Clusters & Business Networks

Dr. Emanuela Todeva Director of Research Centre for Business Clusters, Networks and Economic Development

University of Surrey

Clusters are agglomerations of firms & institutions, co-located in a geographic area, connected by value-added activities, and with access to benefits from input/output markets, infrastructure and environmental coordination via policies (E. Todeva, 2006).

Definition of Clusters

http://www.surrey.ac.uk/BCNED/

http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=1124332

LocationBoundaries

Bio-Medical & Health, Greater South East,

2008

Database Firms ‘Locational Concentration Across Regional Boundaries’ Greater South East, UK

- The Use of complementary databases comprising of the entire population of firms and funded research projects

- Developed a Multi-Stage Cluster Methodology for Cluster mapping and analysis

- Investigating Brokerage, Intermediation, & Information sharing across firm / regional / country boundaries

Amadeus 2008

Diagnostics

240

Medical Care

4902

Social Care

3208

Medical Care Support Services

1154

Technical Support

265

Dental Practice

478

Telecare

63

Drug Development Support

376

Bio-pharma R&D

387

Integrated Pharma& Biotech

115

Health products & cosmetics

677

MedicalDevices

719

Bio-PharmaManufacturing

286

Bio-Pharma Support

496

TradePharmaceutical& bio-products

611

Pharmacies & Drug Stores

1161

Fitness & Wellbeing

309

TradeMedical & Optical

Products

813Universities / centres of excellence

in research

61

© Todeva, 2008

Activities &Transactions

Database Firms ‘Concentration of firms in the Value Chain in the Region’ Greater South East, UK

Bio-Medical & Health, Greater South East,

2008

Cluster Value Chain: SURGICAL & MEDICAL INSTRUMENTS MANUFACTURING(198 firms, ties between firms based on 5 or more shared industry codes)

(87% of firms have the core industry codes: 334510 Electro-medical and Electrotherapeutic Apparatus Manufacturing; 334517 Irradiation Apparatus Manufacturing; 39112 Surgical and Medical Instrument Manufacturing; 339113 Surgical Appliance and Supplies Manufacturing)

© Todeva (2007)

Holding companies

All other personal care stores

Wholesale

Misc. metal products

Electro-medical, electro-therapeutic, irradiation apparatus; surgical & medical instruments;

surgical supplies manufacturing

R&DPlastic

products

198 firms87% in 4 coreindustries

Misc electrical equip & component

manuf.

Regional Inter-University Alliances & Partnerships

Bio-Medical & Health, Greater South East,

2008

Database Research Projects‘Regional University Collaborations’ Greater South East, UK

45403530252015

Std.Deviation

20

15

10

5

0

Med

ian

'02 '03

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'06'02 '03

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'06

'03'04

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'06

'02 '03

'04

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'02

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'04

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'02'03

'04 '05

'06

'02

'03

'04 '05'06'02'03

'04

'05

'06

'02'03

'05

'06

'02

'03

'04

'05

'06

Fit line for Total

16.HealthProd&Cosmetics

10.TradeMed&OpticalProducts

9.Telecare

8.MedicalDevices

7.Diagnostics

6.BioPharmaSupport

5.TradePharmaceuticalProducts

4.IntegratedPharma&Biotech

3.BioPharmaManufacturing

2.DrugDevelopmentSupport

1.BioPharmaR&DCluster

Risk-adjusted Performance

© Todeva, 2008

Location of Capabilities

Bio-Medical & Health, Greater South East,

2008

Database Firms ‘Regional Concentrations of Capabilities Measured with a Two-mode Graph of Relationships Between Regions and Clusters’ Greater South East, UK

RELATIONSHIPS

STRUCTUREACTORS

culturalapproach

relationalapproach

structuralapproach

The Network Diamond

Emanuela Todeva (2006) Business Networks: Strategy and Structure, New York: Taylor & Francis.

