The TCI Network on European Cluster Policy: Enhancing Delivery, Broadening Impact

The TCI Network on European Cluster Policy: Enhancing Delivery, Broadening Impact Executive Summary Cluster-based approaches have over the last few decades become an important element in the tool kit of economic development practice, especially in Europe. Members of the TCI network, the leading global network of professionals and organizations in cluster-based economic development, have been key drivers in the process, often in close collaboration with the European Commission. As a network we now want to contribute to the discussions about the next stage of cluster policy in Europe. In our view the focus of a new strategy should be on enhancing delivery and broadening impact. We believe the main priority for effective cluster policy in Europe is better implementation and a more strategic and coordinated use of cluster policies, not a different direction. Our members have identified five areas as critical to improve the practice of cluster-based economic development in Europe. Especially in the first two, we see the Commission in a leading role; in the others the Commission can further develop its own programs but also influence policy across EU member states and regions: 1. Training, Coaching and Mentoring of professionals in the field 2. Data, analytical concepts and platforms for knowledge sharing 3. Cluster policy models that are aligned with the realities of specific types of locations and clusters 4. Coordination of cluster efforts between different functional units and across different levels of government 5. Cluster-based approaches addressing specific issues or policy goals TCI on European Cluster Policy, February 2015 1

A. Introduction Cluster-based approaches have over the last few years become an important element in the tool kit of economic development practice, especially in Europe. They are now one of the tools available as Europe is looking for a more sustainable, inclusive and innovation-driven growth model. Cluster concepts have in many places moved from being an experimental approach used on the sidelines of the main policy areas to be an integral part of the policy process, from innovation to regional policies to manufacturing and service-oriented strategies and even involving social and environmental policies. In this context, the focus of the debate has shifted from whether cluster-based approaches are useful in principle to how they can be used and implemented in the most effective way. The TCI network was originally created more than 15 years ago by some of the leading pioneers in cluster-based development. Today TCI has more the 500 active members, about half of which are located in Europe; 30 % are regional development agencies. TCI reaches out to 9,000 practitioners from development agencies, government departments, cluster organizations, academic institutions, companies and multilateral organizations in over 110 countries. Over the years, the members of our network have gained rich experience in applying cluster-based tools and approaches, whether they are cluster organizations, economic development agencies, or other organizations and individuals active in this field. Many of them have been key drivers of the cluster-based approaches in Europe, both in terms of implementing them in their own areas of responsibility and in actively engaging in many projects and policy debates at the European level. Based on their experience, they share a conviction that the cluster perspective can provide important practical insights and offer tools and approaches that should play a central role in economic development practice. They are committed to continuously test and further develop the current practices in the field. The European Commission has played a central role in the diffusion and development of cluster-based economic development in Europe. It has provided platforms for learning, invested in a common infrastructure related to data, knowledge and training, and supported many pilot initiatives. Cluster concepts have started to be drawn upon in an increasing number of policy areas for which the European Commission is responsible. And the activities at the EU level have led many member countries and regions to launch or upgrade their own cluster efforts. Importantly, the European Commission has over the years assembled different groups of practitioners to systematize and further develop the common knowledge about effective cluster-based approaches. Again, TCI members were actively involved in many of these groups. It is in this context that the European members of the TCI network want to make a contribution to the current thinking on how to move the practice of cluster policy and mobilization in Europe forward. Our overarching view is that the focus of a new strategy should be on enhancing delivery and broadening impact. In other words, we believe the main priority now for effective cluster policy in Europe is better implementation and a more strategic and coordinated use of cluster policies, not a different direction. We aim to identify specific areas where we see a need for action and make suggestions on where we could collaborate with the Commission to address these issues. TCI on European Cluster Policy, February 2015 2

