Innovative Performance of SMES in an Emerging-Economy Manufacturing Cluster Theresia Gunawan1, Jojo Jacob2 and Geert Duysters3 August 2013 The authors, 2013 1 Maastricht School of management
and organizations in and for emerging economies and developing countries with the objective to substantially contribute to the development of these societies. www. msm. nl The views expressed in this publication are those of the author (s). Publication does not imply endorsement by the School or its sponsors,
Innovative Performance of SMES in an Emerging-Economy Manufacturing Cluster Theresia Gunawana, Jojo Jacobb, and Geert Duystersc amaastricht School of management,
as SMES in emerging economies do. Next to network ties, entrepreneurial orientation (EO) is another significant resource for achieving competitive advantage in general (Covin & Miles, 1999;
Like a firm s network, EO too is particularly salient for market success in the highly competitive and turbulent environments in emerging economies (Covin and Slevin (1989.
our study is carried out in the context of a low-tech manufacturing cluster in an emerging-economy the footwear industry cluster in Cibaduyut, Indonesia.
They benefit from the economies of agglomeration and joint action, giving them collective efficiency and therefore a competitive advantage over firms that are located not co within a cluster (Schmitz, 1995).
Studies in the context of emerging economies are far fewer, but they too suggest that clusters enhance the competitive advantage of SMES (Caniels & Romijn, 2003;
Given that network ties represent a critical resource for SMES, particularly in emerging economies, it is important to understand the interplay between EO and a firm s network ties.
and risk taking on a firm s network ties (ICTS and ECTS) in the specific context of an emerging-economy,
As is typical in emerging economies there only exists limited information about footwear producers in this cluster;
the variance inflation factor was below three, and the tolerance values were close to 1 (Barrow, 2009).
We empirically tested our conjectures on a sample of 120 SMES in a creative-industry manufacturing cluster in an emerging economy, Indonesia.
Thus a key message of our study is that SMES in emerging economies should actively develop inter-organizational networks that go beyond the confines of the region in
Collecting longitudinal data in the emerging economy context is given particularly challenging the lack of governmental level initiatives to this end.
In future research we hope to explore the consequences of partner heterogeneity in the context of emerging-economy SMES. 21 References Aiken, L. S,
Statistics for economics, accounting and business studies (Fifth ed.).United kingdom: Prentice hall. Bathelt, H. 2004. Toward a multidimensional conception of clusters:
A study of exporters from a developing economy. International Small Business Journal, Advance online publication.
Cambridge Journal of Economics, 29,497-515. Cantner, U, . & Graf, H. 2008). Interaction structures in local innovation systems.
Review of Development Economics, 11 (3), 550-565. Katila, R, . & Ahuja, G. 2002). Something Old, Something New:
Horizontal and Vertical Relationships in Developing Economies: Implications for SMES Access to Global Markets. Academy of Management Journal, 51 (2), 359-380.
Local Clusters in a Global economy. Economic Development Quarterly, 14 (1), 15-34. Qian, H, . & Acs, Z. 2013).
Small Business Economics, 40 (2), 185-197. Robertson, P. L, . & Langlois, R. N. 1995).
Creative Innovation in Local economies. Economic Development Quarterly, 20 (2), 162-177. Schoonhoven, C b.,Eisenhardt, K. M,
Innovation and Clustering in the Globalised International Economy. Urban Studies, 41 (5/6), 1095-1112.
Procedia Economics and Finance 16 (2014) 512 520 2212-5671 2014 The Authors. Published by Elsevier B. V. This is an open access article under the CC BY-NC-ND license (http://creativecommons. org/licenses/by-nc-nd/3. 0/).Selection
and/or peer review under responsibility of Scientific Committe of IECS 2014 Nelu Eugen Popescu/Procedia Economics
and developing country economies. Both entrepreneurship and innovation are 2 broad concepts without a unanimously accepted definition
and through innovation and creative destruction the economy evolved. The connections between entrepreneurship, innovation and small firms has been studied over time by various scholars and some even defined entrepreneurship as follows innovation by newly formed independent firms (Kirchhoff,
1994) The recent economic downturn is regarded as one of the worst since the 1930s crisis and its effects are still evident all over the globe
and the past year (2013) could represent a turning point for the EU economies if the positive upwards trends will manage to continue.
and implemented measures to avoid an economic collapse, but economic and competitiveness growth is improving slowly.
the contribution of SMES to job creation and value added constitute a large share of both EU and Romanian economy.
and Thurik suggest that an increase in the entrepreneurial activity is followed generally by a recovery of the economy
Most entrepreneurial initiatives start as SMES rather than big companies and entrepreneurial small firms are considered to be the backbone of the economic system,
For the survey it was used an optimum allocation stratified sampling method. 514 Nelu Eugen Popescu/Procedia Economics
HR training 2010 2011 2012 Nelu Eugen Popescu/Procedia Economics and Finance 16 (2014) 512 520 515 enterprises allocated between 6 and 10%to innovation.