RELATIONSHIPS

STRUCTUREACTORS

structuralapproach

culturalapproach

relationalapproach overlapping networks

multiplexity & dynamics

structure of social relations

bonds & network

ties

embeddedness

roles, status, network position

knowledge & technology interactions

interconnected industrial markets

supply chain

cognitive & structural balance

generalisedexchange

transitivitydiffusion

power dependence

purposefulaction

resource flows activity links

resource dependence

norms, rules, institutions

cultural artefacts / entities

context / actor-world

text, stories, myths, ideas

technology, standards

heterogeneity

network processes – selection, enrolment, translation, staging, representation, framing

the effect of outcomes

© Todeva, 2006

Theoretical Approaches

The Behavioural System of Business Networks

Reactive & Strategic Behaviour in Networks

Firm’s conditions & attributes Business operations

Market conditions

Manageability/Control Legitimacy & Role

Relational framework/ context

Relational attributes

Industry conditions

Factor conditions

Mediating factors

Other connected activities

Decision making & goal settingNegotiating identities, interests & agreementsBargaining & negotiating contractsAscribing and accepting rolesStructuring information flowCoordinationMaximising profits, payoffs, benefitsMinimising costs / Sharing costsOptimising behaviour & maximising ‘expected utility’Manage the use of their assetsAccumulation of heterogeneous resourcesInvestment in assets capabilities & relations (incl. diversifying assets & capabilities)Building strategic capabilitiesSpecialisationInitiation of contacts and entrepreneurshipContracting resourcesDeveloping relationshipsExtending commitments to partners (buyers, suppliers)Acquiring & maintaining powerMonitoring & evaluation of partners, building expectationsExchange of incentivesStrategic positioningMimicry, conformity & complianceLegitimacy seekingForming coalitions and partnershipsCooperation for a final outcomeLearningKnowledge sharingManipulating external & internal environment

f a c t o r s © Todeva, 2006

EGOALTER

Attributes /Affiliated members

and sub-units

Dyadic & Multilateral Relationships

E. Todeva, 2003

EGO

Initiating a link(including learning about the other)

Establishing a relationship

(including certain reciprocity)

Market transaction

(including agreement)

Repetitive transactions (including a partnership agreement)

Mutual recognition between human actors, or interaction with objectsSingle exchange of resourcesbetween human actorsRepetitive exchanges, employing an object into a process

Knowing someone or something

Relation / Association between subjects & objects

►▼◄

♦◘

Co-presence in a field

Interconnected relationships

(including transactions & resource flows)Community exchanges& interconnected processes

POTENTIALRELATIONSHIP

LONG-TERM RELATIONSHIP

DYADIC MARKET RELATIONSHIP

INTERACTION / COMMUNICATION LINK

NETWORK RELATIONSHIP

PRE-RELATIONSHIP

© Todeva, 2006

Evolution of Network Relationship

Types of Structural Configurationshierarchical organisation(Weber, 1947)

trans-national (Bartlett & Ghoshal, 1989)

multidivisional organisation(Simon, 1962; Chandler, 1962; Williamson, 1975)

matrix organisation

functional organisation

horizontal organisation / value-chain, supply chain - through vertical integration of activities (Porter, 1986)

hegemonic / Ego-centred

clustered / dispersed / distributed

circular / regular / small-world

universal / core-periphery / scale-free

heterarchy (Hedlund, 1986)

community / dispersed / distributed

hybrid organisation(Miles & Snow, 1986, Powell, 1987) broker

producerdesigner

distributorsupplier

▼◄♦◘▼ ▼ ▼

industry groups (Porter, 1980)

© Todeva, 2006

Hegemonic Tree Circular Regular Universal Value Chain

Clustered Core/Periphery (Scale-free) Small world

© Todeva, 2006

Network Structure

hegu, hui, guanxi, kongsi

Chinese Family & Community Business Networks

© Todeva, 2005

Shacho-kai

First tier suppliers

Second tier suppliers

GROUPBANK

Japanese Keiretsu Networks

© Todeva, 2005

Sogo Shoshatradingcompany

Foreign partners

BANK

Keiretsunetwork

Firms

Japanese Sogo Shosha Networks

© Todeva, 2005

family

Korean Chaebol

© Todeva, 2005

Types of Supply Chain Networks

• Ego-centred• Dispersed• Project based• Value-chain based• A combination of value-added

chains & strategic control networks

Global Commodity Chains

DISTRIBUTORSERVICEPROVIDOR

MANUFACTURERBANK

MARKETING

TRADINGCOMPANY

INTERMEDIARY RETAIL

SUPPLIERS

Value Chain Supplier Networks

© Todeva, 2005

Distributed Supplier Networks and Commodity Chains

BUYERPRODUCER

MANUFACTURERBANK

TRADINGCOMPANY

SUBCONTRACTORDISTRIBUTOR

value co-creation

value measurement

valuediffusion

value-in-context

value-in-exchange

valuecreation

value extraction

© Todeva, 2014

Network Approach to Value Management