INDIVIDUALS CLUSTERS ARE NEW FINDINGS FROM THE EUROPEAN CLUSTER MANAGEMENT AND CLUSTER PROGRAM BENCHMARKING UPDATED REPORT VOL. II 2012 CLUSTERS ARE INDIVIDUALSCOLOPHON AUTHORS: Lysann Müller Thomas Lämmer-Gampgerd Meier zu Kôckerthomas Alslev Christensen October 2012published BY: The Danish Ministry of Science Innovation and Higher Educationbredgade 43dk-1260 Copenhagen KTEL:++45 35446200fax:++45 35446201e-mail: fi@fi. dk VDI/VDE Innovation+Technik Gmbh (VDI/VDE-IT) Steinplatz 110623 Berlin/Germanywww. vdivde-it. de This publication is supplied free of charge while stocks last. PLEASE APPLY TO: The Danish Agency for Science, Technology and Innovationbredgade 40 DK-1260 Copenhagen KTEL:++45 35446200fax:++45 35446201e-mail: fi@fi. dk This publication can also be downloaded from www. fi. dkdesign AND PRODUCTION: Formidabel IMPRESSION: 1000web: 978-87-92776-21-1print: 978-87-92776-22-8 INDIVIDUALS CLUSTERS ARE NEW FINDINGS FROM THE EUROPEAN CLUSTER MANAGEMENT AND CLUSTER PROGRAM BENCHMARKINGVOL. II 2012 UPDATED REPORT UPDATE 2012 IMPRINTVDI/VDE Innovation+Technik Gmbh (VDI/VDE-IT) Steinplatz 110623 Berlin/Germanywww. vdivde-it. dedr. Gerd Meier zu Köckerhead of Department International Technology Cooperation and Clusters mzk@vdivde-it. dethe project was initiated by the Danish Ministry of Science, Technology and Innovation. It was carried out by VDI/VDE Innovation+Technik Gmbh on behalf of the Danish Ministry for Science, Technology and Innovation. VDI/VDE Innovation+Technik Gmbh (VDI/VDE-IT Berlin, October 2012 TABLE OF CONTENTS EXECUTIVE SUMMARY101 RESULTS OF THE BENCHMARKING OF CLUSTER MANAGEMENT ORGANIZATIONS111. 1 Comparative Portfolio111. 2 General Characteristics of Cluster Management Organizations and their Clusters141 . 2. 1 Age of the Cluster Management Organization141. 2. 2 Size of Clusters161. 2. 3 Composition of the Clusters181. 2. 4 Regional Concentration of Clusters181. 2 . 5 Financing of Cluster Management Organizations (Share of Public Funding in Total Budget) 201.3 What Makes the Difference?..221.3.1 Differences between Research-driven and Industry-driven clusters221. 3. 2 Sources of Funding241. 3. 3 Relevance of Specific Determinants251. 3. 4 Effect of the Cluster's Technology Field291. 3. 5 Link between Services and SME Development301. 4 Excellent Cluster Management Organizations -What are their Distinctive Characteristics?.311.5 What Makes the Difference? Some Key Findings361. 6 Key Determinants for the Impact of a Cluster on Business activities of Cluster Members...372 RESULTS OF THE BENCHMARKING OF CLUSTER PROGRAMS392. 1 Comparative Portfolio402. 2 Characteristics of Cluster Programs432. 2. 1 Overall Objectives of the Cluster Programs432. 2. 2 Strategic Focus: Establishment of New Clusters or Support of Matured Clusters462. 2. 3 Strategic Objectives In terms of Numbers of Clusters49 2. 2. 6 Technical Details: Term and Financial Aspects of Cluster Programs 562.3 Key Findings...572.3.1 Different types of cluster programs serve different purposes572. 3. 2 Most cluster programs feature high on the government's agenda592. 3. 3 Coordination with other funding programs shows room for improvement602. 3. 4 Internationalization of clusters is considered to be important, but the relevance of supporting internationalization of clusters varies between the different programs642. 3. 5 Program owners take over a more active role towards developing individual clusters682. 3. 6 Cluster management excellence has become more and more important in recent years692. 3. 7 Monitoring and evaluation is important, but difficult692. 3. 8 Cluster policy has become more important with the EU enlargement712. 3. 9 The European Regional Development Fund approach has led to good linkages between innovation. support programs and cluster programs722. 3. 10 Independent from the kind of support they provide the cluster programs are integrated equally in national policies 732.3. 11the cluster programs'strategic focus of either launching new clusters or supporting matured ones towards excellence is integrated equally in the policy agendas of the EU Member States742. 3. 12 The budget provided for cluster programs is independent from the gross domestic product p. c. of the respective country752 . 4 Lessons Learned and the Impact on Program Development763 POLICY RECOMMENDATIONS78 THE AUTHORS80 Table 1: Abbreviations for the cluster programs benchmarked in this study8table 2: Benchmarked clusters per country and technology area12table 3: Number of research-driven and industry-driven clusters and number of those clusters that are driven both by industry and research24table 4: Number of clusters of the excellence portfolio per specific technology area32table 5: Excellence indictors of the European Cluster Excellence Initiative (ECEI) 33table 6: Services of cluster management organizations36table 7: Overview of cluster programs41table 8: Overall objectives of the cluster programs43. Table 9: Strategic Focus: Creation of new or support of existing cluster management organizations? 47table 10: Strategic objectives of cluster programs49table 11: Strategic approach: top-down or bottom-up52table 12: Instruments of cluster programs54table 13: Term of cluster programs and financial aspects56table 14: Overview of key findings57table 15: Different categories of cluster programs58table 16: Relevance of the support of international activities of clusters64table 17: Instruments that are used to support international activities of clusters65table 18: Lessons learned with regard to the program strategy77table 19: Lessons learned with regard to the instrumentation of the program77index OF TABLES Figure 1: Participating countries11figure 2: Year of establishment of the cluster management organization15figure 3: Size of the clusters (total number of committed cluster participants) 17figure 4: Composition of clusters18figure 5: Regional concentration of clusters19figure 6: Share of public funds in total budget of cluster management organisations21figure 7: Comparison of R&d-and industry-driven clusters in terms of structural factors22figure 8: Comparison of R&d-and industry-driven clusters in terms of effects on cluster participants. 23figure 9: Characteristics of clusters with a small or high share of public funding25figure 10: Relevance of size and age for the effect on cluster participants26figure 11: Relevance of size and age for the level of institutionalisation of the cluster27figure 12: Characteristics of cluster with a high effect on business activities of SME28FIGURE 13: Structural characteristics of clusters in different technology areas29figure 14: Effects and private funding of clusters in different technology areas30figure 15: Effect of Spectrum and Intensity of Services on Business activities of SME31FIGURE 16: Comparison of structural characteristics of excellent and non-excellent clusters35figure 17: Comparison of effects created by excellent and non-excellent clusters36figure 18: Key determinants for impact on business activities of cluster members37figure 19: Participating countries40figure 20: How important is the cluster program in relation to the overall national or regional economic/industrial development strategy? 60figure 21: Coordination of cluster programs with other business development programs61figure 22: Coordination of cluster programs with infrastructure programs (e g. support of universities and other educational institutions) 62figure 23: Coordination of cluster programs with other R&d/innovation support programs63index OF FIGURES Figure 24: Importance of cluster programs in relation to the overall national or regional economic/industrial development strategy71figure 25: Comparison of older and younger cluster programs with regard to the specific economic environment, and R&d strategy as well as other funding programs72figure 26: Embedment of cluster programs in the overall economic development and R&d strategy with regard to the GDP of the respective country73figure 27: Comparison of cluster programs that provide funding only and cluster programs that provide funding and technical assistance74figure 28: Comparison of cluster programs that focus exclusively on the establishment of new cluster organization and cluster programs that focus exclusively on the further development of already existing cluster organizations75figure 29: Estimated yearly budget of the cluster programs (in Million €), (Cluster programs of countries below EU GDP average are marked yellow. Cluster programs of countries above EU GDP average are marked green. 76box 1: Explanation of figures used to present the results of the benchmarking13box 2: Overview services of cluster management organizations38index OF BOXES Table 1: Abbreviations for the cluster programs benchmarked in this studyabbreviations OF CLUSTER PROGRAMS USED IN THE FIGURESCOUNTRYNAME OF PROGRAMABBREVIATIONAUSTRIACLUSTER Program Lower Austrialower Austriabelgiumcompetence Centres-Light Structuresbelg LSCOOPERATIVE innovation network integrated projectbelg VISCZECH REPUBLICCOOPERATION Clustersczdenmarkinnovation Networks Denmark (Innovationsnetvaerk Denmark) INDESTONIACLUSTER Development Programestfinlandcentre of Expertise Program (OSKE, Osaamiskeskusohjelma) OSKESTRATEGIC Centres for Science, Technology and Innovation (SHOK , Strategisen huippuosaamisen keskittymät) SHOKFRANCEGRAPPE d'entreprisesgrappeles Pôles de Compétitivitépdcgermanycompetence Networks Germany (Initiative Kompetenznetze Deutschland)( expired) KOMGO-Cluster Initiativego Clusterclusterpolitische Gesamtstrategie der Freien und Hansestadt Hamburg (Cluster Policy Strategy of the Free and Hanseatic City of Hamburg) HHCLUSTER Offensive Bayern (Bavarian Cluster Initiative) COBZENTRALES Innovationsprogramm Mittelstand Fördermodul Netzwerkprojekte (ZIM NEMO)( Central Innovation Program SME Funding Module Network Projects) ZIMHUNGARYCLUSTER Development Program of the New Széchenyi Planhuicelandstrategic Research Program for Centres of Excellence and Research Clusters (The Icelandic Centre for Research (Rannsóknamiðstöð lslands)) RANNISREGIONAL Growth Agreements (Vaxtarsamningur) VAXITALYINNOVATION Clusters Piedmontpiedmontlatviacluster Programlat LITHUANIAINNOCLUSTER