Cooperation with other organization for R&d activities 516 Nelu Eugen Popescu/Procedia Economics and Finance 16 (2014) 512 520 performances, especially during the last years of economic downturn.
so it interferes with economic growth. Knowing and understating the obstacles to innovation for SMES is important both to entrepreneurs/owners/managers but also to the government.
in order to contribute to economic growth. Figure 3: Barriers for R&d activities in Romanian SMES Source: CNIPMMR, White Charter of Romanian SMES 11th Edition, Sigma Publishing house, 2013 In regard to the barriers to innovation entrepreneurs from SMES mentioned the high cost implied by R&d activities (56.32
Economics and Finance 16 (2014) 512 520 517 Figure 4: IT use in Romanian SMES Source:
Others Intranet Selling/shopping online None of the above Own website E-mail Internet Computers 518 Nelu Eugen Popescu/Procedia Economics and Finance 16 (2014) 512
Monthly subscription fee for usage Better performance through internal business Detailed reports of departments activities Nelu Eugen Popescu/Procedia Economics and Finance 16 (2014
2004). 4. Conclusions The economic downturn affected the SMES in the whole world and through globalization the negative effects reached countries from all corners of the globe the
and implicitly the Romanian economy was marked by the crisis. In the last period signs for economic recovery start to appear at European level
Under these circumstances in which the SMES sector is a potential key factor for future economic growth
Entrepreneurs usually embrace innovation an this may have positive impact on a countries economy by generating new jobs, creation of wealth and improving quality of life.
As Wennekers and Thurik stated possibilities for economic growth, job creation and innovation can come from SMES (Wennekers & Thurik,
Project ID 133255 (2014), cofinanced by the European Social Fund within the Sectorial Operational Program Human resources Development 2007 2013.520 Nelu Eugen Popescu/Procedia Economics
In addition to existing material about the Andalusia economy, this report draws on a week-long study visit that took place in Seville and Malaga from 12 to 16 april 2010.
the General Secretariat for=Innovation‘of the regional Ministry of Economy, Innovation and Science (MEIS;
The review team was informed initially about the main features of Andalusia‘s economy and entrepreneurship support system by a diagnostic report prepared by Prof.
Dr Jonathan Potter, senior economist, OECD LEED Programme, jonathan. potter@oecd. org Mr. Marco Marchese, policy analyst, OECD LEED Programme
and the EU. The quality of universities needs to be enhanced The university system 10 public universities with a total of approximately 230 000 students depends on the Regional Ministry of Economy,
seeks to adapt vocational training to the new economy and new demand of jobs and occupations.
Andalusia needs to recognise the role of less R&d intensive forms of industry-university cooperation R&d-related activities do not play a major role in most of the firms considered as=innovative‘within the Andalusian economy.
the sharp economic downturn in Andalusia may stimulate a greater willingness to embrace self employment and other forms of entrepreneurship.
The consequence of this level of public subsidy is that much of the regional economy is cushioned to some degree from general competition.
SME development The Andalusian business structure lacks medium-sized firms The Andalusia economy is dominated by SMES with over 99%of firms having less than 500 employees.
While the region experienced a high rate of new business start-ups and a significant increase in jobs during the period of economic growth from the mid 1990s up until the present economic downturn the continued lack of mediumsized firms
Despite this small base, exports increased as a proportion of the total activity in the regional economy over the decade 1995-2005, rising from 20.8%to 24.9%of GDP.
INTRODUCTION Regional economic development is regarded increasingly as critical to the growth of national economies in a globally connected environment.
Spatial variations within countries suggest that not all geographical parts of a country achieve similar levels of employment, skills development, business formation, economic growth and infrastructure development.