B. Assessing the status quo: what are critical issues to improve cluster policy practice? Our concrete proposals are based on a critical review of how we experience the current reality of cluster policy across Europe. We would like to highlight three observations in particular: Europe is home to a large number of cluster-based policies and initiatives with a high degree of heterogeneity among them. This heterogeneity is not in itself a bad sign: Europe includes many different regions and clusters that require policy efforts that are aligned with their unique circumstances. But we are not convinced that the current heterogeneity can be fully explained by these differences in context. Different approaches can also spur innovation. But again we do not see a systematic learning process that systematically drives better practices to be adopted. Many participants in cluster-based efforts report positively on the impact generated. This is true for firms, who often invest significant own resources, and others, especially regional authorities that often experience cluster efforts as a particularly effective way to engage the local business community. There is also robust empirical evidence on the positive relationship between the presence of clusters and economic outcomes like wages, job growth, entrepreneurship and innovation. But we recognize that despite the many efforts on evaluation the data on the ultimate economic impact of cluster efforts needs to be strengthened, both to improve the efforts based on the learning this data provides and to create the legitimacy that they need to sustain broader public support. Cluster-based tools and efforts have become significantly more mainstream over the years and have entered a range of policy areas. For practitioners they have become an accepted alternative to look at when approaching specific policy issues. But we experience many of these cluster-based efforts to have little connection to the broader set of policy tools used in the respective field. The same lack of policy coordination we also see all too often across different levels and parts of government that use cluster programs. There are, of course, many other issues that are worth discussing. The debate on cluster policies does, for example, continue to suffer from lack of awareness about key concepts, like the difference between clusters and cluster initiatives/organizations and the definition of what qualifies as cluster policy. We want to focus, however, on those aspects that are most relevant for the implementation of cluster policies and in which the European Commission plays a particularly central role. Our members have identified the following five areas as critical to improve the practice of cluster-based economic development in Europe in ways that address the issues highlighted above. In the first two areas we see the Commission in a leading role; it is the organization best placed to move these issues forward. The final three areas require the engagement of the Commission as much as of other levels of government across Europe; here the Commission can develop its own programs but also trigger an effect beyond the activities under its direct control: TCI on European Cluster Policy, February 2015 3

1. Training, Coaching and Mentoring of professionals in the field; this includes activities to systematically strengthen the skills and capabilities of individuals engaged in cluster-related activities. 2. Data, analytical concepts and platforms for knowledge sharing; this includes activities related to fact-based policy making, cluster-oriented management information systems, big data-tools, impact assessment and fact-driven policy learning. 3. Cluster policy models that are aligned with the realities of specific types of locations and clusters; for locations, different approaches are likely needed depending on the economic maturity but also the size of region or country; for clusters, the stage of its development is likely to be critical. 4. Coordination of cluster efforts between different functional units and across different levels of government; this includes integrating cluster efforts with other policies aiming at similar policy objectives but run by different parts of government and creating more clarity on the complementary roles of cluster efforts across different levels of the public sector. 5. Cluster-based approaches addressing specific issues or policy goals; examples of such topical areas are the internationalization of SMEs, the collaboration across clusters, innovation and entrepreneurship, and the use of cluster efforts to achieve broader societal goals. Many government agencies across Europe look to the Commission for guidance on how to approach these specific policy areas in an effective way. C. Proposals for action: where to start a collaborative process to develop better practices Our proposals at this stage do not provide a detailed list of actions to be executed; that would go beyond what is possible in the context of this paper and would in our view also not be a useful way to achieve action. We believe that actual progress needs to be based on collaboration between the practioners community, the European Commission and other relevant stakeholders that can make a contribution. Our proposals are therefore a suggestion on where we would find it beneficial for the Commission to start such collaboration. 1. Training, Coaching and Mentoring of professionals in the field Here the Commission is already doing a lot, especially through the training components of the European Cluster Excellence Programme. We see opportunities to strengthen these activities: Broaden the scope of training activities with dedicated offerings to especially cluster initiative managers, while continuing programs for economic development professionals in government agencies, other organizations involved in economic development and managers of firms and TCI on European Cluster Policy, February 2015 4

