M Kiese: A European Proposal for Comparative Cluster Policy Research

Matthias Kiese
Institute for Competitiveness and Communication ICC

A European Proposal
for Comparative Cluster Policy Research

MOC Network Cluster Research Workshop
Harvard Business School, 12 December 2010

Matthias Kiese

Motivation: Best Practice & Copycat Behavior

„Presidents, ministers, and dignitaries come in pilgrimage
here, in well-publicized delegations that aim to capitalize the
visit in social prestige or political votes back home.“
(Castells/Hall 1994, S. 12)

Silicon Valley Silicon X Y Valley
© Max-Peter Menzel
MOC Network Cluster Research Workshop Harvard Business School 12 December 2010 2

1

Matthias Kiese

Guiding Questions
• Diffusion of cluster policies across time and space
• How? ⇒ Channels
• Adaptation? ⇒ Policy Learning
• What impact? ⇒ Evaluation
• Impact of structural & institutional variety on the design, implementation and
effectiveness of cluster policies poorly understood
• E.g. varieties of capitalism (Hall/Soskice 2001) ⇒ liberal vs. coordinated
market economies
• Constellations of actors in regional governance structures
• Interdependencies across spatial scales ⇒ multilevel governance (cf.
Callaghan 2010)

⇒ Convergent vs. divergent forces
⇒ Determine scope for policy learning
• Relationship between theory, empirical cluster research, policy and
practice ⇒ Public Choice perspective

Matthias Kiese

Comparative Cluster Policy Research: Outline

• Methodology
• Key concepts and findings
• Public Choice perspective (cf. Kiese 2008, Kiese/Wrobel forthcoming)
• Stylized facts
• Diffusion & policy learning (cf. Kiese 2010)
• Varieties of cluster policy (cf. Kiese 2009, Sternberg et al. forthcoming, Stockinger et al.
2009)

• Taking CCPR forward


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Matthias Kiese

Cluster Initiative vs. Cluster Policy

Cluster Initiative = an organised effort to increase the growth and
competitiveness of a cluster within a region, involving cluster firms,
government and/or the research community (Sölvell et al. 2003, p. 31)

(Regional) Cluster Policy
• all efforts of government to develop and support clusters (in a
particular region) (Hospers/Beugelsdijk 2002, p. 382)
• Industrial, structural, technology or innovation policy promoting
regional specialisation
• Public efforts to develop concentrations of industry or network
structures into clusters, or to promote existing clusters (cf. Bruch-
Krumbein/Hochmuth 2000, p. 69 f.)


Matthias Kiese

Dimensions of Cluster Policy

Governance1 Public
PPP Private

Cluster reference1 Implicit Explicit

Complexity Single Instrument Holistic Approach

Cluster Orientation Low High

Coherence Low High

Institutionalisation Weak Strong

Maturity Embryonic Completed

1) cf. Fromhold-Eisebith/Eisebith 2005, p. 1256

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Matthias Kiese

Case Study Regions: Western Germany
• Three federal states in West
Germany
• North Rhine-Westphalia ~ mature
industries facing structural change
Hannover Region:
hannoverimpuls GmbH Wolfsburg AG
• Bavaria ~ late industrialisation,
high-tech
Projekt Region
Braunschweig GmbH • Lower Saxony ~ ‘grey mass’
dortmund-project region
Wuppertal-Solingen-
Remscheid: • Regional typology ⇒ structural,
kompetenzhoch3
institutional & political variance
Nuremberg Region/
Central Franconia
• Seven sub-regional cases

Regensburg • 110 semi-structured face-to-face
interviews with 134 practitioners,
observers & consultants
(2006/2007)
Cartography: Stephan Pohl

Matthias Kiese

A Public Choice Model of Cluster Promotion

Economic Cluster Theory
Methods for Cluster Academia
Identification & Analysis
Conceptual Advice
Action Space
A
Rationality
Political
P

P A Political Action Implementation
Principal-Agent- Space
Constellation A P
Rationality
Bureaucratic
P A
Practical Action
Electorate
Space
Rationality
Cf. Kiese 2008, p. 133

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Matthias Kiese

Public Choice Economics: Implications for Cluster Policy
“Even if the public authority that oversees the cluster is highly
competent and attempts to maximise local welfare, an optimal
cluster policy looks like something extraordinarily difficult to
achieve.“
“Cluster policies that already look fraught with difficulties in a world
of benevolent governments look extremely unappealing when
political agency is explicitly taken into account.“
(Duranton 2009, p. 26-27; emphasis added)

• Welfare-enhancing cluster policies threatened by
• multiple information asymmetries
• political and bureaucratic rationalities
• lobbying und rent seeking


Matthias Kiese

Understanding of Clusters in German Policy and Practice
• Porter’s definition only academic/theoretical reference
• Cluster = “geographic concentrations of interconnected companies, specialized
suppliers, service providers, firms in related industries, and associated
institutions (for example, universities, standards agencies, and trade
associations) in particular fields that compete but also cooperate” (Porter 1998, p.
197 f.)