This is as true of Spain as it is of other economies round the world. Structural, spatial and temporal variations occur across regions because of differences in the human capital base, the industrial structure, relevant research and development capabilities, business formation,
and the capacity of institutions to generate facilitative conditions for a productive and entrepreneurial economy.
and relatively backward economy was the outflow of human capital to Spanish growth poles, especially to the north and Northeast regions and to Madrid.
Since that period, partly because of the impact of the volatility of the Spanish economy and of the global economic crisis which hit Spain disproportionately,
the regional economy of Andalusia has faltered badly with sharp drops in both gross domestic product (GDP) and employment.
Andalusia‘s European economic identity mirrored that of Spain just before the economic crisis as the nation began an impressive catch up race with its more prosperous European counterparts.
The rapid growth in the real estate component of Gross Capital Formation during 2000 to 2005 reinforces this notion of fragility as the collapse of those economies dependent on property price inflation has been the worst among others across Europe.
and structural changes necessitating new forms of economic activity, there is a greater push for new types of skills, businesses and governance.
It is against this background of the Andalusian economy that a review on Entrepreneurship, SMES and Local Development has been carried by the OECD Local Economic and Employment Development (LEED) Programme in partnership with the Andalusian Technology Network (Red de Espacios Tecnologicos de Andalucía RETA).
In examining these components of the regional economy and the extent to which entrepreneurship and SMES contribute to innovation,
The challenges faced by new and small firms in terms of emergence and growth in a knowledge-based global economy with specific reference to human capital;
and how they blend together to make an effective contribution to the Andalusia economy. Figure 1. A Schemata for Reviewing the Andalusia Economy Human Capital
and the Labour market It is recognised now well that the set of technical, cognitive, facilitative and operational skills competencies and knowledge,
often referred to as=human capital‘play a key role in the formation of a labour market and more generally in the development of an economy.
This fact has acquired a particular poignancy in recent times in our so-called knowledge economy where=brain power
and educational attainment acquires a premium in relation to the economy. Its importance has gained momentum with the advent of the knowledge economy.
The overall premium to higher education has increased sharply as the main drivers of these economies, the knowledge-based industries, demand higher levels of skills in the workforce with
which to manage technological change productively. It is argued also that higher levels of human capital help to generate new,
which brings all stakeholders of knowledge creation and commercialisation together at all points in the process of making new goods
and services and generating economic growth. Universities now engage in industrial innovation through a variety of channels
2002) is another way of generating talent in the local economy. Attracting talent to a local economy is enabled by making an environment and the quality of local life conducive to entrepreneurial economic activity.
The emphasis a region puts on any one of the two approaches is to some extent dependent on their capacity to pursue each approach
and value creation for the economy and for society. Entrepreneurship is evident in both small and mediumsized enterprises (SMES
as well as large ones, in the formal and informal economy; in legal and illegal activities, in innovative and traditional firms;
and in pretty much all sectors and sub-sectors of the economy (OECD, 2001). This spectrum of involvement can lead to both productive and unproductive or even destructive entrepreneurship (Baumol, 2006.
and talent to make it happen, thereby energising local economic activity. Increasingly even economically less prosperous regions such as Andalusia are being exhorted to court entrepreneurship as part of an effective economic development strategy.
Granados, University of Malaga) to provide an initial analysis of the key facts about the Andalusia economic system and the entrepreneurship and SME policy context.
A wide range of issues were discussed with stakeholders, providing a variety of perspectives on the region and its policies.
and additional literature and material about the Andalusia economy. The draft report was submitted for comments and approval to the local partner, the Andalusia Technology Network (RETA.
References Acs Z.,2008, Foundations Of high Impact Entrepreneurship, Jena Economics Research Papers, n. 2008-60.
%This might be an indicator that that Andalusia has undertaken not yet fully its transition to a knowledge-based economy.
Labour utilisation and labour productivity The recent economic crisis has struck Spain severely, and Andalusia has been no exception.
which had been one of the main sectors driving the economy in the booming period, has also been one of those hit hardest by the recession, shedding in Andalusia a far higher number of jobs than at the national level. 1 On the other hand,
Today, Andalusia‘s economy has approximately 510 000 firms, corresponding to 15.9%of the national total against a population that is 17.8%of the total.