other institutions engaged in cluster activities. At the moment, there is a clear sense that the existing offers are taken up significantly more by representatives of government agencies than by cluster initiative managers themselves. In this context there it could also be useful to focus more on operational tools used by cluster initiative managers, from community management tools to knowledge management platforms to management information systems. Cluster organizations have started to use such instruments and the benchmarking of cluster initiatives implicitly encourages their adoption, but there is no organized effort to encourage their development and diffusion. Move beyond a narrow focus on training and adopt a broader, on-going perspective on skill development. This could include the establishment of learning communities (or communities of practice ) and tools such as peer reviews, an area of activities where the TCI network has relevant experience and might be a useful partner. It would also require a different type of support from research institutions, focusing on action learning and potentially the broader use of e-learning tools. Ultimately, we see value in thinking about the development of job descriptions or profiles for the different roles in cluster-based economic development. This could help structure training efforts and provide more transparency around the career opportunities in this field. It could also play an important part in a more active strategy of recruiting talent to this field. 2. Data, analytical concepts and platforms for knowledge sharing This, too, is an area where the Commission is already doing a lot. Key activities include the European Cluster Observatory and the Cluster Benchmarking activities of the European Cluster Excellence Programme. We see a need to better leverage these tools to create practical impact: Combine the cluster data with a tool kit for the systematic use of this data for economic development decisions and activities. In general the current use of this data is heavily focused on policy makers, while cluster initiative managers view themselves largely as providers rather than users of cluster data. New tools that are better aligned with the specific needs at the cluster initiative-level are needed. Providing an effective toolkit can build on collecting existing methods and approaches but needs to move further. Develop the labelling of cluster organization into a learning process. While the benchmarking associated with the quality labels has provided important insights, there is currently no natural follow-up process for learning and operational change on the basis of these assessments. Here a connection to the idea of learning communities mentioned above could be useful. Existing platforms like the ECCP could be used to develop true communities connected to them. Forcefully develop impact assessment. While there have been very positive developments in this field, the results so far still remain unsatisfactory and only partially capture the value TCI on European Cluster Policy, February 2015 5

generated through clusters. Ultimately clusters allow collections of organisations to do better and different things together that they could not achieve alone. The added value of that collaborative effort needs to be better evidenced. The TCI Interest Group on Evaluation would be a natural partner. We need more clarity on the key questions to answer, more robust methods in data collection and analysis and more exchange and comparison of the results and the learnings to be drawn from them. Importantly, this will also require both policy makers and cluster initiative managers to set clear and quantifiable objectives to be measured against. 3. Cluster policy models that are aligned with the realities of specific types of locations and clusters This is the area in which in our view probably most work still remains to be done. We have focused in Europe on benchmarking and general guidelines and that has been important to try and raise the overall standards of practice. But it runs the risk of offering generic solutions that are not aligned with the specific context of locations and clusters, especially those that might be further behind and not as involved in the processes that define general standards at the European level. Launch work on the most effective models for cluster policy and cluster initiatives in less advanced and peripheral regions. This will require collecting existing experience and designing and testing of new approaches. Some of our TCI members, for example the networks in South Eastern and Central Europe, could be pilot partners. There are other dimensions of locational context, for example the difference of large and small countries that are likely to raise quite different demands on an effective cluster policy. These could also be topics for specific work. Launch work on the most effective models for cluster policy and cluster initiatives in emerging industries. Emerging industries are a core priority of the recent and current work of the European Cluster Observatory and they feature importantly in the discussion of smart specialization. Some useful experience has also been made with cross-clustering as a related activity of cluster initiatives. But we see a need and potential to much more systematically reflect on how established practices in cluster policies and cluster initiatives need to be adjusted to be effective in emerging industry situations. Model demonstrator regions could as lighthouse initiatives play an important role to test such new approaches. 4. Coordination of cluster efforts between different functional units and across different levels of government Cluster-based economic development efforts are not an objective in and of itself; they are a means towards achieving a broader economic development objective. Too often, however, cluster efforts are pursued in isolated ways, operating with a focus on the responsibilities of a specific government agency rather than as part of a mutually reinforcing mix of policies from different partners. TCI on European Cluster Policy, February 2015 6