• General scepticism of theory; practical know-how and
experience-based learning dominates
• daily duty leaves no time to deal with fragmented theory
• no recognition of practical value
• ‘academic’ approach conflicts with mobilisation of firms
• Technocratic understanding: clusters are ‘made’ and often
equated with organised effort (initiative/policy) ⇒ danger of
overlooking / crowding out organic cluster development
• Equation of clusters and networks ⇒ institutionalisation
• Superficial reference to value chains ⇒ selectivity ⇒ rhetoric?!

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Matthias Kiese

Stylized Facts on Regional Cluster Policy in Germany
1. Technocratic understanding of clusters in policy & practice
2. For simplicity‘s sake, clusters are understood as networks
3. Spatial mismatch between cluster and policy ⇒ over-/
underbounding
4. Temporal mismatch (short-termism vs. cluster development)
5. Herd behaviour (ICT, bio, nano…)
6. From horizontal demonstration effects to top-down diffusion
7. Inflationary use of cluster term ⇒ meaning, credibility ⇓
8. Lack of explicit theoretical foundation/reference
9. Sloppy identification of cluster potential
10. Declining cluster focus over time

Matthias Kiese

Fuzzy Action Spaces of Cluster Promotion
Blurred action spaces and
Economic Cluster Theory
rationalities:
Methods for Cluster Academia
Identification & Analysis • Politics and Bureaucracy
Conceptual Advice govern concept
Action Space development
A
Rationality
• Action purpose-led ⇒ unity
Political
P of reason? (cf. Willgerodt 1994)
P A Political Action Implementation
Principal-Agent- Space
Constellation A P
Rationality
Bureaucratic
P A
Practical Action
Electorate
Space
Rationality
Cf. Kiese 2008, p. 133

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Matthias Kiese

Policy Transfer: Channels and Determinants
• Channels
• Literature
• Academic
• Best practice case studies
• Manuals
• Mobility of personnel (dispositive/operative)
• Consultants as transfer agents (Stone 2004)
• Knowledge communities
• Epistemic communities (Haas 1992)
• Communities of practice (Brown/Duguid 1996)
• Journeys of politicians and practitioners (policy tourism)
• Formal & informal communication (secondary)
• Determinants (cf. Lütz 2007: 139-141)
• Endogenous = cultural, institutional, socio-economic proximity
• Exogenous: frequency of interaction, networks, transfer agents
• Transfer object: complexity, visibility, potential for conflict

Matthias Kiese

Consultants as Transfer Agents: The McKinsey Case
• International projects, esp. U.S./ Silicon
Valley ⇒ knowledge management

• ThyssenKrupp = key supplier to VW
Hannover Region:
hannoverimpuls GmbH Wolfsburg AG • Lower Saxony ⇒ Hannover region as pilot
Projekt Region project for new structural policy approach
Braunschweig GmbH
„regional growth concepts“
dortmund-project

Bergisches Städtedreieck:
kompetenzhoch3
• State funding for concept development in
Nuremberg Region/
Braunschweig region
Central Franconia District
• Further growth concepts in Weserbergland
(2004), Süderelbe (2005)
City of Regensburg
• McK spin-off designed comparable projects
in Wernigerode, Aachen
• 2005 prelim study for Bochum 2015
Cartography: Stephan Pohl Cf. Kiese 2010

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Matthias Kiese

Transfer Channels: Summary of Evidence
Channel Occurrence / Relevance
Literature low (limited to Porter’s definition, manuals hardly known nor used)
Personnel mobility Some cases in cluster management for transfer of procedural knowledge
Knowledge Low, limited to regional/national scene
communities
German practitioners hardly participate in international KCs
Journeys Common, but doubts about transferability
Consultants Widespread

Personal Informal exchange btw state ministries, otherwise rare
communication

⇒ Overall low degree (inspiration, sometimes combination), path-dependent
learning by doing tends to dominate
⇒ McKinsey projects = notable exception (copying, adaptation), but influence
fading over time
⇒ Unilateral policy shopping as dominant mechanism
Cf. Kiese 2010

Matthias Kiese

Interregional vs. Path-dependent Institutional Learning

generic
explicit

Cluster approach

(Re-)Contex-
Decontex- Regional cluster tualisation
tualisation concept
Decoding
Codification accumulated experience, Adaption
learning by doing
(„laboratory“)
path-dependent learning (incremental, cumulative)
local-specific
tacit