Micro firms (less than 10 employees) dominate the economy, representing over 90%of the total. This is typical of Figure 3. Andalusia's foreign trade and trade balance (1990-2008)( € 000s) Imports Exports Trade balance Source:
ESECA, 2009 peripheral economies which generally find it difficult to penetrate international markets. Indeed only 1. 4%of regional firms are engaged in foreign trade,
%as against 9%at the national level. 1970s agriculture was still playing an important role in the Andalusian economy,
Nowadays Andalusia‘s industry structure resembles much more closely that of any modern economy though the very low contribution of manufacturing (11%)and the disproportionate impact of services (71%)on regional GVA flag an imbalance that can undermine the competitiveness of the region due to lower capital investments
and lower internationalisation that are both typical of economies overly reliant on services. Figure 4. Andalusia's GVA trends by sector, 2001-2009 Construction Services Industry Source:
Food industry The food industry has traditionally been one of the linchpins of the Andalusia economy.
In addition, the sectors that have driven the Andalusian economy over the last decades mainly construction and tourism are known not for being R&d-intensive
the most relevant for the scope of this study being the Ministry of Economy, Innovation and Science (MEIS).
This is the result of the recent merger between the Ministry of Economy and the Ministry of Innovation, Science and Enterprise (MISE.
This decision signals the decision of the regional government to better coordinate its economic policies as well as the importance given to business innovation and entrepreneurship as the main drivers of local development.
and the social economy sector. EMPRENDE also maintains a network of 37 Corporate Development Support Centres (CADES) providing a decentralised BDS support across the region.
and thereby reduce the welfare gap with the most competitive economies. It establishes the framework for the region‘s research
The long-term objectives of this plan are the modernisation and competitiveness of the regional economy.
Reig E.,(2010), The Competitiveness of the Spanish Regions, in J. R. Cuadraro (ed.),Regional Policy, Economic growth and Convergence, Springer, Heidelberg.
HUMAN CAPITAL AND THE LABOUR MARKET Introduction Human capital development and labour market dynamics play a key role in a knowledge-based global economy.
Role of human capital in the knowledge economy: Debates in the literature Higher levels of human capital create returns not only in terms of worker productivity but also of higher wages (Becker, 1965.
With the advent of the knowledge economy, the overall premium to higher education has increased sharply (Carnoy, 1994.
One path to competing in the global knowledge economy is through using local universities to develop a high-skilled workforce to serve local firms
A recent example of this is innovation in California‘s clean energy economy, in which the most innovative firms interact more with nonprofits, local governments, other local businesses, local trade associations,
that seeks to make Europe the most competitive knowledge-based economy in the world by 2010.
innovation and the knowledge economy, on the one hand, and the environment and risk prevention on the other.
) Assessment of the region Local labour market conditions The Andalusian labour market contains several structural weaknesses that distinguish it from the rest of the Spanish economy, namely:
this is not employed appropriately enough to contribute significantly to economic growth (Cuadrado-Roura, 2010). At present, Andalusia is experiencing an unemployment rate above 26.5%(as compared to 18%in Spain as a whole.
During the recent economic crisis, Andalusian universities have seen enrolment increase by over two percent. In addition, the changing demographic structure in the region has affected labour market dynamics.
and the dominance of the construction and tourism sectors in the regional economy, it is not surprising that Andalusia has in recent decades switched from a region from
and the Ministry of Economy, Innovation and Science. In the mid 1980s, after education policies were transferred to Andalusia,
and economic development tools and facilitate a shift towards an economy based on knowledge. 3 On March 22,
2010, the Regional Ministry of Economy merged with the Ministry of Innovation, Science and Enterprise. 4 The newly created Ministry of Economy,
which is now dependent on the Regional Ministry of Economy, Innovation and Science. This has created greater pressure for industryuniversity collaboration.
seeks to adapt vocational training to the new economy and new demand of jobs and occupations.
RETA and other regional stakeholders might work to encourage potential entrepreneurs among them to stay in the region,
3) offering entrepreneurship fairs to connect different stakeholders; and (4) conducting research on promoting entrepreneurship in higher education (Laurent, Periáñez,
Economics and business administration departments in public universities are disconnected often from the local business community and, in response,
internships with companies abroad in strategic sectors for the Andalusia economy (aeronautics, biotechnology, ICT, culture industries, renewable energies;
) but with the collaboration of the Regional Ministry of Economy, Innovation and Science. CTA recently began a new program to support the doctoral education of researchers within their member companies.
only a few regional stakeholders describe the many different organizational disconnects in the region as issues as well.
