Patrick Humphreys, LSE (UK)Blanca Martins , UPC (ES)Kay Alwert, GmBh (DE)

CEA=PME symposium Oct 1 2010

The role of Clusters for SMEs

Cross-enterprise Assessment and Development

of Intellectual Capital

MotivationMotivation To contribute theoretical and practical aspects of To contribute theoretical and practical aspects of

SME cluster building emphasising Intellectual CapitalSME cluster building emphasising Intellectual Capital Key IssuesKey Issues

Successful cluster building, management and networking is Successful cluster building, management and networking is essentially a bottom-up processessentially a bottom-up process

Importance of facilitating mechanisms to enable and Importance of facilitating mechanisms to enable and enhance intellectual Capital (IC) flows within and across the enhance intellectual Capital (IC) flows within and across the cluster cluster

Practical implicationsPractical implications Highlight critical factors; successful cluster operationalisation Highlight critical factors; successful cluster operationalisation

lies with the SMEs involved, devoping clusters bottom-up lies with the SMEs involved, devoping clusters bottom-up through improving and exploiting the flow of IC (soft through improving and exploiting the flow of IC (soft knowledge and know-how) between and within SMEs in the knowledge and know-how) between and within SMEs in the cluster.cluster.

1.1. The importance of networks for SMEsThe importance of networks for SMEs Why do they appear as Why do they appear as thethe alternative in dynamic and alternative in dynamic and

turbulent contexts?turbulent contexts? The fundamentals of collaborationThe fundamentals of collaboration

2.2. The decline of top-down The decline of top-down Why have top-down approaches proven ineffective? Why have top-down approaches proven ineffective? The emergence of the bottom-up approachThe emergence of the bottom-up approach

3.3. Supporting bottom-up cluster-building by Supporting bottom-up cluster-building by SMEsSMEs

CADIC cluster activity frameworkCADIC cluster activity framework

4.4. ConclusionsConclusions Implication for practice, multiplicationImplication for practice, multiplication

• Shortening life cycles innovationShortening life cycles innovation• Large IT and institutional changes Large IT and institutional changes • Dynamic specialization Dynamic specialization • Strong and radical shifts in social bondsStrong and radical shifts in social bonds• …………....

Network arrangements Network arrangements that, though embedded in, that, though embedded in, transcend geographical transcend geographical locationlocation, focus on global , focus on global markets, operate as markets, operate as ad-hocad-hoc and/or long term business and/or long term business networks, are networks, are ICT enabledICT enabled, , and are based on and are based on dynamic dynamic aggregations of aggregations of capabilities of different capabilities of different SMEsSMEs..

Damaskopoulos et al (2008)Damaskopoulos et al (2008)

Geographic Geographic concentrations concentrations of of interconnected companies, interconnected companies, specialized suppliers, specialized suppliers, service providers, firms in service providers, firms in related industries, and related industries, and associated institutionsassociated institutions in particular fields thatin particular fields that compete but also compete but also cooperatecooperate..

Michael E. Porter (1998)Michael E. Porter (1998)

Early 2000s: clusters called into question Early 2000s: clusters called into question Highly innovative firms: HOW to combine strong local SME Highly innovative firms: HOW to combine strong local SME

knowledge base with others in distant regions?knowledge base with others in distant regions? Locally embedded knowledge Locally embedded knowledge vs.vs. international knowledge international knowledge

spill-overs & networksspill-overs & networks

Networking triggers ...Networking triggers ... Keeping pace of innovation; IT advancements; institutional Keeping pace of innovation; IT advancements; institutional

and social changesand social changes Flows of new knowledge Flows of new knowledge become critical to business become critical to business

success and these flows success and these flows occur only in the context of occur only in the context of relationshipsrelationships

... And its impact on business ... And its impact on business Business strategies/models reconfigured Business strategies/models reconfigured (Open innovation) (Open innovation) Innovation is increasingly the result of cooperation Innovation is increasingly the result of cooperation

(Collaborative pull )(Collaborative pull )

What is it? What is it? ““A A processprocess through which parties who see different aspects through which parties who see different aspects

of a problem can of a problem can constructively explore constructively explore their differences their differences and search for solutions that go and search for solutions that go beyond their own limited beyond their own limited vision of what is possiblevision of what is possible.”.” (Gray, 1989: 5)(Gray, 1989: 5)

““A A mutually beneficial relationship mutually beneficial relationship between two or more between two or more parties who parties who work toward common goals work toward common goals by sharing by sharing responsibility, authority, and accountability for achieving responsibility, authority, and accountability for achieving results.”results.” (Chrislip and Larson , 1994: 5)(Chrislip and Larson , 1994: 5)

Implications for SME clusters Implications for SME clusters Setting the basis for a Setting the basis for a collaborative environment, collaborative environment, right at right at

the outset, is essential the outset, is essential (Collectively articulated vision and goals; (Collectively articulated vision and goals; trust building)trust building)

Collaboration has to be Collaboration has to be systematically nurtured and systematically nurtured and managedmanaged

The reasons behind: The reasons behind: Regional oriented approaches which promoted structures Regional oriented approaches which promoted structures

constructed to benefit from governmental funding constructed to benefit from governmental funding Inoperative and terribly slow to respond to market demands Inoperative and terribly slow to respond to market demands

and firms’ innovation needs and firms’ innovation needs Overabundance of “Overabundance of “standard” support standard” support ; bias towards ; bias towards

technical solutions rather than towards addressing technical solutions rather than towards addressing organisational and managerial deficitsorganisational and managerial deficits; lack of proper ; lack of proper understanding of understanding of SMEs’ SMEs’ knowledge flows and knowledge flows and communicative practicescommunicative practices (EU ADAPT, 1999)(EU ADAPT, 1999)

Inability to evolve from stage of co-locationInability to evolve from stage of co-location The emergence of the bottom-upThe emergence of the bottom-up

EvidenceEvidence: OECD (2007), Huggins (2008), European Cluster : OECD (2007), Huggins (2008), European Cluster Memorandum (2009), OECD LEED program (2009), EU Memorandum (2009), OECD LEED program (2009), EU launching of Knowledge Intensive Clusters (2010)launching of Knowledge Intensive Clusters (2010)

CADIC is a research project funded within the European

Union Seventh Framework Programme. It is coordinated by

CEA-PME.

