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APPENDIX 1

Commissioning Regional Cluster Studies

As in all good applied analyses and regional studies, the usefulness of the results depends heavily upon a good specification of what is needed, how results will be used by the client, and prior agreement on what must be delivered to satisfy performance expectations. If analysts suspect they are subject to an open-ended and constantly expanding wish-list of small puzzle problems facing an uninformed client, they will hedge what they promise by understating what is truly possible to protect against the resource drain of an open-ended set of changing client demands. On the other hand, if clients suspect they are merely receiving a ‘warmed-over’ version of the analyst’s previous studies, with only marginal adjustments for local circumstances and issues, clients are understandably motivated to extract additional value-in-kind for contractually promised payments by insisting that related problems are part of the bigger picture.

These familiar scenarios apply to nearly all work conducted by analysts for clients, even when both share strong interests in a common topic or problem. The scenario is further complicated when the language, conventions, and concepts underlying what is thought to be common vary widely within and between these two communities, which is surely the case for industrial clusters. Therefore, it is in the interests of serious clients and analysts to specify any commissioned study rather closely. We argue this process of specification starts with the client, not the analyst, and therefore offer the following points.¹

What should the client do to launch this process? First, know what is needed [see link]. What is the problem or issue for which a regional study of industrial clusters is under consideration? Is it simply exploratory? Bear in mind, a useful exploratory study of a region’s industrial clusters is not necessarily an inexpensive way to explore whether there is genuine need or client interest in the topic. Client needs should be known and clearly specified before launching any exploratory study phase. However, the follow-on costs of more detailed, subsequent inquiries will be quite modest and of greater effectiveness if built upon a good exploratory analysis. Perhaps some local program or policy is being contemplated and its design depends upon some focused understanding of industrial cluster(s) to which it applies. Perhaps some problem facing the region would be more manageable if certain industrial cluster characteristics were clearer to those responsible for making key decisions. Curiosity alone is a weak base from which to commission or design a useful cluster study, and all parties should be wary of the likely results. How will you use the intended findings and in what form must findings take to be useful to the client? If the client has no clear sense of this, or must ask assistance from the analyst, then there is quite possibly no clear client need for such a study. The final thing a client needs to know while considering the commissioning of a study is a working knowledge of the available methods and data available, and how they might be drawn upon in various mixes or intensities to meet needs or actually used to solve specifically stated problems [link to Exhibit A1.2]. It is at this point that the analyst enters the picture, and about which much is said in Chapter 3.

At this stage when client and analyst first begin seriously to collaborate, there are some further general considerations that deserve attention. Assuming the client knows the needs and what actual uses the completed study should support, the skills of the analyst can be drawn upon to further specify a jointly-conceived study design. Industrial clusters need to be defined much more tightly in terms of client interest. Depending upon the definition and nature of the clusters to be studied, there are a series of general methodological considerations that yield results of varying qualities, precision, breadth, and problem relevance. These in turn are of varying usefulness to various audiences and formats when implementation is seen as an important element. Bear in mind that this simple check-list can be far longer and more complicated for certain types of client needs, and the possibilities of responsive assistance will differ widely with the competence and experience of the analyst(s) invited to respond.

Further fine-tuning of a commissioned study should identify the key interdependencies that merge both client needs and analytic methods in alternative mixtures of study-designs. This is perhaps the most intellectually interesting and challenging phase in which informed clients and skilled analysts can be engaged. Everyone’s experience and knowledge can be drawn upon and ensuing discussions can be of very high intrinsic value, although the main purpose is to increasingly specify and focus exactly what means will be selected, what results can be expected, and the formats and character of the final product. The very possibility of understanding and acting upon interdependencies in regional economies is perhaps one of the greatest advantages offered by a good industry cluster study. It deserves the closest possible attention.