But most commonly emphasized by stakeholders in the Andalusian regional innovation system is the training available at the universities.
For instance, despite the fact that Renewable Energies is one of the main clusters defined by the Ministry of Economy,
Limited coordination amongst the Ministry of Economy, Innovation and Science and the Ministry of Employment Second,
and the Ministry of Economy merging with Innovation and Science in 2010. The Ministry of Employment remains separate.
consolidating efforts for efficiency purposes (National Centre on Education and the Economy, 2007. Limited synergies between cluster strategies and workforce strategies Finally, in part because of this agency balkanization, the region‘s cluster strategy lacks strong connections to its workforce strategy.
given the breadth of agent involvement in the Andalusian economy, as well as the rotation of agents between clients, it was not possible to give in-depth sectoral assistance.
including the commitment of regional stakeholders to improving the innovation system, the enthusiasm of foreign students for the region,
which will link training better to the new economy, also presents an opportunity for RETA to provide input
During economic crisis it is particularly important to stimulate business to create more jobs. RETA might help the regional government identify examples of programs from other countries (such as the East Bay Green Corridor Partnership described below) that link incentives to job creation,
Linking workforce and economic development in the regional green economy The East Bay Green Corridor Partnership in the San francisco bay Area provides an example of linking workforce and economic development,
and also illustrates the potential of regional coordination around one emerging sector in this case, the clean energy economy.
such as regional economic growth and competitiveness, can be contradictory. Job training seeks to help economically or educationally disadvantaged people access employment opportunities,
in part to create jobs in a stagnant economy. In the U s.,cities and states have found several creative ways to include workforce development in economic development programmes.
and clusters in the regional economy, and thus able to facilitate economic development. In late 2007, the mayors of Oakland, Berkeley, Richmond,
and promote the green economy in the region. The so-called East Bay Green Corridor Partnership (EBGCP) has expanded
local stakeholders argue that the Partnership has created a friendlier business climate for green businesses and streamlined the many energy efficiency programs.
it provides an example of how to stimulate the economy during a downturn by creating a new market;
it targets green economy businesses, also a strength for Andalusia; it links workforce 11 This 52 million Euro program includes integral energy efficiency retrofit of existing residential units, incorporation of new energy efficiency criteria for already planned rehabilitation of historic centres,
RETA might find a niche as a convener of the various stakeholders in each sector.
Sweden‘s emphasis on new technology-based firms is based on the understanding that they contribute to economic growth not just by producing own products
The Review of Economics and Statistics, 72,4: 551-559. Bates, T. 1995. Self employment Entry Across Groups.
the Politics and Economics of Race in America. New york: Cambridge university Press. Castells, M. 1996. The Rise of the Network Society.
Innovating the Green Economy in California Regions. Berkeley: University of California-Berkeley, Coronado, D.,Acosta, M. and Fernández, A. 2008.
Lessons from the Spanish Experience, Chapter 13, pp. 285-311, in Cuadrado-Roura, editor, Regional Policy, Economic growth and Convergence.
Economic growth and Workforce Development in the 1990s. Economic Development Quarterly, 14,340-359. Glaeser, E. L. and M. Resseger. 2009.
Innovation and the Internationalisation of the Local economies: Andalusia. Spain. Unpublished paper. Instituto Estadístico de Andalucía. 2010.
Quarterly Journal of Economics 107,33-60. Laurent, J.,Periáñez, I. & I. W. Petit de Gabriel. 2010.
National Center on Education and the Economy, 2007, Under One Roof: New Governance Structures for Local Economic and Workforce Development. http://colosus. ncee. org/pdf/wfd/Under one roof final. pdf OECD & Eurostat. 2005.
THE CONTRIBUTION OF RESEARCH ORGANISATIONS Introduction Universities and public and private research organizations play a crucial role in regional economies that rely upon growth-oriented entrepreneurship and business innovation.
The funding, infrastructure and commercialization activities of research organizations within these economies are increasingly important as they make the transition to a knowledge-intensive form of production.
The current policy context of the region is summarized with respect to the role of research organizations in the regional economy.
It documents the policy context for the regional economy and the role played by both the Andalusia university system and RETA within that context.
and help overcome the existing obstacles to innovation in the Andalusian economy, it must do so on the basis of a more effective way to augment knowledge flows between research organizations and firms in the regional economy.
