

Phil Davies’ piece (fedgazette – September 2003 – Courting clusters) has some real gems.

§          Government can’t fathom how to help clusters without engaging in ongoing conversations with the cluster businesses themselves… Cluster-savvy policies emphasize “a set of issues that are more fundamental in terms of improving the competitiveness of the state’s economy,” Cortright said. Like access to a well-trained workforce. Without it, cluster growth can’t be sustained.  
§          Through clusters, government officials learn what makes a particular cluster tick and where its greatest needs lie. Still, implementation is where cluster strategy gets sticky – state and local governments are struggling to get academics, bureaucrats and business people on the same page. 
§          Research at major universities tends to ignore the priorities of industries in their own backyards. “Right now the universities and centers do invest in R&D, but often it’s based on the interests of the faculty, and what they produce may have no relevance to the local economy,” Rosenfeld said.  
§          Minnesota‘s Department of Employment and Economic Development assigns specialists to industries (computers, health care, printing & publishing), helping businesses market themselves, apply for loans and grants, find strategic partners and sign up for customized training.  
§          It’s not really about public policy,” said Mary Jo Waits, at Arizona State University “By collaborating, business, academia and government learn from each other what it takes for clusters to flourish, sustaining a feedback loop of continuous improvement.” 
§          “One of the things we can do in state government is start focusing all of our grant, loan and business support programs to encourage, if not require, businesses to collaborate with each other before they apply for grants,” says Dave Gibson in Montana.

Welsh expert warns against use of C word

December 17, 2004

A well-known Professor at Cardiff University has provided us with some advice worthy of  close contemplation.

My current research into horizontal vs. vertical “clusters” is forcing me to drop the word “cluster” and adopt “social networks of businesses”, a more cumbersome term but less ambiguous for government agencies and business participants not terribly familiar (still) with current competitiveness think.

Part of the reason for this is God Porter himself, as I pretty quickly found you can have all of his factor conditions present and still not have any clusters unless there is the “social” (in a business interaction sense) catalyst.  

Sorry to be a bit academic but there is a compelling need to move away from the cluster descriptor to a much more elegant and business savvy term. I just don’t have a clue what it should be!

Protecting IP in cluster environments

December 17, 2004

Australian Electrical & Electronics Manufacturers’ Association has undertaken a very good analysis of cluster possibilities for its industry. It also explores issues associated with trust, and makes some interesting suggestions re promoting clusters in Australia. 

The management of IP and confidentiality in cluster environments requires composite frameworks. The report suggests identification of participants as core and non-core participants.

Core participants are likely to have minimum performance obligations to each other as the basis for maintaining their position, whereas non-core participants are interested in the outcome of a project but in relation to whom there are no specific performance obligations.  

This classification is then useful in determining the level of information available to others. For non-core participants, there would largely be unmediated access to general information about the cluster and its participants. However for core participants where the needs of trust are much higher, there would be arrangements for mediated access to, in some cases, highly confidential information.

As the levels of trust develop, so do the levels of collaboration and correspondingly the need for increasingly complex legal regulation between the parties. However, the report also explores the concept of high levels of trust becoming the glue by which participants may be freed from a prescriptive agreement basis for engagement to one of ethics and conduct.  

Consistent with its objective to evaluate and define new ground in this area, the report suggests that Australia should now generate its own clustering traditions, taking account of its own unique geographical, cultural and historical factors. This arguably ethnocentric approach should in no way diminish its global orientation in externally-focused industry and export development. It is time for Australia to be seen as establishing a benchmark for a sustainable cluster in its own right, rather than be shackled to past ‘truisms’ that may (or may not) apply to the Australian environment.

In this context the ‘cluster of clusters’ approach is recommended as a feature of the way forward for Australia. 

Contact: John Humphreys at