Illustration: NCACTs Commissions an Industrial Cluster Study

We illustrate the process of commissioning an industry cluster study with a major policy initiative undertaken by North Carolina Alliance for Competitive Technologies (NCACTS), North Carolina’s lead technology development agency.² In 1996, NCACTS needed to identify the principal channels through which production technologies tend to spread and diffuse. The agency was particularly concerned with a specific policy problem: how to diffuse advanced production technologies efficiently among businesses in a manufacturing economy traditionally dominated by a least-cost competitive ethos. North Carolina’s rapid growth from the 1960s through the 1980s was fueled initially by the re-location of branch plant facilities from high wage, unionized locations in the industrial mid-western and northeastern parts of the country. Although the state has gradually established a solid high technology base (principally centered upon Research Triangle Park) and banking presence (in the Charlotte region), its economy remains disproportionately specialized in traditional sectors that remain under unrelenting pressure from low-cost, overseas producers (e.g., textiles and apparel). In this environment, encouraging producers to invest in, adopt and utilize best practice production technologies can be an exceptional challenge. NCACTS knew exactly what policy problem it wanted solved and now needed help to solve it.

NCACTS invited the study authors to enter discussions at this point. In an earlier study of technology adoption practices among producers in the state’s nominal automotive supply chain, the authors found that smaller and often more rural producers tended to be less aggressive in adopting new manufacturing techniques (Bergman et al. 1995). Reasons cited included lack of information about advanced technologies and inadequate access to sources of capital that do not dilute control over the firm. More passive or traditionally-oriented firms are satisfied with the existing market, and are not interested in pursuing an aggressive growth strategy through investment in technologies that will open new markets, even though such complacency will be fatal in certain traded industries.

On the other hand, the authors also found that producers presently in the NC vehicle supply chain tend to adopt and use technologies at a significantly higher rate. Consistent with other research, study evidence suggested this resulted partly because final market vehicle assemblers were essentially ‘forcing’ adoption of new methods by their suppliers as well as serving as a source of information about best practice techniques. Also important are increasingly strict international certification requirements (e.g., ISO 9000). In short, there was sound evidence of a powerful diffusion effect that spread competitive production technologies through the supplier or value-added chain, a well-known view that continues to receive considerable support from the growing research on buyer-supplier relations (Roelandt and den Hertog 1999).

The implication for solving the problem was the critical importance of inter-industry trade channels for the diffusion of new technologies. The technology agency agreed and commissioned a study to define and identify linked producers in the state to better target technology adoption programs. In this context, both the policy needs and rationale for studying industry clusters based on value-chains were clear. The study focus became one of identifying key buyer-supplier chains in the state, those that currently exist and those that may be emerging. Focusing strictly on existing activity would prevent us from observing gaps in particular clusters that might prevent efficient technology diffusion.

Alternatively, attention to emerging or ‘potential’ clusters would provide a means of identifying key growth points in the economy, particularly those sectors which are likely to grow because of unique locational advantages offered in certain North Carolina regions. To examine emerging clusters, we essentially needed a benchmark against which to compare the North Carolina manufacturing economy. As we shall demonstrate in Chapter 4, this benchmark or ‘template’ can also be used in other advanced OECD countries with similar inter-industry trading patterns. This led to the general analytic procedures sketched along the left-side circuit of Exhibit A1.3, which summarizes the proposed study program.

As discussions continued about how the study would be designed and conducted using micro data (right-side circuit of Exhibit A1.3), NCACTS also hoped to identify mismatches between production and input supply, i.e., local industries that could be served by local supplier sectors that may exist (but do not supply local producers, perhaps due to quality control problems) or could be established through coordinated regional development strategies. In this way, the agency hoped to build and expand value chains by better targeting development resources.

Other policy needs emerged, which included attention to the geographic distribution of linked sectors and the need to examine the manufacturing economy comprehensively. As the full potential became clear, NCACTS planned a series of continuing extensions to use the results primarily to improve state- and regional-level economic development analysis and planning. The cooperative discussions built upon the strength of the proposed analytical approach and permitted opportunities for useful experimentation. Indeed, one of the study objectives soon became focused on building better analytical capacities for state and local development planning, one that incorporated industry cluster ideas.

End Notes

1. Selected concepts and all figures used in preparation of text for this subsection were drawn from presentation by Edward Feser before the SSTI Annual Conference, Columbus, Ohio, 24 September 1998.

2. This subsection draws upon text and graphic illustrations from Bergman and Feser, 1999.

Copyright ©1999, Regional Research Institute, WVU

Book List    Chapter One     Chapter Two     Chapter Three     Chapter Four     Appendix 2