Interregional learning is embedded in path-dependent local learning processes.
based on Hassink/Lagendijk (2001: 69), also cf. Nonaka/Takeuchi 1995

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Matthias Kiese

Cluster Policy and Varieties of Capitalism1

Liberal Coordinated
Market Economies Market Economies

• More CIs initiated by companies • Stronger role of government in
CIs
• More focused on export growth
• More national cluster policies
• More focused on upgrading
innovation
• More CI staff
• More trust across groups

Global Cluster Initiative Survey (GCIS II), Ketels et al. 2006, p. 22
1) Hall/Soskice 2001

Matthias Kiese

Case Study Regions in the U.S.
• 3 states + 2 sub-
regional cases
each
• 2007/2008: 87
Philadelphia interviews with
Portland practitioners,
Pittsburgh
Southern advisors and
Oregon observers

Research
Triangle
Piedmond
Triad

Stockinger 2010, p. 66 (Cartography: Stephan Pohl)

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Matthias Kiese

Cluster Policies in Germany vs. U.S.: Selected Differences

1) cf. Amin/Thrift 1993; 2) cf. Putnam 1995; 3) van den Berg/Braun 1999
Cf. Stockinger et al. 2009, Sternberg et al. (forthcoming)
Germany U.S.
Institutional • Cooperation and consensus • Individualism and competition
setting • Institutional thickness1, neo-corporatism • Less institutional thickness
(chambers, associations) • Collective agency less formalized, less trust
• More collective agency, trust, social capital and social capital2

National System • Focus on incremental innovation, • Strength in radical innovation, high-tech
of Innovation perceived problems with commercialization industries, commercialization aided by
of scientific breakthroughs strong VC base
• Dual system of vocational training supports • Diffusion and absorptive capacity limited by
diffusion and absorptive capacity through skills constraints.
human capital.
Policy area • Federal & state governments: innovation • Federal government: focus on workforce
policy ⇒ regional networks of science and development and disadvantaged regions
industry to accelerate commercialization (reactive)
• Regions: economic development, structural • States: Locational marketing and
policy (holistic) workforce development
Implementation • Structural: Public & collective actors • More private agency & reliance on
• Institutionalization, more political top-down individual leadership
initiation • Flexible framework, but lack of strategic
• Higher organizational capacity3, but coherence
technocratic (⇒ stylized facts)


Matthias Kiese

Comparative Cluster Policy Research: Towards an Agenda
• Horizontal expansion: Including more countries to increase variety
(e.g. Kiese 2009)

• Perspectives proved useful
• institutional (VoC, regional & multilevel governance)
• policy diffusion/transfer and learning
• Public Choice

• Conceptual broadening through new perspectives and tasks, e.g.
• Isolated best-practice case studies ⇒ common framework for systematic
CCPR
• Increase interdisciplinary research
• need for independent scholarly evaluation

• ECRP (European Collaborative Research Programme) as an
opportunity, but 2011 call has been cancelled due to organizational
transitions ⇒ new funding opportunities sought


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Matthias Kiese

References (1/3)
Amin, A.; Thrift, N.J., 1993: Globalization, Institutional Thickness and Local Prospects. In: Revue d'Économie
Régionale et Urbaine, (3): 405-427.
Brown, J.S.; Duguid, P., 1991: Organizational Learning and Communities of Practice: Toward a Unified View of
Working, Learning, and Innovation. In: Organization Science, 2(1): 40-57.
Bruch-Krumbein, W.; Hochmuth, E., 2000: Cluster und Clusterpolitik. Begriffliche Grundlagen und empirische
Fallbeispiele aus Ostdeutschland. Marburg: Schüren.
Callaghan, H., 2010: Beyond Methodological Nationalism: How Multilevel Governance Affects the Clash of
Capitalisms. In: Journal of European Public Policy, 17(4): 564-580.
Castells, M.; Hall, P., 1994: Technopoles of the World: The Making of 21st Century Industrial Complexes.
London, New York: Routledge.
Duranton, G., 2009: California Dreamin'. The Feeble Case for Cluster Policies. Toronto, 1 July 2009.
http://individual.utoronto.ca/gilles/Papers/Cluster.pdf, last accessed 7 December 2010.
Fromhold-Eisebith, M.; Eisebith, G., 2005: How to Institutionalize Innovative Clusters? Comparing Explicit Top-
down and Implicit Bottom-up Approaches. In: Research Policy, 34(8): 1250-1268.
Haas, P.M., 1992: Introduction. Epistemic Communities and International Policy Coordination. In: International
Organzation, 46(1): 1-35.
Hall, P.A.; Soskice, D., 2001: An Introduction to Varieties of Capitalism. In: Hall, P.A.; Soskice, D. (ed.):
Varieties of Capitalism: The Institutional Foundations of Comparative Advantage. Oxford: Oxford Univ. Press,
1-68.
Hassink, R.; Ladendijk, A., 2001: The Dilemmas of Interregional Institutional Learning. In: Environment and
Planning C, 19(1): 65-84.
Hospers, G.-J.; Beugelsdijk, S., 2002: Regional Cluster Policies: Learning by Comparing? In: Kyklos, 55(3):
381-402.