LTLTINNOCLUSTER LT+LT+LUXEMBOURGLUXEMBOURG Cluster Initiativeluxnorwaynorwegian Centres of Expertise (NCE) NCEARENA Program (Arena-programt) ARENAPOLANDPOLISH Cluster Support Schemes: Support for the development of Supra-Regional Clusters and Cluster Creation in Eastern Polandpolportugalportuguese Operational Competitiveness Program-COMPETECOMPETEROMANIADEVELOPMENT of business support infrastructures of national and international interest (Competitiveness Poles) CP , ROSUPPORT to the integration of SMES in value chains and clusters (Clusters) Clusters, ROSERBIASERBIAN Cluster Development Support Programserbiaslovakiasupport to innovative industrial cluster organizationsskspaincluster Development Cataloniaspain Catswedenvinnväxtvinnturkeysupport for the Improvement of International Competitiveness (URGE) URGE, TRUNITED KINGDOMKNOWLEDGE Transfer Networksktn 10 In economic and innovation policy the term cluster is used usually to explain geographical concentrations of economic and innovation activities. According to conventional wisdom clusters support economic development through the specialization of regions in activities within which companies gain higher productivity through accessing external economies of scale or other comparative advantages. During the past 15 years clusters and innovative (competence) networks have gained more and more importance as an element of economic development and innovation strategies of the European union and its Member States. The analyses in this report challenge conventional wisdom of what drives development and innovation within a cluster. Based on the largest international analysis of its kind involving a simultaneous benchmarking of more than 260 cluster organizations and of cluster policies from 23 European countries it is found that the economic impacts of clusters depend on many more factors not related to the specialization of regions through the geographical concentration of the cluster than earlier research suggests. Cluster management excellence and the spectrum and frequency of business-related services of the cluster organization are important determinants for the impact of a cluster. The analyses of cluster organizations and cluster policies also show many other key determinants for the development and characteristics of a cluster such as internationalization activities, R&d activities, age, technology areas. The overall objective is to contribute to the development of outstanding clusters through excellent management and excellent cluster programs. Conducted from October 2010 to September 2012 the project pays particular attention on the characteristics of cluster management organizations and their effects on cluster development. More than 260 cluster management organizations from 16 countries were benchmarked to base the analysis on a comprehensive comparative portfolio. 34 cluster programs from 24 countries supporting most of the analyzed cluster organizations were analyzed to facilitate a better understanding of successful strategies and mutual learning between the program owners and to develop recommendations for a perfect cluster program. The Danish Ministry of Science, Technology and Innovation has initiated this project. The analyses were carried out by VDI/VDE Innovation+Technik Gmbh. Invaluable support was given by the country experts of the benchmarked clusters and cluster programs in this report. EXECUTIVE SUMMARY 11 In order to understand the characteristics of cluster management organizations and their interaction with cluster stakeholders in more detail, 261 cluster management organizations have been benchmarked since November 2010. The results provide a detailed insight into cluster management organizations and clusters in terms of the structure of the cluster cluster management and governance, financing, services provided by the cluster management organization and achievements and recognition of the cluster management organization. This chapter presents the results of the benchmarking of cluster management organizations. The comparative portfolio is explained in chapter 1. 1, while chapter 1. 2 introduces the findings of the benchmarking in terms of the general characteristics of cluster management organizations and clusters. Chapter 1. 3 analyses differences between cluster management organizations and clusters. Chapter 1. 4 gives an insight into excellent cluster management organizations, while chapter 1. 5 presents key determinants that decide about the effect a cluster on business activities of cluster participants. 1. 1 COMPARATIVE PORTFOLIO The comparative portfolio includes 261 cluster management organizations from 17 countries (see Figure 1) covering a broad range of technology areas respectively industries (see Table 2). 1 RESULTS OF THE BENCHMARKING OF CLUSTER MANAGEMENT ORGANIZATIONS Figure 1: Participating countries Iceland 4 Norway 16 Germany 74 Belgium 1 Austria 6 India 1 Latvia 2 Poland 20 France 73 Greece 1 Spain 6 Portugal 3 Sweden 11 Finland 11 12 Table 2: Benchmarked clusters per country and technology area TECHNOLOGY AREAS Aviation and space Biotechnology Construction/building sector Energy and environment Food industry (non-biotech) Health and medical science Humanities/social sciences, media, design, service innovation Information and communication Micro, nano and optical technologies New Materials and chemistry Production and engineering Transportation and mobility TOTAL COUNTRIES AUS 1 1 1 1 2 6 BEL 1 1 DNK 1 1 1 4 2 2 5 5 1 2 3 3 30 ESP 1 1 1 1 1 1 6 EST 1 1 FIN 3 2 1 2 1 2 11 FRA 3 2 1 15 10 6 3 8 5 11 4 5 73 GER 2 10 7 5 5 3 13 10 6 8 5 74 GRC 1 1 IND 1 1 IRL 1 1 ISL 2 1 1 4 LVA 1 1 2 NOR 2 1 2 2 1 2 1 5 16 POL 2 2 4 2 3 3 1 1 1 1 20 PRT 2 1 3 SWE 2 2 1 1 2 1 1 1 11 TOTAL 8 16 5 41 24 19 19 40 22 24 27 16 261 13 Boxplot A boxplot presents the minimal and maximal values as well as the median of the results. The median is a numerical value separating the higher half of a sample from the lower half. The lower quartile covers the lowest 25 per cent and the upper quartile covers the lowest 75 per cent of the data. The difference between the upper and lower quartiles is called the interquartile range. It represents 50 per cent of the data. Radar Chart A radar chart is a graphical method of displaying multivariate data in the form of a two-dimensional chart of quantitative variables represented on axes starting from the same point. In the following example the data of the benchmarked cluster is indicated by a green line and compared to the data of the clusters in its specific technology area (orange line) and all technology areas (blue line). Box 1: Explanation of figures used to present the results of the benchmarking Box 1: Explanation of figures used to present the results of the benchmarking 100%80%60%40%20%0%Regional International National Total Cluster XYZ Technology area Minimum Value Lower Quartile Upper Quartile Interquartile range Maximum Value Minimum Value Lower Quartile Upper Quartile Interquartile range Maximum Value 25 percent of all values Total: all clusters in all technology areas 75 percent all values 50 percent of all values Cluster XYZ Median 0%10%20%30 %40%50%60%70%80%90%100%14 1. 2 GENERAL CHARACTERISTICS OF CLUSTER MANAGEMENT ORGANIZATIONS AND THEIR CLUSTERS This chapter provides an overview of the general characteristics of cluster management organizations and their clusters for each country1. The overview includes data on The age of cluster management organizations, The size of clusters, The composition of clusters, The regional concentration of clusters and Financing of cluster management organizations. 1. 2. 1 AGE OF THE CLUSTER MANAGEMENT ORGANIZATION The establishment of the majority of cluster management organizations started in Austria, Germany and Finland already at the end of the 1990s followed by Denmark, France, Norway, Sweden, Spain Poland and Iceland (see Figure 2). This pattern reflects the history of cluster policy in many of these countries. While, for example, cluster policy in Germany started in the mid-1990s resulting in a number of support programs both from the federal and regional level, in other countries cluster policy developed rather late at the beginning of the 2000s, like in Sweden, or even later, like in Iceland. As the majority of benchmarked cluster management organizations in their early phases relied heavily on public funding there is a clear correlation between the establishment and the inception of funding programs. An interesting observation concerns the length of cluster institutionalization processes. While the majority of clusters in Germany were established during an eight-year period between 1998 and 2006, and in Finland between 1999 and 2007, this process was much shorter in other countries, e g. in Poland just two years (2006 to 2008) or in Sweden just one year (2005). As this pattern cannot be explained by the influence of funding programs (e g. through the publishing date of call for proposals) only except for France where the Pôles de compétitivité program was launched in 2005, -it is most likely that other dynamics such as specific developments in individual industries also had an effect on the date of establishment. 1 In order to get meaningful results the analysis includes only countries with more than four benchmarked clusters. 15 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 AUSTRIA 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 DENMARK 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 FINLAND 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 FRANCE 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 GERMANY 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 ICELAND 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 NORWAY 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 POLAND 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 SPAIN SWEDEN Figure 2 Year of establishment of the cluster management organization 16 1. 2. 