Volume 7, Number 3 – October 2010

Clusters Going Global

For the past few weeks, policy advocates here in Washington DC have been pontificating on “The New Cluster Moment.”    While it’s been more than ten years since most economic development professionals began talking about clusters, it now looks like the Federal government is starting to listen.  Both the Economic Development Administration and the Small Business Administration have recently announced new grants to regional innovation clusters located across the US. 

My basic response to the latest flurry of activity is: “It’s about time.”  It’s great to see that Federal policy makers and local leaders are recognizing that clusters can be an important tool for organizing and promoting local economic development.   In a speech last month, Commerce Secretary Gary Locke talked about the importance of regional innovation ecosystems that contain:

  • A talent pool that connects across disciplines;
  • An “innovation infrastructure” with physical facilities,
  • A skilled workforce,
  • Access to capital; and
  • A support system that can shepherd promising innovations through the so-called “valley of death.”

I can’t quibble with this list, but would suggest that we think more holistically about the role of clusters in driving regional economic prosperity.  Specifically, we need to think more deeply about why and how individual firms get involved in these clusters and networks.  They don’t do it because they want access to an “innovation infrastructure.”  They do it because they believe that participation brings tangible benefits to their company.  These can take the form of money, specialized information, or new partners and customers.

The new cluster policies can help on many of these fronts.   New Federal dollars and new access to capital efforts can help on the money front. By their very nature, clusters provide access to specialized information and tacit knowledge about a given industry or sector.  Yet, we could do a better job of linking firms within clusters to new customers and business opportunities, especially overseas customers. 

Thanks to my recent participation in a conference sponsored by the Technopolicy Network, I’ve had an interesting update on how European cluster organizations are linking member firms into a global customer base.  Because most European nations lack a large domestic market, their firms and their clusters must almost always look overseas to build their markets.  Finland has been especially aggressive on this front.  Its China-Finland Golden Bridge Soft Landing program provides facilities and business services to Chinese firms looking to locate in Finland or to use Finland as a hub for entering European markets.  Finnish companies are also engaged in a regional cluster effort known as Baltic Sea Region (BSR) Stars.  This joint initiative, which links clusters from ten Baltic Sea countries, builds cross national clusters in target sectors such as cleantech, well-being and health, digital business services, and future transport.  

Many American communities get the importance of building these international connections.  Sister city programs, export promotion, and business incubator soft landings programs all seek to build stronger global trading links.  Yet, it seems that connections between industry cluster development and export promotion are weak.  Robust export and investment promotion agencies exist across the US, but very few cluster or innovation-focused networks consider export promotion to be a core part of their missions.

Finding ways to remedy these shortcomings should not be too difficult.  As a first step, cluster organizations should place higher priority on building global alliances.  This can involve closer partnerships with local export and investment promotion programs as well as the development of bilateral and multilateral partnerships with non-US based cluster organizations. 

In addition, Federal agencies in Washington should do a better job of linking their commitments to regional innovation clusters and to export promotion programs. The recent While House report on the National Export Initiative, which envisions a doubling of US exports over five years, contains only one brief reference to clusters—despite the fact that the plan places heavy reliance on increasing exports from smaller firms.  One of the best means for reaching these firms is via their involvement in local cluster organizations or entrepreneurial networks.   The result should be stronger regional cluster, more prosperous firms, and improved export performance.

What’s New at EntreWorks Consulting?

We continue to provide more regular news and updates at the EntreWorks blog (http://blog.entreworks.net).  Recent postings have focused on the National Infrastructure Bank, complexity theory, manufacturing support programs, and current debates over industrial policy. 

In addition, we’ve added lots of new reports to the EntreWorks’ on-line library.  They include:

Finally, Erik Pages of EntreWorks continues to hit the public speaking circuit.  In the coming months, we’ll be doing presentations in Washington DC, Waterville ME, and Shelby NC.  Hope to see you on the road.