Matthias Kiese

References (2/3)
Kiese, M., 2008: Mind the Gap: Regionale Clusterpolitik im Spannungsfeld von Wissenschaft, Politik und Praxis
aus der Perspektive der Neuen Politischen Ökonomie. In: Zeitschrift für Wirtschaftsgeographie, 52(2-3): 129-
145.
Kiese, M., 2009: National Styles of Cluster Promotion: Cluster Policies between Variety and Convergence. In:
Hagbarth, L. (ed.): Innovative City and Business Regions. (=Structural Change in Europe, 6). Bollschweil:
Hagbarth Publications, 57-67.
Kiese, M., 2010: Policy Transfer and Institutional Learning: An Evolutionary Perspective on Regional Cluster
Policies in Germany. In: Fornahl, D.; Henn, S.; Menzel, M.-P. (eds): Emerging Clusters: Theoretical, Empirical
and Political Perspectives on the Initial Stage of Cluster Evolution. (=Industrial Dynamics, Entrepreneurship
and Innovation). Cheltenham: Edward Elgar, 324-353.
Kiese, M.; Wrobel, M., forthcoming: Wagging the Analytical Dog: A Public Choice Perspective on Regional
Cluster and Network Promotion in Germany. Paper accepted for publication in European Planning Studies.
Lütz, S., 2007: Policy-Transfer und Policy-Diffusion. In: Benz, A.; Lütz, S.; Schimank, U.; Simonis, G. (eds.):
Handbuch Governance: Theoretische Grundlagen und empirische Anwendungsfelder. Wiesbaden: VS Verl. für
Sozialwissenschaften: 132-143.
Nonaka, I.; Takeuchi, H., 1995: The Knowledge-creating Company: How Japanese Companies Create the
Dynamics of Innovation, New York: Oxford Univ. Press.
Porter, M.E., 1998: Clusters and Competition. New Agendas for Companies, Governments and Institutions. In:
Porter, M.E. (ed.): On Competition. (= The Harvard Business Review Book Series). Boston: The Harvard
Business School Publishing, p. 197-287.
Putnam, R.D., 1995: Bowling Alone: America's Declining Social Capital. In: Journal of Democracy, 6(1): 65-78.
Sölvell, Ö.; Lindqvist, G.; Ketels, C., 2003: The Cluster Initiative Greenbook. Gothenburg: Ivory Tower AB.
Internet-Quelle: http://www.ivorytower.se/eng/projgrnbk.htm (09.05.2006).


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Matthias Kiese

References (3/3)
Sternberg, R.; Kiese, M.; Stockinger, D., forthcoming: Cluster Policies in the U.S. and Germany: A Varieties
of Capitalism Perspective on Two High-Tech States. Paper accepted for publication in Environment and
Planning C.
Stockinger, D.; Sternberg, R.; Kiese, M., 2009: Cluster Policy in Co-ordinated vs. Liberal Market Economies: A
Tale of Two High-Tech States. Paper presented at the DRUID Summer Conference on Innovation, Strategy
and Knowledge, Copenhagen Business School, 18-20 June, 2009. Copenhagen Business School.
http://www2.druid.dk/conferences/viewpaper.php?id=5890&cf=32, last accessed 7 December 2010.
Stockinger, D., 2010: Handlungsräume und Akteure der Clusterpolitik in den USA: Implementierungsprozesse in
North Carolina, Oregon und Pennsylvania aus politisch-ökonomischer und institutioneller Perspektive. Berlin:
Logos.
Stone, D., 2004: Transfer Agents and Global Networks in the „Transnationalization“ of Policy. In: Journal of
European Economic Policy, 11(3): 545-566.
van den Berg, L.; Braun, E., 1999: Urban Competitiveness, Marketing and the Need for Organising Capacity.
In: Urban Studies, 36(5-6): 987-1000.
Willgerodt, H., 1994: Politische contra ökonomische Rationalität? Über die Interdependenz von Moral und
Vernunft. In: Orientierungen zur Wirtschafts- und Gesellschaftspolitik, 60(2): 4-12.


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