2 SIZE OF CLUSTERS For the purpose of this project the size of clusters was measured in terms of numbers of cluster participants who are committed to the work of the cluster management organization. A committed cluster participant is a company, R&d institution etc. who meets at least one of the following criteria: The cluster participant has signed a membership agreement, a letter of intent or a similar form of written commitment; The cluster participant pays membership fee or provides financial support to the cluster management on a regular basis (this may also include inkind contributions or staff working time); The cluster participant contributes actively to the development of the cluster on a regular basis, e g. through the participation in projects, workshops or working groups. Figure 3 presents the composition of clusters in terms of total number of committed cluster participants. The total number includes participants from the following categories: SME2, Non-SME, R&d institutions, universities, training and education providers, financial intermediaries, consultants, governmental agencies and others. The size of a cluster does not correlate with its business and innovation potential or its utilization: it is the quality of the cluster participants that is important. The size of a cluster does not necessarily depend on the size of the national economy. Although the economies of Germany and Denmark are very much different in terms of the numbers of economic players, clusters in these two countries have a similar size. The size of clusters in Poland is given quite small the size of the Polish economy; but clusters may further grow in the future given the very young history of these clusters since the establishment of the cluster management organization. Eventually there is of course a size limit set by the size of the economy as it has an influence on the number of players in economic sectors in which clusters can develop. The large size of Finish clusters can be explained by the fact the majority of the benchmarked clusters are rather coordination bodies of smaller clusters in the same economic field; in this particular case the funding program OSKE Centre of Expertise Program, which supports the cluster management organizations, had a significant effect on the size of the clusters. 2 Based on the SME definition of the European commission (Recommendation 2003/361/EC regarding the SME definition) this benchmarking considers a company as a SME if it has no more than 250 employees. 17 Figure 3: Size of the clusters (total number of committed cluster participants) AUSTRIA DENMARK FINLAND FRANCE GERMANY ICELAND NORWAY POLAND SPAIN SWEDEN 0 50 100 150 200 250 300 350 400 450 500 550 600 650 700 750 800 0 50 100 150 200 250 300 350 400 450 500 550 600 650 700 750 800 0 50 100 150 200 250 300 350 400 450 500 550 600 650 700 750 800 0 50 100 150 200 250 300 350 400 450 500 550 600 650 700 750 800 0 50 100 150 200 250 300 350 400 450 500 550 600 650 700 750 800 0 50 100 150 200 250 300 350 400 450 500 550 600 650 700 750 800 0 50 100 150 200 250 300 350 400 450 500 550 600 650 700 750 800 0 50 100 150 200 250 300 350 400 450 500 550 600 650 700 750 800 0 50 100 150 200 250 300 350 400 450 500 550 600 650 700 750 800 0 50 100 150 200 250 300 350 400 450 500 550 600 650 700 750 800 18 1. 2. 3 COMPOSITION OF THE CLUSTERS Figure 4 displays the typical composition of a cluster for each country. With the exemption of Iceland in all countries industry (SME and Non-SME) is the dominating stakeholder. Swedish clusters have the lowest share of industry (56 per cent SME: 45 per cent) and Finnish clusters, which are dominated by SME, the highest (86 per cent, SME: 80 per cent. The share of industry in Icelandic clusters is only 38 per cent. The share of R&d institutions and universities is very much different between the countries. Iceland and Germany have the highest share (R&d institutions and universities account for 24 respectively 11 per cent of all stakeholders). 1. 2. 4 REGIONAL CONCENTRATION OF CLUSTERS According to the definition of Michael E. Porter clusters are geographic concentrations of interconnected companies and institutions in a particular field. 3 The closer these players are located to each other, the more likely is not only interaction between them, but also the chance of mutual trust building between them is much higher. Modern ways of communication, particularly structured by the internet, have made communication much easier, but nothing beats faceto-face interaction when it comes to the development and implementation of projects, in particular if problems have to be solved. Personal interaction matters in this regard as it contributes to the building of trust between project partners, which is a mandatory resource for successful projects. It was analyzed therefore how dense the regional concentration of a cluster is. Figure 5 displays for each country the percentage of cluster members located within a distance of 150 kilometers from the office of the cluster management organization. This distance can be covered easily by car or train in a short period of time, which facilitates personal interactions through frequent meetings of the cluster stakeholders. All clusters that were benchmarked show a high regional density with a median value of at least 75 per cent. The conditions for successful work in terms of the spatial proximity of the cluster management organization to the members of the cluster are in these cases favorable. Figure 4: Composition of clusters AUSTRIA 68%7%6%3%2%1%8%2%3%SME Universities Consultants Non-SME Training and education providers Governmental agencies R&d institutions Financials intermediaries Others DENMARK 59%14%2%4%2%2%8%4%5%FINLAND 6%80 %1%2%1%2%6%1%1%FRANCE 49%16%6%4%2%3%7%3%10%GERMANY 53%13 %6%5%3%3%7%3%7%ICELAND16%22%10%14%11%11%6%5%5%NORWAY 52%12%7 %3%5%3%3%7%8%POLAND 49%12%4%4%5%6%10%4%6%SPAIN 49%24%4 %4%2%2%6%5%4%SWEDEN 45%11%4%6%4%4%19%4%3%3 Michael E. Porter 1998: Clusters and the New Economics of Competition, in: Harvard Business Review, November/December 1998, p. 78 19 Figure 5: Regional concentration of clusters AUSTRIA DENMARK FINLAND FRANCE GERMANY ICELAND NORWAY POLAND SPAIN SWEDEN 0%10%20%30%40%50%60 %70%80%90%100%0%10%20%30%40%50%60%70%80%90%100%0%10%20%30%40 %50%60%70%80%90%100%0%10%20%30%40%50%60%70%80%90%100%0%10%20 %30%40%50%60%70%80%90%100%0%10%20%30%40%50%60%70%80%90%100%0 %10%20%30%40%50%60%70%80%90%100%0%10%20%30%40%50%60%70%80%90 %100%0%10%20%30%40%50%60%70%80%90%100%0%10%20%30%40%50%60%70 %80%90%100%20 1. 2. 5 FINANCING OF CLUSTER MANAGEMENT ORGANIZATIONS (SHARE OF PUBLIC FUNDING IN TOTAL BUDGET) Many cluster management organizations depend to a large extent on public funding to finance staff and other resources, such as office space and equipment (see Figure 6). Sources of public funding include project-based grant funding, institutional funding or service contracts. The sources and the share of public funding depend very much on the clusters and their individual environments as well on the public funding programs that support them. Cluster management organizations can be funded from different regional, national and European funding programs. The small share of public funding in the budget of Polish cluster management organizations (median value compared to other countries) is due to the fact that many of the clusters originate from groups of companies that have not made use of public funding programs (yet) because they are not eligible (e g. they do not have institutionalized a legally cluster management organization which is a typical eligibility criterion for funding). 21 Figure 6: Share of public funds in total budget of cluster management organization AUSTRIA DENMARK FINLAND FRANCE GERMANY ICELAND NORWAY POLAND SPAIN SWEDEN 0%10 %20%30%40%50%60%70%80%90%100%0%10%20%30%40%50%60%70%80%90%100 %0%10%20%30%40%50%60%70%80%90%100%0%10%20%30%40%50%60%70%80 %90%100%0%10%20%30%40%50%60%70%80%90%100%0%10%20%30%40%50%60 %70%80%90%100%0%10%20%30%40%50%60%70%80%90%100%0%10%20%30%40 %50%60%70%80%90%100%0%10%20%30%40%50%60%70%80%90%100%0%10%20%30%40%50%60%70%80%90%100%22 1. 3 WHAT MAKES THE DIFFERENCE? Clusters and their cluster management organisations are individuals. Even though they share some characteristics as discussed in the previous chapter, there are also significant differences. What they are and what actually makes the difference between clusters that are individuals is presented in this chapter. Further insight into this will be provided by further analysis of: Differences between research-driven and industry-driven clusters Sources of funding Relevance of specific determinants Effects of the cluster's technology field Links between services of the cluster management organisation and SME activities 1 . 3. 1 DIFFERENCES BETWEEN RESEARCH-DRIVEN AND INDUSTRY-DRIVEN CLUSTERS Research-driven clusters show different characteristics than industry-driven clusters4: their financial situation is better than that of industry-driven clusters, they are smaller in terms of numbers of cluster participants and in terms of governance (clarity of roles, level of centralization of governance structure and legal organization) they show a less distinct profile than industry-driven clusters. In contrast to industry-driven clusters the financial outlook in terms of budget security of R&d-driven clusters is better (Figure 7). 