The preceding discussion suggests that the task of transferring knowledge from universities to industries is more complex,
frequently treat knowledge itself as a universally available commodity, virtually as a free public good,
which contributes both to the stock of tacit knowledge in the local economy, as well as to the=thickness‘of the local labour market (Gertler and Vinodrai, 2005).
Both the diversity of knowledge bases that firms draw upon and the different modes by which they innovate reinforce the point that the=knowledgebased economy‘consists of many=pools‘of knowledge accessible to different knowledge=communities‘within the broader economy (Lundvall, 2006.
It pays particular attention to the current state of the technology transfer process between the universities and enterprises in the regional economy, especially in terms of the concentration of the industrial structure of the region in small and medium-sized enterprises.
The key objective of the Lisbon Agenda was to bring Europe up to the same standard as the most competitive knowledge-based economies in the world by 2010
and the changing international terms of competition that have led to a growing concern with the overall innovativeness and competitiveness of the European economy.
i) the promotion of the knowledge economy; ii) entrepreneurial development and innovation. Total expenditures on these two objectives are authorized at EUR 2. 38 billion over the life of the program.
actively contributing to the creation of an environment of innovation capable of reducing the gap with the most competitive economies (Junta de Andalucía, 2006).
In March, 2010 the Ministry of Enterprise, Innovation and Science was merged with the Ministry of Economy,
however, given the predominance of SME‘s in low-technology sectors in the industrial structure of the regional economy.
and innovation policy geared to favouring economic growth first and thus to give priority to the pro industry approach.
One consequence of this cultural attitude is that the universities have been reluctant to direct research efforts in strategic directions related to areas of industrial strength in the regional economy,
but this is a particular challenge with the SMES that predominate in the Andalusia economy. They assess the needs of companies
The relationship is based on the extensive knowledge that RETA has of firms on the ground in different parts of the Andalusia economy
This highlights a critical issue in the university‘s relations with the SMES that characterize the regional economy.
and characteristics of the companies in the part of the regional economy where the universities are located.
The authors also suggest that it is important to recognize that R&d related activities do not play a major role in most of the firms that are designated as=innovative‘within the regional economy.
1) integrating the various elements of the Andalusian R+D+I system and serving as a coordinating mechanism between the small firms that comprise the backbone of the regional economy and the other organizations
Rationale for the Intervention A general feature of the Canadian economy, especially in the high technology sectors, is the predominance of small and medium-sized enterprises,
A number of key benefits of the co-op program were identified in research conducted on the role of the University of Waterloo in the regional economy.
Relevance to Andalusia The key lesson to be drawn from this experience is that the patient investment of resources in a program such as this can pay incredible dividends to the local economy over a long period of time.
It has proved invaluable in both creating extremely tight linkages between the university and the dense network of technology-based firms in the local economy,
Rationale for the Intervention A second report, prepared by the Institute for the Future, suggests that the model of selfcontained research parks that has prevailed for the past fifty years is currently under challenge from a series of shifts in the global economy,
Innovation and the Internationalization of the Local economies: Andalusia, Spain. Diagnostic Report Prepared for the OECD-LEED Study Mission to Andalusia.
In Microfoundations of Economic growth: A Schumpeterian Perspective, eds Gunnar Eliasson and et al. Ann arbor: University of michigan Press.
The Paradox of Cluster Development in an Open Economy, eds David A. Wolfe and Matthew Lucas. Montreal and Kingston:
in the formal and informal economy; in legal and illegal activities; in innovative and traditional firms;
and in pretty much all sectors and sub-sectors of the economy (OECD, 2001, p. 35. If Governments were increasingly emphasising the importance of the development of a=culture of entrepreneurship,
At the level of local, regional, national and supernational economies, the EC highlights the importance of entrepreneurship in terms of its contribution to job creation and growth
set itself the ambitious goal of making the EU the most competitive and dynamic knowledge-based economy in the world, capable of sustainable growth with more and better jobs and greater social cohesion by the year 2010.
Structural reforms were launched in the fields of employment, innovation, economy, social cohesion, and environment. However, by 2005 it was apparent that the goal was overly ambitious.
a 10-year strategy designed to revive the European economy through smart, sustainable and inclusive growth, with greater coordination of national and European policy.
an entrepreneurial spirit is the main driving force behind innovation, competitiveness and economic growth. There is a relationship between the entrepreneurial spirit and economic results in terms of growth, consolidation of the business framework, innovation, job creation, technological changes and increase in productivity.