•The CADIC consortium of SME Associations and Groupings

(SME-AGs) and RTD partners focuses on seven “core”

countries in Europe (Greece, Portugal, Spain, Italy, England,

Scotland, Germany), helping a large number of SMEs to set

Up, manage and strengthen their own clusters for their own

benefit:CADIC supports and facilitates Intellectual Capital (IC)

flows within and between SME clusters

Cross-enterprise Assessment and Development of Intellectual Capital

CADIC Cross-Organisational Assessment and Development of Intellectual Capital

Duration 01.07.2010 to 31.12.2012

Consortium SME-AGs CEA-PME (Project Coordinator)Aegean Technopolis (Greece)ANPME (Portugal)CECOT (Spain)Confindustria Vibo Valentia (Italy)Intellectual Assets Center (UK)

SMEs Green Shelter (Greece)J&J Teixeira (Portugal)Just-B./Sitekit (UK)Metalsud (Italy)SIDASA (Spain)

RTD partners Fraunhofer IPK (Scientific Coordinator)London School of Economics (LSE)Universitat Politécnica de Catalunya (UPC)Università della Calabria (UC)

New set of practical and simple tools and New set of practical and simple tools and methodologiesmethodologies to to promotepromote, , supportsupport and and assessassess the evolution of the cluster the evolution of the cluster The tools and methodologies are customised customised to the SMEs’

(cluster) requirements (IC base; IC complementarity; absorptive & learning capacity)

They aim to ensure the development of a collaborative collaborative mindset mindset (Trust building mechanisms –IC competence; governance; shared vision; shared values and beliefs)

locus of the support initiative resides at the SME level locus of the support initiative resides at the SME level (Bottom-up)

The different levels (cluster, SME & people in The different levels (cluster, SME & people in facilitation and supportive roles) are not isolated facilitation and supportive roles) are not isolated silos but silos but co-evolving dimensions in the co-evolving dimensions in the process of cluster creation and developmentprocess of cluster creation and development

CADIC’s Support Tools

CADIC Support in SME Clusters

CADIC Cluster Multiplication • In the European Union: importance of dissemination

•Throughout the World - Transfer partners

The Cluster Management Framework The Cluster Management Framework CMF must be must be adequately customized to respond to the evolving adequately customized to respond to the evolving demands of the different actors involved demands of the different actors involved

The The CMF CMF is attentive and sensitive to a set of is attentive and sensitive to a set of actionable areas, mainlyactionable areas, mainly Conceptual and strategicConceptual and strategic Relations and governanceRelations and governance Action-drivenAction-driven

The CMF lays the foundations of an SME cluster The CMF lays the foundations of an SME cluster process evaluation for improvement systemprocess evaluation for improvement system Through systematic reflection & learning it serves the purpose Through systematic reflection & learning it serves the purpose

of creating a shared and collaborative mindsetof creating a shared and collaborative mindset The evolution of the cluster is different from the evolution of The evolution of the cluster is different from the evolution of

each SME partner and so shall be the system of evaluation for each SME partner and so shall be the system of evaluation for improvementimprovement

1.1. Top-down approaches have proven ineffective Top-down approaches have proven ineffective to improve firms’ (esp. SMEs) innovation to improve firms’ (esp. SMEs) innovation capacity capacity

2.2. Networks and open knowledge clusters, Networks and open knowledge clusters, bottom-up conceivedbottom-up conceived, are , are thethe alternative for alternative for SMEs to flourish SMEs to flourish

3.3. Implications for CADICImplications for CADIC Identify and develop the necessary tools, methodologies and Identify and develop the necessary tools, methodologies and

roles to support collaboration and the expansion of the cluster roles to support collaboration and the expansion of the cluster Selection and aggregating of capabilities at regional, national, Selection and aggregating of capabilities at regional, national,

cross-regional or international level (IC base, complementarity, cross-regional or international level (IC base, complementarity, absorptive capacity and learning skills, …)absorptive capacity and learning skills, …)

The complexities and dynamics generated through SME/cluster The complexities and dynamics generated through SME/cluster interactions shape the cluster’s oprerational framework and interactions shape the cluster’s oprerational framework and evaluation process evaluation process

4.4. Policy implications Policy implications Well designed policies and supportive mechanisms to spur Well designed policies and supportive mechanisms to spur

new collaborative habits and practices among SMEs.new collaborative habits and practices among SMEs. Adoption of a broader systemic vision and longer time Adoption of a broader systemic vision and longer time

horizon in policy-makinghorizon in policy-making

5.5. Finally, effective support of SME clusters in Finally, effective support of SME clusters in dynamic and complex business landscapes dynamic and complex business landscapes will require not only the concurrence of will require not only the concurrence of multiple disciplines but involving multiple multiple disciplines but involving multiple interacting levels of understanding (macro, interacting levels of understanding (macro, meso and micro)meso and micro)