4 In the context of the benchmarking cluster managers were asked to classify their clusters as either research or industry-driven. A cluster is research-driven if strategy and activities are defined mainly by research institutions or universities. If mainly industry defines strategy and activities then a cluster is classified as industry-driven. Figure 7: Comparison of R&d-and industry-driven clusters in terms of structural factors Age Share of clusters highly specialised in their industry Numbers of cluster participants Share of cluster participants within 150 km Share of clusters that are organised legally Share of clusters with highly centralised governance structure Share of clusters with high clarity of tasks & roles Private financing rate Share of clusters with highly assured financing Median value R&d driven clusters Industrial driven clusters 0 25 50 75 100 150 175 Percentage of median value(%)125 23 Research-driven clusters have lesser effects on the development of SMES. While research-driven clusters have a higher effect on R&d activities of research institutions (including universities) than industry-driven clusters through their cluster management organization, their effects on the industry are rather small. In contrast, industry-driven clusters have a larger effect through their cluster management organization on business, R&d and international activities of SME. They are also more successful in establishing co-operations with companies and research institutions outside the cluster. This suggests that the specific impact of a cluster on business, R&d and international activities of the cluster participants depends on the agenda setter: if companies set the agenda which is the case in industry-driven clusters they benefit more, if research institutions set the agenda which is the case in research-driven clusters they benefit more (Figure 8). Figure 8: Comparison of R&d-and industry-driven clusters in terms of effects on cluster participants Effect on R&d activities of research institutions Share of clusters having initiated many successful co -operations Share of clusters with high media coverage Effect on business activities of SME Effect on R&d activities of SME Effect on international activities of SME Median value R&d driven clusters Industrial driven clusters 0 25 50 75 100 125 Percentage of median value(%)24 The following table gives an overview of clusters per country in terms of whether they are research or industry-driven. The vast majority is driven by industry (65%of the total sample. There are only a few research-driven clusters (10%of the total sample), while a quarter of the total sample is driven both by industry and research. COUNTRY NUMBER OF RESEARCH-DRIVEN CLUSTERS NUMBER OF CLUSTERS THAT ARE DRIVEN BOTH BY INDUSTRY AND RESEARCH NUMBER OF INDUSTRY-DRIVEN CLUSTERS AUSTRIA 0 1 5 DENMARK 8 10 12 FINLAND 0 2 9 FRANCE 2 28 43 GERMANY 6 15 53 ICELAND 2 0 2 NORWAY 0 2 14 POLAND 4 3 13 SPAIN 0 1 5 SWEDEN 3 1 7 TOTAL 25 63 163 Table 3: Number of research-driven and industry-driven clusters and number of those clusters that are driven both by industry and research 1. 3. 2 SOURCES OF FUNDING In terms of structure and governance clusters with a small share of public funding (private funding has a share of more than 75 per cent in total funding of the cluster management organization) and a high share of public funding (the share of public funding in total funding of the cluster management organization is higher than 75 per cent) are similar. However, there are some differences between these two types of clusters (see Figure 9: There are more clusters being driven mainly by industry and highly specialized in a certain industry that have a cluster management organization that is financed to more than 75 per cent by private means. Clusters with a cluster management organization that is financed to more than 75 per cent by private means show specific characteristics of governance more often than clusters with cluster management organizations that are financed to a large extent by public funds. They have more often a dedicated legal form (e g. registered association or limited liability) and there are more cluster management organizations that report a high clarity of tasks and roles. Thus clusters with a high share of private funding tend to be more often highly institutionalized than clusters with a high share of public funding. Cluster management organizations that are funded to a large extent by private means are often older. 25 1. 3. 3 RELEVANCE OF SPECIFIC DETERMINANTS There is a strong correlation between the age and the size of a cluster and the effect of the work of the cluster management organization on business and R&d activities of SME. Clusters that are five years or older and have more than 50 members perform significantly better than younger and smaller clusters in this regard as well as in terms of the numbers of initiated successful co-operations. This is also reflected by the cluster's visibility in terms of press and media coverage (see Figure 10). Apparently, larger and matured clusters provide a much better environment for results and impacts as an effect of activities of a cluster management organization. Figure 9: Characteristics of clusters with a small or high share of public funding Share of clusters highly specialised in their industry Number of cluster participants Share of clusters mainly driven by industry Share of clusters that are organised legally Share of clusters with high clarity of tasks & roles Share of clusters having a strategy Share of cluster participants within 150 km Age Median value Public funding rate>75%Private funding rate>75 %0 25 50 75 100 125 150 Percentage of median value(%)26 The older and larger a cluster is institutionalized, the more it is in terms of having a legal form (with regard to the cluster management organization) and clarity of tasks and roles (e g. through statutes or contracts) of its institutional parts such as the cluster management organization, a steering committee or board and a general assembly (see Figure 11. Figure 10: Relevance of size and age for the effect on cluster participants Share of clusters having initiated many successful co-operations Share of clusters with high media coverage Effect on R&d activities of SME Effect on business activities of SME Median value More than 50 participants Less or equal 50 participants 5 years or younger Older than 5 years Percentage of median value(%)0 25 50 75 100 125 150 27 Figure 11: Relevance of size and age for the level of institutionalisation of the cluster Assuming that clusters that are governed by a cluster management organization mature over time, it is not surprising that they become more and more institutionalized as they learn like any other organization that a certain set of rules is a necessary requirement for success. The process of institutionalization becomes even more relevant the larger and more heterogeneous a cluster is in terms of membership. A clear and binding set of rules and institutions is important for building and maintaining trust in large and heterogeneous groups. The larger and more heterogeneous a group is the more it tends to be anonymous and thus the more it is prone to misconduct. Institutionalization of rules and processes counterbalances this effect and thus contributes to a culture of trust in a cluster which facilitates collaboration between its members. As business and R&d activities in a cluster require trustfully relationships between the partners, it is not surprising that old and large institutionalized clusters show a higher impact for exampleon business and R&d activities of SME than small and young cluster do. Another interesting pattern is that smaller clusters tend to specialize in a particular field (see Figure 11. It seems that clusters tend to be specialized less the larger they are. In larger clusters more players are involved with a more diversified set of interests and options for collaboration. This translates into a more diversified development of the technology portfolio of the cluster and as a result into a lesser degree of specialization in a particular field. The finding that size and institutionalization have an important effect on the development of SME is confirmed by a further analysis of structural characteristics of clusters. Share of clusters highly specialiced in their industry Share of clusters that are organised legally Share of clusters with high clarity of tasks & roles Share of clusters with highly centralised governance structure Median value More than 50 participants Less or equal 50 participants 5 years or younger Older than 5 years Percentage of median value(%)0 25 50 75 100 125 150 28 Figure 12 shows that clusters that have a high effect on business activities of SME are larger in terms of numbers of members, have more often a legal form (respectively the cluster management organization) and feature more often a clear assignment of tasks and responsibilities of their actors compared to the median value of all analyzed clusters. Figure 12: Characteristics of cluster with a high effect on business activities of SME Age Share of clusters having a strategy Share of clusters with highly assured financing Share of clusters highly specialised in their industry Share of clusters mailly driven by industry Numbers of cluster participants Share of cluster participants within 150 km Share of clusters that are organised legally Share of clusters with high clarity of tasks & roles Private financing rate Share of clusters with highly centralised governance structuremedian value High effect on SME business development 0 25 50 75 100 125 150 Percentage of median value(%)29 1. 3. 4 EFFECT OF THE CLUSTER'S TECHNOLOGY FIELD The characteristics of a cluster depend very much on the technology field it is operating in Figure 13 displays structural characteristics of clusters from six different technology fields. The different structural characteristics reflect the characteristics of their industry sectors or technology fields. For example, biotechnology clusters are oriented less towards industries as still today biotechnology is driven very much by research institutions and universities. Other examples for specific industry characteristics are the industry sectors of energy and environment, services as well as micro, nano and optic. Clusters in these industries are specialized not highly as they work on technologies that can also be applied in various other industries. Figure 13: Structural characteristics of clusters in different technology areas Share of clusters highly specialiced in their industry Share of clusters that are organised legally Share of clusters with high clarity of tasks & roles Share of clusters with highly centralised governance structure Median value More than 50 participants Less or equal 50 participants 5 years or younger Older than 5 years Percentage of median value(%)0 25 50 75 100 125 150 30 There are also differences between clusters in different technology areas when it comes to the impact of the work of the cluster management organization and the share of private funding of the cluster management organization (see Figure 14). These findings demonstrate that the industry or technology field in which a cluster operates in has an important effect both on the structural characteristics of a cluster and the performance of a cluster management organization. This is an important conclusion for the development of future cluster programs. In order to support clusters according to their specific needs cluster programs have to take the specific technology foci of clusters into account. 