Within the European Commission, clusters have been introduced in many policy fields and programs. In enterprise policy, DG Enterprise supports an own Cluster Portal and cluster elements have been introduced in programs like COSME and strategies like the New Industrial Policy. Cluster-specific actions have been announced to support Key Enabling Technologies (KETs). The European Institute of Technology supports Knowledge and Innovation Communities (KICs), often with cluster organization as a natural partner. In regional policy, cluster efforts play a core role in many smart specialization strategies and conceptually clusters and this new regional policy approach share many common features. In research and innovation policy, Horizon 2020 opens the door to clusters and cluster initiatives as instruments to convert research into commercial success stories and efforts like the Regions of Knowledge program have in the past actively built on clusters. The Commission has started several activities to improve the alignment of cluster policies across these different policy areas. There are internal coordination groups, reports by expert groups and more. We welcome this work but see the need to enhance its impact on the practice of EU cluster policies. Apart from the operational complexities of different parts of the Commission running their cluster efforts in different ways, there is often a lack of clarity on how the cluster efforts connect and build on the more traditional policy tools used in these different areas. Across Europe, individual clusters and cluster organizations often face a multitude of European, national, regional and local policies and support programs. In some cases the cluster organizations become effective integrators of the different tools that are available. In other cases, however, these tools are overlapping, competing and at the minimum require each their own administrative management. While many of these issues have to be addressed within EU member countries, the European Commission could play an important role as a neutral broker. It can help to establish a basic understanding of the respective roles and responsibilities that different levels of government have (where these roles will differ depending on the specific structure of the given country). And it can help set common goals to guide the activities of many independent partners; something the Commission has successfully done in the meta-region strategy processes. EU policies can also trigger such processes to occur in a bottom-up fashion: The Vanguard initiative, for example, has brought together different levels of governance to integrate regional policies with strong cluster-based elements to enhance industrial competitiveness. Despite a number of interesting initiatives like this, we see a need to do much more to better align cluster efforts across different levels of government. Develop guidance to policy makers in other fields of economic development on how they can use cluster data and cluster initiatives in policy design and delivery. This should include the use of cluster initiatives as partners to gain insights into the needs of the business communities that government programs aim to support. Strengthen the coordination of cluster programs across the European Commission, drawing on the recommendations from existing advisory groups. This could include better alignment of operational practices but also efforts, maybe starting in a pilot area, to explore how clusterbased tools can be systematically integrated with other policy instruments pursuing the same broad policy objective. An initial step could be the creation of a common depository of relevant programs, policy documents and studies. TCI on European Cluster Policy, February 2015 7