Knowledge economy (4. 6%of total expenditure: promote research, technological development, innovation and the information society.
and support firms in Andalusia committed to the growth and globalisation of the regional economy.
therefore, represent a unique window of opportunity to get the regional economy in shape for the future.
Entrepreneurial profile There are a number of aspects of the Andalusian economy that are relevant from the viewpoint of entrepreneurship and start-ups.
The above synopsis indicates that the rapid economic growth and other gains experienced in recent decades,
The analysis suggests that there is an urgent need to further diversify the regional economy; given the education levels
Ministry of Economy, Innovation and Science The regional Ministry of Innovation, Science and Enterprise merged in 2010 with the Regional Ministry of Economy,
to result in the Ministry of Economy, Innovation and Science (MEIS). The MEIS is a powerful institution with a commensurate annual budget of some EUR 3 billion.
competitiveness and economic growth in all regions, including Andalusia. The region has deployed numerous public instruments and resources to boost the competitiveness and innovative capacity of enterprises.
Secondly, there is a clear divide between policy-making (the responsibility of the new Ministry of Economy
The consequence of this level of public subsidy is that much of the regional economy including entrepreneurs and enterprises being supported,
Fourthly, although the local economy may be cushioned by EU and national subsidies, it has certainly not been spared from the economic crisis.
The construction and real estate sectors have been affected severely, and so as has agriculture and, to a lesser extent, tourism. The consequence is high levels of youth unemployment,
The regional economy in not strongly export-oriented companies refrain from placing orders, and the general public is nervous about possible layoffs
the sharp economic downturn in Andalusia may stimulate a greater willingness to embrace self employment and other forms of entrepreneurship.
This recognition comes from a conviction that entrepreneurial spirit can be a driver for innovation, competitiveness and economic growth.
Turning to the institutions in Andalusia, a Working group is in the process of being established by the new Ministry of Economy,
and diversify the economy The rising levels of unemployment, the need to diversify the economy (e g. away from construction, real estate, etc.)
combined with the population‘s latent interest to establish a business (GEM, 2006) call for a greater focus on providing opportunities for people to establish their own businesses though self employment or creation of firms.
The specific nature of corporate spin-offs means that they are an important aspect of the knowledge economy:
and diversifying the regional economy. The regional government should therefore undertake a review of the current levels of corporate spin-offs in the region,
Incubators should be promoted by an inclusive partnership of public and private sector stakeholders. During the development phase
Although new economy incubators are currently out of favour, there are many lessons to be learnt that are relevant to the more traditional model (and vice versa).
SME DEVELOPMENT IN ANDALUSIA Introduction SME development and growth is critical to fostering entrepreneurship, job creation and economic development in Andalusia as a result of the dominance of SMES in the regional economy.
Currently, the export performance of the Andalusia economy is dominated by a small number of firms (both SMES
In part, the diagnosis of regional policymakers is that this relates to the firm size structure of the regional economy (see below) with an over-preponderance of very small firms.
Even in the most open economies, SMES are reluctant internationalists because they lack the capacities of larger firms,
Assessment of the region SMES in the Andalusia economy The Andalusia economy is dominated by SMES with over 99%of firms having less than 500 employees (see table below.
While the region experienced a high rate of new business start-ups and a significant increase in jobs during the period of economic growth from the mid 1990s up until the present economic downturn in 2007/2008, the continued lack
The imbalances in the regional economy were exacerbated further in the boom period from the mid 1990s to the 2007
This resulted in a shift of resources, particularly of capital and labour, from the more productive and internationally competitive sectors of the economy.
The global economic downturn has worsened probably this situation: the most recent data available indicate that the larger firm sectors,
Despite this small base, exports increased as a proportion of the total activity in the regional economy over the decade 1995-2005, rising from 20.8 percent to 24.9 percent of GDP (Consejo Economico y
The most recent evidence from EXTENDA suggests that the region‘s exports were holding up well compared to other Spanish regions in the face of the economic downturn.
Developing effective innovation and internationalisation policies for Andalusia‘s SMES therefore needs to recognise the diverse needs and different potentials of these three different segments of the economy.
what are viewed as knowledge-economy sectors such as IT and biotechnology, Andalusia needs to reassess the competitive prospects of many of the firms in these sectors.