1. 3. 5 LINK BETWEEN SERVICES AND SME DEVELOPMENT A cluster management organization can influence the development of a cluster through the provision of targeted services for its members (see Box 2 for an overview of services). The analysis of the benchmarking results has demonstrated that the more active a cluster management is in this regard, the higher its impact on the development of business activities of cluster members is. This was analyzed in detail for SME members by calculating a composite indicator for business-oriented services provided by the cluster management organization that was put in relation with the impact of the work of the cluster management organization on business activities of SME. Figure 15 displays a correlation between the spectrum and intensity (in terms of frequency) of business-oriented services and the impact of the work of the cluster management organization on business activities of SME. The more services are provided (see e g. the median value the higher the impact on business activities of SME is. Figure 14: Effects and private funding of clusters in different technology areas Private financing rate Effect on international activities of SME Effect on business activities of SME Effect on R&d activities of SME Share of clusters having initiated many successful co-operations Median value Energy & environment Micro & nano & optic Biotechnology & health Services & nontechnical innovations Production & engineering Information & communication 0 25 50 75 100 150 125 Percentage of median value(%)31 1. 4 EXCELLENT CLUSTER MANAGEMENT ORGANIZATIONS -WHAT ARE THEIR DISTINCTIVE CHARACTERISTICS? Excellent management is considered to be a general prerequisite for successful operation in industry and the private sector in general, in the public sector, like education, health, environment, etc. and in public administration and governmental organizations Therefore, it is obvious that excellent management should also be considered as a main prerequisite for a cluster organization to achieve the highest impacts of the cluster within a given technological, industrial, regional, and legislative framework: for the cluster participants, for the industrial sector in general, and for the development of regions. Figure 15: Effect of Spectrum and Intensity of Services on Business activities of SME 0 10 20 30 Impact on business activites of SME Significant and sustainable impacts for a significant number of cluster participants No impacts yet Total: all clusters in all technology areas Business oriented composite service indicator 0 1 2 3 4 40 50 60 32 Out of the 261 cluster organizations that have been benchmarked since November only 71 less than a third can be considered as excellent cluster management organizations (see Table 4). These organizations demonstrate sophisticated management approaches according to the excellence indicators defined by the European Cluster Excellence Initiative (ECEI )( see Table 5 on next page) as well as a high level of services and activities. In terms of structural characteristics excellent clusters respectively their management organisations have more participants and feature more often a higher clarity of tasks and roles in terms of governance. The age of a cluster management organisation as well as the regional concentration of the cluster participants within the cluster do not have an effect on the level of excellence. Table 4: Number of clusters of the excellence portfolio per specific technology area TECHNOLOGY AREAS Aviation and space Biotechnology Construction/building sector Energy and environment Food industry (non -biotech) Health and medical science Humanities/social sciences, media, design, service innovation Information and communication Micro, nano and optical technologies New Materials and chemistry Production and engineering Transportation and mobility TOTAL TOTAL 5 2 2 11 5 5 6 13 4 7 7 4 71 PERCENT OF EXCELLENT CLUSTERS IN THE SPECIFIC TECHNOLOGY AREA 63%13%40%27%21%26%32%33%18%29%26%25%27%33 Table 5: Excellence indictors of the European Cluster Excellence Initiative (ECEI) DIMENSION INDICATOR STRUCTURE OF THE CLUSTER Committed Cluster Participation Composition of the Cluster Participants Number of Committed Cluster Participants in Total Geographical Concentration of the Cluster Participants TYPOLOGY, GOVERNANCE, COOPERATION Maturity of the Cluster Management Human resources Available for the Cluster Management Qualification of the Cluster Management Team Life Long Learning Aspects for the Cluster Management Team Stability and Continuity of Human resources of the Cluster Management Team Stability of Cluster Participation Clarity of Roles Involvement of Stakeholders in Decision making Processes Direct Personal Contacts Between the Cluster Management Team and the Cluster Participants Degree of Cooperation within the Cluster Integration of the Cluster Organisation in the Innovation System FINANCING Prospects of the Financial Resources of the Cluster Organisation Share of financial resources from private sources STRATEGY, OBJECTIVES, SERVICES Strategy Building Process Documentation of the Cluster Strategy Implementation Plan Financial Controlling System Review of the Cluster Strategy and Implementation Plan Performance Monitoring of Cluster Management Focus of the Cluster Strategy Activities and Services of the Cluster Management Performance of the Cluster Management Working groups Communication of the Cluster Organisation Cluster organisation's web presence ACHIEVEMENTS, RECOGNITION Recognition of the Cluster in Publications, Press, Media Success Stories Customer and Cluster Participants'Satisfaction Assessment 34 STRUCTURE OF THE CLUSTER Committed Cluster Participation Composition of the Cluster Participants Number of Committed Cluster Participants in Total Geographical Concentration of the Cluster Participants TYPOLOGY GOVERNANCE, COOPERATION Maturity of the Cluster Management Human resources Available for the Cluster Management Qualification of the Cluster Management Team Life Long Learning Aspects for the Cluster Management Team Stability and Continuity of Human resources of the Cluster Management Team Stability of Cluster Participation Clarity of Roles Involvement of Stakeholders in Decision making Processes Direct Personal Contacts Between the Cluster Management Team and the Cluster Participants Degree of Cooperation within the Cluster Integration of the Cluster Organisation in the Innovation System FINANCING Prospects of the Financial Resources of the Cluster Organisation Share of financial resources from private sources STRATEGY OBJECTIVES, SERVICES Strategy Building Process Documentation of the Cluster Strategy Implementation Plan Financial Controlling System Review of the Cluster Strategy and Implementation Plan Performance Monitoring of Cluster Management Focus of the Cluster Strategy Activities and Services of the Cluster Management Performance of the Cluster Management Working groups Communication of the Cluster Organisation Cluster organisation's web presence ACHIEVEMENTS, RECOGNITION Recognition of the Cluster in Publications, Press, Media Success Stories Customer and Cluster Participants'Satisfaction Assessment 35 There is a clear difference between excellent and non-excellent clusters and their management organizations in terms of activity levels and effects. Excellent cluster management organizations demonstrate higher service intensity than non-excellent cluster management organizations and their agenda is driven more often by industrial interests. In view of the results and effects the high service intensity of excellent management organizations reflects in higher effects on R&d activities of SME, business activities of SME, international activities of SME and a larger number of cooperation requests from parties outside the cluster (Figure 17 on next page. Figure 16: Comparison of structural characteristics of excellent and non-excellent clusters Age Share of clusters with high clarity of tasks & roles Share of cluster participants within 150 km Number of cluster participants Median value Excellent clusters 71 Non-excellent clusters 190 0 25 50 75 100 125 150 175 200 36 Summing up the observations, it can be concluded that size, an adequate level of governance and the provision of services are key characteristics of excellent cluster management organizations that yield effects on cluster development, particularly in regard to the development of business, R&d and international activities of SMES. Hence excellence cluster organisations provide higher impact on business. 1. 5 WHAT MAKES THE DIFFERENCE? SOME KEY FINDINGS Clusters and their cluster management organisations are individuals. Although each individual is different, analysis reveals some characteristics that are typical for specific groups of individuals. This applies in particular to the level a cluster is driven by research or industrial interests, the level of private funding of a cluster management organisation, size and age of the cluster respectively its cluster management organisation, the technology field of the cluster and services that are provided by the cluster management organisation to facilitate the development of the cluster: 1) Research-and industry-driven clusters are different in terms of financial situation, size and governance and most important: industry-driven clusters have a higher effect on SME development. 2) The majority of clusters are driven mainly by industry and-not surprisingly-they also have a higher share of private financing than the research driven clusters. 3) There is a strong correlation between the age and the size of a cluster and the effect of the work of the cluster management organization on business and R&d activities of SME. Clusters that are five years or older and have more than 50 members perform significantly better than younger and smaller clusters in this regard. 