Launch a working group with partners at different levels of government across Europe, to establish guidelines on the most effective way to allocate different roles and responsibilities in cluster efforts to different levels of government. This could also include the exploration of cofinancing schemes, based on programs at lower levels of government meeting standards set at the EU or national level. 5. Cluster-based approaches addressing specific issues or policy goals Cluster policies and initiatives are drawn to support an increasing number of specific policy objectives. This starts from activities close to what many cluster initiatives already do, like the support for internationalization, to much broader ambitions, like the contribution to societal goals. We welcome this trend as recognition of the role clusters can play as an effective organizing principle and delivery channel for different policies. From the perspective of cluster initiatives we see it as important to always start with the specific needs of the cluster that they serve. Cluster-based government programs with more specific objectives should provide instruments to the cluster organization as they fit into their cluster s strategic action agendas, but they should not drive what is on this agenda. Ensure that programs to finance specific activities of cluster initiatives that the Commission views as important across all of Europe do not inappropriately bias the action agendas of individual cluster initiatives away from their clusters specific needs. The current funding programs do address important issues that could be matched with other instruments that give more freedom to the cluster initiatives to identify which issues are critical for them. There is always a trade-off between responding to needs and creating demand but it is a challenge that we believe can be managed in a dialogue between policy makers and cluster initiative managers. Map the existing set of policies and operational programs in these specific issues areas, for example internationalization and specify the role that cluster-based programs have in this policy context. This should include a dialogue with the entities operating existing programs. Explore opportunities for using cluster-based approaches in programs to support entrepreneurship and start-ups. While this is a topic that generally receives a lot of interest and has been taken on board by some cluster initiatives, we see a potential for a more concerted effort in this field. There are also clear overlaps with the discussion on emerging industries, where new business formation plays an important role. More systematically organize the process from the mapping of successful practices and the development of policy guidance for specific policies that has been done in range of EU-funded projects, for example TACTICS and recently ClusteriX, to implementation. Too often these recommendations and learnings remain underutilized. TCI on European Cluster Policy, February 2015 8

D. Conclusion The European Commission has a strong record of regularly adjusting its activities in the area of cluster policy to meet the specific needs of a given period. It initially focused on fact-finding and exploration, moved to the support for many different models of cluster mobilization, the facilitation of platforms for policy learning and the creation of a data infrastructure and then consolidated the support to focus on excellence in operational management and policies. In this process, it has also repeatedly asked for the input from the practitioners community, for example through the European Cluster Memorandum in 2007 and the report of the European Cluster Policy Group in 2012. For the next stage of developing European cluster policy and practice, we want to offer to the Commission our support, both as a network and as the individual members that the network represents. We see much potential looking forward but also a need to collaborate more effectively in unlocking the benefits that are achievable. We would like to offer the Commission to work with us in identifying the issues that matter most to practitioners and look forward to a continued dialogue. TCI on European Cluster Policy, February 2015 9

Annex 1. The European Members of the TCI Network are Business Upper Austria OÖ irtsc s ent r mb Austria Public Service of Wallonia Belgium Consulting Cluster Veritas Ltd Bulgaria Innonet Lifestyle - Interior&Clothing Denmark Region of Southern Denmark Denmark University of Southern Denmark Denmark Transport Innovation Network Denmark JAMK University of Applied Sciences Finland Invest in Lyon - ADERLY France Region Rhône-Alpes France BioRN Network e.v. Germany Economic Development Dept. City of Karlsruhe Germany EU Members of the TCI Network, February 2015 Annex 1

ESCA - European Secretariat for Cluster Analysis Germany NIRO - Network of Industry RuhrOst Germany Software-Cluster Germany Steinbeis-Europa-Zentrum Germany INNOSKART Business Development Non-profit Ltd. Hungary Gekon Iceland FILAS Società Finanziaria Laziale di Sviluppo SpA Italy Brainport Development NV Netherlands Innovation Norway Norway Agency for Enterprise Development Ltd Poland PARP - Polish Agency for Enterprise Development Poland InovCluster - Associação do Cluster Agro-Industrial do Centro Portugal EU Members of the TCI Network, February 2015 Annex 1

SPI - Portuguese Innovation Society Portugal ACCIÓ-Catalan Government Spain Orkestra-Basque Institute of Competitiveness Spain SPRI Basque Business Development Agency Government of the Basque Country Spain VINNOVA Sweden Consulting Cluster Switzerland ICT Cluster Bern-tcbe.ch Switzerland Izmir Development Agency Turkey Invest Northern Ireland United Kingdom Technopolis Group United Kingdom EU Members of the TCI Network, February 2015 Annex 1

As well as many individual members TCI Global Conference, Kolding, Denmark, 2013 The entire TCI membership directory can be consulted online on www.tci-network.org EU Members of the TCI Network, February 2015 Annex 1