"The Cluster Initiative Greenbook: New Findings on the Process of Cluster-Based Economic Development", Christian H. M. Ketels

Rotman Competitiveness Seminar, November 21, 2003, 8 a.m.

Talk co-sponsored by the Ontario Institute for Competitiveness and Prosperity, and the Rotman School, University of Toronto

Christian H. M. Ketels, Institute for Strategy and Competitiveness, Harvard Business School

These participant's notes were created in real-time during the meeting, based on the speaker's presentation(s) and comments from the audience. These should not be viewed as official transcripts of the meeting, but only as an interpretation by a single individual. Lapses, grammatical errors, and typing mistakes may not have been corrected. Questions about content should be directed to the originator. These notes have been contributed by David Ing (daviding@systemicbusiness.org) at the IBM Advanced Business Institute ( http://www.ibm.com/abi).

Introduction by Roger Martin

[Christian Ketels]

Institute in Toronto is a role model for the type of institution that Harvard Institute wants to work with

How to use clusters in regional and national development

Some confusion:  people confuse clusters and cluster policy

Over the last 10-15 years, since renewed interest in clusters, how economic activity is located across geographies.

Use of clusters now moving more to the mainstream

Will discuss greenbook, then what will emerge.

Clusters are intertwined with the concept of competitiveness

Looked to U.S. regions for empirical proof

What is driving productivity?  What drives companies to operate at high levels of productivity?

In the Global Competitive Report, try to generate more data to see if it's really true that the microeconomic factors matter.

Look at the business environment:  the diamond introduced by Porter

Clusters are geographically colocated companies and institutions, that have externalities from being colocated

Declustering / outsourcing:

Another change in thinking over 10 to 15 years, is the change in geographic levels

Move to what does this mean for economic policy?

In a lot of regions, there are new institutions that play a new role.

One more theoretical point, before moving into data:  clusters versus cluster policy.

Empirical evidence, from the cluster mapping project started by Michael Porter 3 to 4 years ago.

First observation:  a lot of industry is not clustered

Second, prevalent traded cluster areas

Third, natural-resource-driven companies, less than 1% of employment

Chart:  average local wage (2001) vs. average traded wage

Found 41 cluster types:

People say need to be in high-wage clusters

Example:  Ohio

What share of employment is in our strong clusters?

Thus, a strong role for clusters.

What about change?  Chart:  state data

Explaining average regional wages:

The Cluster Initiative Greenbook

Flavour:  web-based survey

Implicit understanding of cluster initiative

Approach:  conceptual model:  there are different things that can influence what a cluster can do

First, talk about descriptive statistics, then performance

Setting, context:  strong environment for clusters

Objectives:  What are they trying to achieve?

Process / structure:  interaction between governments, companies

When did cluster initiative start?  Timeline

Cluster initiative facilitator

Self-assessment in improving the success of the cluster:

Leading drivers of failiure:

How can we build on this evidence to think about cluster-based economic development more generally?

Life cycle of a cluster initiative:

Generalized:  need to become more professional

As moving from clusters to cluster-based economic development, clusters aren't a new policy tool

Cluster creation and cluster activatoin:

Clusters are important, but they're not everything.

Still a young field


Trying to begin a cluster initiative, would you try to define the boundaries of a cluster or measure them?  Drive team?  Measures?

Where this matters is patent or concentration.  Could define those boundaries, e.g. one primary patenter, but would have a dozen within a drive.

In Ontario, there are a lot of companies near Detroit involved in automotive.  Is this one big cluster, or clusters on their own?

Where is the line between policy and cluster development?

Has data shown a correlation between the peformance of clusters, and engagement of universities with companies?  Particularly with natural resources.

In Canada right now, one of policy issues is commericalization, particularly in university research.  Clusters and commercialization?  Right now trying to understand knowledge transfer, rather than commercialization.  Currently a positive correlation.  Do you have some sense of needing to move beyond correlation with patent activity, towards looking towards knowledge transfer towards commercialization?

Define an institution for collaboration?  Boards of trade?  e.g. Italy?  Expansions beyond one or two person offices.  e.g. MARS project in Toronto.

Education and knowledge creation as a cluster.  Does anyone study these clusters?  Does this suggest that clusters can be influenced?  In this province, they're all public institutions, more like a planned economy?  Can you influence this cluster to develop?

Do you suspect that there are certain clusters or industry, in terms of industrial organization (e.g. multiple actors or consolidated actors) that impact on collaboration, or the success of the cluster initiative?  (No dependent variable, yet)  Suspicions?

Other issues:  global market or local market, so that local companies would see themselves as collaborators.  Relationship to internal / external factors.  e.g. software company that rely on research institutions for flows in and out of people.

At http://competeprosper.ca , have 41 clusters for Canada.  First working paper has more information on clusters.  Second annual report will be released on Tuesday.


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