4) The characteristics of a cluster depend very much on the technology field it is operating In this includes Figure 17: Comparison of effects created by excellent and non-excellent clusters Service intensity Share of clusters having many cooperation requests Share of clusters mainly driven by industry Effect on international activities of SME Effect on business activities of SME Effect on R&d activities of SME Median value Excellent clusters 71 Non-excellent clusters 190 0 25 50 75 100 125 150 37 structural characteristics such as governance, being driven by research-or industry, size and age, but also the effect of the cluster management organisation on business, R&d and international activities of SME. 5) There is a correlation between the spectrum and intensity (in terms of frequency) of business-oriented services provided by a cluster management organisation and its effects on business activities of SME. The more services are provided, the higher the impact on business activities of SME is. 6) The older and larger a cluster is institutionalized, the more it is in terms of having a legal form (with regard to the cluster management organization) and clarity of tasks and roles 7) Excellent cluster management organizations reveal higher service intensity than non-excellent cluster management organizations and their agenda is driven more often by industrial interests. In addition, excellent cluster initiatives tend to have more participants and higher clarity of tasks and roles in terms of governance. Hence, excellence cluster organisations provide higher impact on business. 1. 6 KEY DETERMINANTS FOR THE IMPACT OF A CLUSTER ON BUSINESS ACTIVITIES OF CLUSTER MEMBERS The results of the benchmarking suggest that several key determinants matter in terms of a cluster's impact on the business activities of its members; this applies in particular to the impact on business activities of SME. Structural factors such as size, age, governance and the type of agenda setter (industry or research stakeholders) have an effect on the spectrum and intensity of services provided by the cluster management organization and thus on the development of business activities of SME. Figure 18 displays the causal relationship of structural factors and agenda setters, services and effects: The impact of a cluster in terms of SME business activities depends on the spectrum and intensity of services provided by the cluster management organization which in turn depends on specific characteristics of the structural factors and agenda setters as displayed in the figure, which might be influenced by the specific characteristics of the technology area the cluster is operating in. Figure 18: Key determinants for impact on business activities of cluster members Size Age Governance Share of private funding in the total budget of the cluster management organization Industry -or research-driven Technology area of the cluster Structural factors Agenda setters Spectrum and intensity of services provided by the cluster management organization Impact on business activities of SME Although these determinants are general findings whose relevance may depend on the individual context of a cluster, particularly on the technology field the cluster is operating in, they provide guidance for the development of cluster programs. From a general perspective the conclusion of the cluster management organization benchmarking in this regard is: the more matured in terms of age and institutionalization, the larger in terms of size of membership, the more industry-driven a cluster is and the more active its cluster management organization is in terms of spectrum and intensity of service offer, the higher its effect on economic development is. This is a key message for policy makers and program owners. 38 Box 2: Overview services of cluster management organizations 5 Sydow, Jörg/Zeichhardt, Rainer, 2009: Importance of Network Services for the Success of Networks, in: Buhl, Claudia Martina/Meier zu Köcker, Gerd (eds. 2009: Cluster Management Excellence, Vol. 1: Network Services, Competence Networks Germany, Berlin, p. 20 CATEGORIES OF SERVICES EXAMPLES OF SERVICES ACQUISITION OF THIRD-PARTY FUNDING FOR PROJECTS (PUBLIC FUNDS) Acquisition of R&d and non-R&d projects on behalf of cluster members Distribution of information about funding programs COLLABORATIVE TECHNOLOGY DEVELOPMENT, TECHNOLOGY TRANSFER AND R&d PROJECTS Organization of tasks forces/working groups Management of projects on behalf of cluster members Legal advice, e g. on IPR INTERNAL NETWORKING AMONG CLUSTER MEMBERS Regular meetings, get-togethers, thematic events/workshops for cluster members Internal newsletters, databases etc. DEVELOPMENT OF HUMAN RESOURCES Participation in the development and implementation of vocational training or study courses together with external partners such as universities Training courses for cluster members Recruitment of staff on behalf of cluster members DEVELOPMENT OF ENTREPRENEURSHIP Consulting and coaching Acquisition of financing (e g. venture capital, banks, public funds) on behalf of entrepreneurs MATCHMAKING AND NETWORKING WITH EXTERNAL PARTNERS/PROMOTION OF THE CLUSTER LOCATION Information material, website, press releases, publications Presentation of the cluster and its members on trade fairs or conferences Events/workshops to present the cluster Matchmaking/partnering events INTERNATIONALIZATION OF THE CLUSTER Presentation of the cluster and its members on trade fairs or conferences, networking visits, study tours Offices or other permanent representations abroad Cooperation with export promotion agencies Services for clusters members that are provided by the cluster management organization are an important instrument to develop a cluster. They provide a basis for intensifying and/or stabilizing interaction between cluster members reduce the time and costs spent by cluster members through high-quality standard solutions and/or allow cluster members to focus on their core activities. 5 Table 6 gives a general overview of services that can be offered by a cluster management organization to support the development of a cluster: For further information about this topic please see Buhl, Claudia Martina/Meier zu Köcker, Gerd (eds. 2009: Cluster Management Excellence, Vol. 1: Network Services, Competence Networks Germany, Berlin, www. kompetenznetze. de/the-service/order-service/cluster-management-excellence-volume-1-network-services 39 Cluster policy issues have appeared in scientific publications since the 1990s.6 Until today, the question has remained, whether there are long term impacts visible in those countries where cluster programs have been implemented. This chapter gives an overview of 34 European cluster programs, their objectives, activities, instruments and results. Clusters help people engaged in the same technology field to network with each other, e g. companies with companies, companies with research institutes, universities with governments and so forth. Policies are set up to reply to market failures. By implementing a cluster policy national or regional economies are able to reply to the market failure of information asymmetries. As a consequence countries have started to set up specific policies particularly designed to help establishing new clusters and advancing matured ones. Thus, governments are eager to start specific policies aiming at the development of clusters cluster programs in order to increase the benefit for the companies, universities and R&d institutions and other service providers within the cluster. Quoting Boekholt and Thuriaux, cluster policies comprise the set of policy activities that aim to: stimulate and support the emergence of these networks; strengthen the interlinkages between the different parts of the networks; and increase the value added of their actions. 7 Ketels defines cluster policy as efforts by governments, alone or in a collaborative effort with companies, universities, and others, that aim to increase the competitiveness of specific clusters by organizing government policies around them. 8 Both definitions serve as basis for the analysis presented in this chapter. Sure, it is one of the government's main task to inspire overall national or regional strategies that lead to more business deals and motivate more R&d activities, thus improving the framework conditions for economic well-being. Fulfilling these authoritative tasks many policy makers have realized that f. ex. installing infrastructures for the development of clusters and further supporting them can be a good step towards smart specialization. The concept of smart specialization includes an entrepreneurial process of discovery 9 about what the unique selling propositions with regard to R&d and production of a specific country or region are. In a way, this is a bottom-up policy process which may probably be carried best out by clusters and networks. It can therefore be assumed that due to the corrective influence of clusters within an economy, many countries have set up their specific cluster program. It is hence of interest to compare the characteristics of the current cluster programs in Europe in order to learn a o. which cluster program has developed well instruments, which one is adjusted well to its country specific economic development strategy and which cluster programs provide ideas for others to follow a distinct R&d strategy. For this reason, a pan-European benchmarking exercise was initiated of which the first run took place in 2011 and the second in 2012. The results of the 2011 benchmarking of cluster programs have been updated in 2012 and are presented in this chapter. Furthermore, the data base of 2012 has been extended by more cluster programs. They have been benchmarked with the same criteria as the programs analyzed in 2011. As of today 34 cluster programs of 24 countries are included in the cluster program benchmarking portfolio. A group of experts of 24 European countries has evaluated their specific national or regional cluster program. As already stated in the introduction, nowadays policy makers and program owners are no longer facing the question whether they should establish new clusters, but the question of how they can improve the global competitiveness of existing clusters. How can cluster programs support the development of clusters that can compete in a global economy? How can cluster programs contribute to cluster management excellence as a precondition of world-class clusters? These questions motivated policy makers and program owners from different European countries to engage in a benchmarking of cluster programs that should facilitate mutual learning in this respect. Chapter 3. 