The availability of alternative employment in the growing economies of the nearby cities of Florence, Siena and Pisa resulted in an outflow of the farming population attracted by less arduous and more economically rewarding forms of employment.
2006) also highlight the=broad stakeholder involvement‘behind these initiatives so that a bottom-up rather than top-down approach has been pursued that encouraged SMES to become more involved in strategic agendas.
Sonninor@cardiff. ac. uk Professor Gianluca Brunori, Department of Agronomy and Management of the Agro-ecosystem, Group of Agricultural and Environmental Economics, University of Pisa, Via del
gbrunori@agr. unipi. it Danish low-tech clusters and the‘village economy'Description of the approach Confounding conventional analyses of globalisation, Denmark, with few natural resources and high production costs by international
Continued presence in low technology sectors has been achieved without the establishment of a large-firm dominated economy.
The Danish model has been referred to as the=village economy‘becomes it is founded upon clusters of SMES
Rationale for the intervention As a small open economy with 50 percent of its economic activity accounted for by international trade,
Denmark has lacked traditionally the ability to undertake interventionist industrial strategies and demand-side economic policies of larger countries.
what is referred sometimes to as the=negotiated economy‘(Amin and Thomas, 1996; Maskell, 1998): 80 percent of workers are in trade unions
Obstacles and responses Despite growing international competition from lower cost producers in China and Eastern European, Denmark‘s employment remained relatively stable up until 2007 but with the economic downturn and collapse of global demand in many key markets,
but involve the key stakeholders in different sectors (e g. businesses, labour unions, social economy organisations.
Greater autonomy from the regional government in developing sector specific agendas would allow Andalusia SMES to generate their own strategies with regard to innovation and productivity improvements.
Against a historical background of over-dependence on foreign owned firms and declining manufacturing activity, it represents an important boost to Scotland‘s knowledge economy
commodity chains ad actors. The region‘s history and tradition at the forefront of medical sciences
Scottish-based firms are plugged very well into the commodity chains of the main European and United states pharmaceutical multinationals.
The skills and experience such returnees bring to firms are invaluable when operating in the global economy.
The focus more recently on key knowledge economy sectors and a series of cluster initiatives hold some important policy lessons for Andalusia
Christensen, J. L. 2010 Low-tech, High Performing Clusters in Knowledge-based Economies. Paper presented at the DRUID Summer Conference, London, June.
Maskell, P. 1997 Learning in the village economy of Denmark. In Braczyk, H. J. Cooke, P. and Heydenreich, M. eds) Regional Innovation Systems.
Specialisation and Prosperity in Small Open Economies, London, Routledge. Maskell, P. 1998 Successful low-tech industries in a high-cost environments:
Storper, M. 1995 The resurgence of regional economies, ten years later: the region as a nexus of untraded interdependencies.
The recent economic crisis has made things worse, striking Andalusia harder than the rest of Spain, which has been in itself severely hit by recession. 14 Two different stages of development connote the recent economic history of Andalusia.
(i e. the prioritisation of the knowledge-based economy with a view to making Europe the most competitive economy worldwide);
and the last EU-driven Andalusia Operational Programme for the period 2007-2013 earmarked EUR 2. 38 billion (nearly one quarter of the total) for the promotion of the knowledge economy and for entrepreneurial
i e. the entrepreneurship and SME development support system of Andalusia, focusing on four main areas that are relevant for a thriving knowledgebased economy:
i) today‘s knowledge-based economy put a premium on education; as a result, the regional government should seek to strengthen further participation in higher education;
in the knowledgebased economy there are greater returns from higher education. College graduates make up 29%of the employed population in the region,
As a result, co-ordination and co-operation between the ministry of employment and the Ministry of Economy, Innovation and Science would be crucial in this domain.
a feature that has been exacerbated by the weight of the construction industry in the regional economy. As of 2008, micro enterprises (less than 10 employees) accounted for 95,
The task of internationalising the regional economy is made complicated by the very different sectors that have an international potential in the region,
Key future opportunities Developing entrepreneurship skills to upgrade local industries Universities are being geared up to be conduits for knowledge and innovation in the new economy but as the OECD study reports, inappropriate
renewable energy is one of the main clusters defined by the Ministry of Economy, Innovation and Science;
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