a paper [pdf] by the Kauffman Foundation, the leading entrepreneurship
think-tank in the US, showed that research universities and other postsecondary
institutions are important for metropolitan entrepreneurship, but are not the
key catalyst in spurring such activity. Instead, the most fertile source of
entrepreneurial spawning is "the population of existing companies, which has
implications for economic policymaking and economic development strategies."
Meanwhile, the received wisdom on clusters, that physical proximity within
city-regions is key for innovation, is also under attack.
Michael Porter, the Harvard Business School academic
and author of the 1990 book, 'The Competitive Advantage of Nations,' has defined
a cluster as, "A geographically proximate group of interconnected companies and
associated institutions in a particular field, linked by commonalities and
complementarities (external economies)."
Prof Porter told BusinessWeek that "the more there are no barriers, the more
things are mobile, the more decisive location becomes. ..Now that globalisation
continues to power forward, what has happened is that clusters must become more
specialised in individual locations. The global economy is speeding up the
process by which clusters get more focused. There is a footwear cluster in
Italy, for example, where they still produce very advanced products. The design,
marketing, and technology still are in Italy. But much of the production has
shifted to Romania, where the Italians have developed another cluster. All of
the production companies actually are Italian-owned. Taiwan has done the same by
shifting production to China. The innovation is in Taiwan, but its companies are
moving aspects of their cluster that don't need to be in Taiwan."
However, Vivek Wadhwa, an Indian-American technology
entrepreneur and academic,
writing in The Washington Post, dismisses Porter's "outdated cluster
theory," which "lies at the heart of what
is wrong with these common prescriptions. He observed that geographic
concentrations of interconnected companies, specialized suppliers, and service
providers gave certain industries a productivity and cost advantage. His legions
of followers postulated that by bringing these ingredients together into a
“cluster,” regions could artificially ferment innovation. They just needed to
build the right infrastructure and bring together chosen industries."
Prof Wadhwa adds:
Most of the top-down cluster-development projects in the United States and
around the world have died a slow death in relative obscurity.
held the press conferences to claim credit for advancing science and technology
are long gone. Management consultants have cashed in their big checks. Real
estate barons have reaped fortunes, and taxpayers are left holding the bag."
Ireland's enterprise and innovation minister,
who is an avid consumer of what Prof Wadhwa calls "snake oil," remains in
place for the time being, relying on faith rather than evidence.
Wadhwa says that a recent
analysis of 1,604 companies in
the five largest Norwegian cities underscores what’s missing from this
prescription for a knowledge economy: people. The prerequisite for a regional
innovation system is knowledgeable people who have the motivation and ability to
start ventures. To succeed, these people need to be connected to one another by
information-sharing networks. Basic infrastructure is always needed, but fancy
science parks and big industry are just nice to have.
He adds that the study, conducted by Rune Dahl Fitjar, of Norway’s Centre
for Innovation Research at the
International Research Institute of Stavanger, and Andres Rodriguez-Pose of the London
School of Economics and Political Science, found that the key drivers of
innovation in Norway are the communication channels that local entrepreneurs
maintain to the outside world and their open-mindedness toward foreign cultures,
change and new ideas. Companies that are “regionally minded” - - that maintain
ties only with players within the same cluster - - are four times less likely to
innovate than the globally connected. The study found that regional and national
clusters are “irrelevant for innovation.”