1 introduces the comparative portfolio, which consists of 34 cluster programs from 24 countries. Chapter 3. 2 describes the characteristics of these programs in terms of objectives, strategic focus, instruments, terms and financial aspects. Important key findings from the benchmarking are presented in chapter 3. 3. The key findings give further insight into the different types of cluster programs, 2 RESULTS OF THE BENCHMARKING OF CLUSTER PROGRAMS 6 Cf.:OECD (1999. Boosting Innovation: The cluster approach. Paris: OECD Proceedings.;Sölvell, Ö.,Lindqvist, G.,Ketels, Ch. 2003). ) The Cluster Initiative Greenbook. www. cluster-research. org. 7 Boekholt, P.,Thuriaux, B. 1999. Public policies to facilitate clusters: background, rationale and policy practices in international perspective. In: Boosting Innovation: the cluster approach. Paris: OECD Proceedings. p. 381.8 Ketels, Ch. 2010). ) Cluster Policy: A Guide to the State of Debate. In: Hernández, J. M.,Pezzi, A.,Soy, A. 2010. Clusters and competitiveness: the case of Catalonia (1993-2010. Government of Catalonia, Ministry of Enterprise and Labour, Directorate General for Industry, Observatory for Industrial Foresight 9 Foray, D.,David, P.,Hall, B. 2009. Smart Specialization The Concept. In: Knowledge Economists Policy Brief No. 9. European commission. 40 their relevance on the policy agenda and their coordination with other funding programs, support of cluster internationalization, the role of program owners when it comes to the development of clusters, the relevance of cluster management excellence in the programs, monitoring and evaluation practices and lessons learned by the program owners. With this update of the cluster program benchmarking, six countries that have joined the EU only in 2004 have been added to the portfolio (Hungary, Czech republic, Romania, Lithuania, Estonia and Latvia). Thus, in total the benchmarking exercise includes seven(+Poland) younger EU member states. It is thus of special interest, if these countries have different core areas in their programs. 2. 1 COMPARATIVE PORTFOLIO The cluster program benchmarking covered 34 cluster programs from 24 countries, which are Austria, Belgium, Czech republic, Denmark, Estonia, Finland, France, Germany, Hungary, Iceland, Italy, Latvia, Lithuania, Luxembourg, Norway, Poland, Portugal, Romania, Serbia, Slovakia , Spain, Sweden, Turkey and United kingdom. Figure 19: Participating countries Iceland Norway United kingdom Germany Belgium Luxembourg Austria Italy Estonia Latvia Lithuania Poland Czech Replublic Slovakia Hungary Romania Turkey Serbia France Spain Portugal Sweden Finland 41 The programs cover a wide array of different rationales, objectives and instruments, but have the development of clusters through the support of cluster management organizations in common. Table 7: Overview of cluster programs COUNTRY NAME OF PROGRAM INTERNET AUSTRIA Cluster Program Lower Austria www. ecoplus. at/en/ecoplus/cluster BELGIUM Competence Centres -Light Structures Public website not yet available Cooperative innovation network integrated project http://www. iwt. be/subsidies/vis-trajecten CZECH REPUBLIC Cooperation Clusters www . czechinvest. org DENMARK Innovation Networks Denmark (Innovationsnetvaerk Denmark) www. innovationsnetvaerk. dk ESTONIA Cluster Development Program www. eas. ee FINLAND Centre of Expertise Program (OSKE, Osaamiskeskusohjelma) www. oske. net Strategic Centres for Science, Technology and Innovation (SHOK, Strategisen huippuosaamisen keskittymät) www. tekes. fi FRANCE Grappe d'entreprises www. territoires. gouv. fr/grappes-denterprises Les Pôles de Compétitivité www. competitivite. gouv. fr GERMANY Competence Networks Germany (Initiative Kompetenznetze Deutschland)( expired) www. kompetenznetze. de Go-Cluster Initiative www. go-cluster. de Clusterpolitische Gesamtstrategie der Freien und Hansestadt Hamburg (Cluster Policy Strategy of the Free and Hanseatic City of Hamburg) www. bwa. hamburg. de Cluster Offensive Bayern (Bavarian Cluster Initiative) www. cluster-bayern. de Zentrales Innovationsprogramm Mittelstand Fördermodul Netzwerkprojekte (ZIM NEMO)( Central Innovation Program SME Funding Module Network Projects) www. zim-bmwi. de/netzwerkprojekte HUNGARY Cluster Development Program of the New Széchenyi Plan www. magzrt. hu 42 ICELAND Strategic Research Program for Centres of Excellence and Research Clusters (The Icelandic Centre for Research (Rannsóknamiðstöð lslands)) www. rannis. is Regional Growth Agreements (Vaxtarsamningur) www. vaxtarsamningur. is ITALY Innovation Clusters Piedmont www. regione. piemonte. it LATVIA Cluster Program www. liaa. lv/lv/es fondi/projektu istenosana/klasteru programma/LITHUANIA Innocluster LT www . ukmin. lt Innocluster LT+www. ukmin. lt LUXEMBOURG Luxembourg Cluster Initiative www. clusters. lu NORWAY Norwegian Centres of Expertise (NCE) www. nce. no Arena Program (Arena-programt) www. arena-programt. no POLAND Polish Cluster Support Schemes: Support for the development of Supra-Regional Clusters and Cluster Creation in Eastern Poland www. parp. gov. pl PORTUGAL Portuguese Operational Competitiveness Program-COMPETE www. pofc. qren. pt ROMANIA Development of business support infrastructures of national and international interest (Competitiveness Poles) http://amposcce. minind. ro Support to the integration of SMES in value chains and clusters (Clusters) http://amposcce. minind. ro SERBIA Serbian Cluster Development Support Program http://klasteri. merr. gov. rs/en/SLOVAKIA Support to innovative industrial cluster organizations Not yet available SPAIN Cluster Development Catalonia www. acc10. cat/en//index. jsp SWEDEN Vinnväxt www. vinnova. se /en/activities/vinnvaxt TURKEY Support for the Improvement of International Competitiveness (URGE) www. smenetworking. gov. tr/UNITED KINGDOM Knowledge Transfer Networks https://connect. innovateuk. org 43 For a detailed overview of each program in terms of rationales, objectives, instruments and results please see the appendix to this report: Description of Cluster Programs. 2. 2 CHARACTERISTICS OF CLUSTER PROGRAMS This chapter provides a tabular overview of the different programs in terms of Overall objectives of the cluster programs Strategic Focus: Creation of new clusters or support of existing clusters? Strategic objectives of cluster programs in terms of numbers of clusters to be supported etc. Strategic approach: top-down or bottom-up Instruments of cluster programs Term of cluster programs and financial aspects 2. 2. 1 OVERALL OBJECTIVES OF THE CLUSTER PROGRAMS The cluster programs that have participated in the benchmarking feature a diverse set of overall objectives. Common to all programs is their rationale of increasing the competitiveness of the national economy through the facilitation of collaboration between companies and research stakeholders. Most of the programs have a national perspective, while a few focus on the promotion of regional systems of innovation. The diverse set of overall objectives also reflects different types of cluster programs each of them serving a specific purpose. Table 8: Overall objectives of the cluster programs COUNTRY NAME OF THE PROGRAM OVERALL OBJECTIVES AUSTRIA Cluster Program Lower Austria To foster innovation through cooperation of companies in the region's fields of economic strength BELGIUM Competence Centres-Light Structures To support innovation for a large group of companies with focus on SMES. These projects should bring companies and knowledge providers together and contribute to the solution of major socioeconomic challenges Cooperative innovation network integrated project To support innovation for a group of at least 20 companies with focus on SMES. These projects should result in innovative solutions that can have a short term implementation CZECH REPUBLIC Cooperation Clusters To support the development of cooperative sectoral alliances (clusters) on regional and national level as a tool for the stimulation of international competiveness and acceleration of economic growth To create a favorable business climate with improved conditions for business development and innovations and to build a sustainable competitive advantage by enhancing the quality of relationships among research institutions, universities and business sectors DENMARK Innovation Networks Denmark To strengthen innovation and research in Danish companies and thereby promote knowledge-based growth in business and industry To strengthen public-private interaction and knowledge sharing and development of research and innovation between knowledge institutions and companies ESTONIA Cluster Development Program To increase the international competitiveness of entrepreneurs through implementing the co-operation projects of a cluster 44 FINLAND OSKE Centres of Expertise Program To create new innovations products, services, companies and jobs based on top-class expertise To support interregional specialization and division of duties in order to create internationally competitive centres of expertise To increase the attraction of regional innovation environments in order to lure international companies, investments and leading experts to the region SHOK Strategic Centres for Science, Technology and Innovation To establish international Strategic Centres of Excellence in STI in key competence areas with regard to future needs of the business sector and society. The centres are expected to renew industry clusters and to create radical innovations FRANCE Grappe d'entreprises To develop business clusters in economic sectors with weak R&d activity Les Pôles de Compétitivité To boost the competitiveness of The french economy and to help develop growth and jobs in key markets To improve the attractiveness of France by providing support for high-tech and creative activities, primarily industrial, in the various regions of France and by that increasing international visibility GERMANY Competence Networks Germany To facilitate intensive networking between industry and science to increase the innovation capacity and international competitiveness of German industry To increase international visibility of the clusters and by this market Germany as an international innovation hub Go-Cluster To continue the mission of the Competence Networks Initiative To increase the competitiveness of German regions To approach the excellence status of European cluster management organizations Cluster Offensive Bayern To support the competitiveness of the Bavarian enterprises in selected fields of competence Cluster Policy Strategy of Hamburg Medium and long term support of economic growth and employment Zentrales Innovationsprogramm Mittelstand Netzwerkprojekte (ZIM NEMO) Development of innovation capacities and competitiveness of SME through the support of innovation networks HUNGARY Cluster Development Program of the New Széchenyi Plan To develop R&d and innovation infrastructure, improve the facilities of higher education institutes To motivate the cooperation of companies through clusters To support joint innovation investments of clusters To accredit innovative clusters ICELAND Regional Growth Agreements (Vaxtarsamningur ) To promote innovation and strengthen the competitiveness of regions through networking and cluster co-operation among firms, R&d institutions, universities, municipalities and the government Strategic Research Program for Centres of Excellence and Research Clusters To reinforce science and technology research, encourage successful collaboration between different parties nationally, as well as internationally and actuate value creation and investment in research and innovation in the economy ITALY Innovation Clusters Piedmont To identify firms'technological needs in order to guide future regional policy actions in support of research and innovation To stimulate R&d and innovation in its firms, valorizing the present assets, developing the internationalization processes and increasing the attraction of productive investments in the region 45 LATVIA Cluster Program To promote cooperation between unrelated companies operating in specified sectors and research, educational and other institutions, thus promoting increase of export volumes and competitiveness of entrepreneurs as well as development of new products LITHUANIA Innocluster LT To stimulate the collaboration of Lithuanian industries To increase international competitiveness of Lithuanian industries Innocluster LT+To stimulate collaboration among Lithuanian industries and to increase international competitiveness of Lithuanian industries To create a favorable environment for innovative clusters and to develop international clusters LUXEMBOURG Luxembourg Cluster Initiative To enhance the visibility of the technological excellence and the innovation potential of cluster members To encourage the uptake of new technologies and the identification of potential business opportunities NORWAY Norwegian Centres of Expertise (NCE) To facilitate growth by generating and reinforcing cooperation-based innovation and internationalization processes within clusters with clear ambitions and substantial national and international growth potential Arena Program To strengthen the capability of regional business environments for innovation and value creation by intensifying alliances between business environments, educational institutions and the public sector POLAND Polish Cluster Support Increased competitiveness of the Polish economy through the support of the establishment and development of clusters at the national and regional level PORTUGAL COMPETE To improve the sustained competitiveness of the Portuguese economy in the context of the global market, intervening on strategic dimensions such as innovation, scientific and technological development, internationalization, entrepreneurship and modernization of public administration ROMANIA Competitiveness Poles To foster the setting up and development of innovative enterprises/activities in enterprises resulting in an increased number of suppliers and clients on national and international markets via an integrated financing package of projects jointly developed by enterprises, R&d organisations, NGOS and public bodies Clusters To develop specific business structures (clusters) around productive activities aiming at increasing the added value of competitive products on national and international markets SERBIA Serbian Cluster Development Support Program To improve international competitiveneness To introduce a new economic development policy in accordance with the EU standards and use the results in order to define key assumptions for fostering competitiveness in Serbia Tto use clusters as a platform for new innovation policy which is under preparation SLOVAKIA Support to innovative industrial cluster organizations To develop individual measures of the Innovation Strategy of the Slovak Republic for 2007 to 2013 To set up support mechanisms for the creation and development of innovation structures, innovation businesses, partnership and cooperation among businesses, universities and research institutes in the fields of research, development and innovation, and the establishment of conditions for 46 2. 2. 2 STRATEGIC FOCUS: ESTABLISHMENT OF NEW CLUSTERS OR SUPPORT OF MATURED CLUSTERS Most programs support both the establishment of new cluster management organizations and the further development of already existing matured cluster management organizations. Only a few programs concentrate either on the establishment of new cluster organizations or the further development of already existing matured cluster organizations. These programs-including the German programs Go-Cluster and Cluster Offensive Bayern, the Norwegian programs Norwegian Centres of Expertise and Arena, the Icelandic program Strategic Research Program for Centres of Excellence and Research Clusters, the Cluster Program Lower Austria, The french Pôles de Compétitivité the Lithuanian initiative Innocluster LT, the Romanian Competitiveness Poles and the Spanish/Catalan program Cluster Development Catalonia have dedicated a strategic orientation towards either setting up cluster management organizations from scratch or towards the promotion of particular industries that are driven already cluster to improve the global competitiveness of industry sectors that are relevant for the national economy. Although such a clear focus on such a single specific objective is certainly an advantage for a cluster program as it supports the concentration of resources on the specific needs of clusters, programs that both establish new cluster organizations and further develop already existing matured cluster organizations do not have to be necessarily ineffective or inefficient. In their case it depends ultimately on how well developed the strategy and the set of instruments are and if they are applied in a way that ensures the addressing of the needs of both target groups. However, due to the different needs of young and matured cluster organizations it is most likely that more efforts by the program owners have to be made in terms of coordination. This may have a negative effect on the efficiency and effectiveness of a cluster program, if it is equipped not with sufficient resources, particular in terms of numbers and experience of staff. The cluster programs of the younger EU member countries mostly support both the establishment of new cluster management organizations and the further development of already existing matured cluster management organizations. Romania has two cluster programs each of which specifically dedicates its effort to either the development of new cluster organizations or the further support of the already existing cluster management organizations. SPAIN Cluster Development Catalonia To improve the competitiveness of Catalan companies by facilitating strategic change and upgrading their business toward more added value activities. To strengthen innovation through cross-sectoral cooperation projects To improve the professionalization of cluster managers and stimulate networking SWEDEN Vinnväxt To promote sustainable growth in regions by developing competitive research and innovation environments within specific growth fields TURKEY Support for the Improvement of International Competitiveness (URGE) To develop a joint action culture To create new exporters To create new export markets To develop consultancy services capacity of Turkish companies UNITED KINGDOM Knowledge Transfer Networks To stimulate technology-enabled innovation through increased knowledge transfer, partnership formation, supply chain support and other relevant support 47 Table 9: Strategic Focus: Creation of new or support of existing cluster management organizations? COUNTRY NAME OF THE PROGRAM ESTABLISHMENT OF NEW CLUSTER ORGANIZATIONS FURTHER DEVELOPMENT OF ALREADY EXISTING MATURED CLUSTER ORGANIZATIONS AUSTRIA Cluster Program Lower Austria X BELGIUM Competence Centres-Light Structures X X Cooperative innovation network integrated project X X CZECH REPUBLIC Cooperation Clusters X X DENMARK Innovation Networks Denmark X X ESTONIA Cluster Development Program X X FINLAND OSKE Centres of Expertise Program X X SHOK Strategic Centres for Science, Technology and Innovation X X FRANCE Grappe d'enterprises X X Les Pôles de Compétitivité X GERMANY Competence Networks Germany X Go-Cluster X Cluster Offensive Bayern X Cluster Policy Strategy of Hamburg X X Zentrales Innovationsprogramm Mittelstand Netzwerkprojekte (ZIM NEMO) X HUNGARY Cluster Development Program of the New Széchenyi Plan X X ICELAND Strategic Research Program for Centres of Excellence and Research Clusters (RANNIS) X Regional Growth Agreements (Vaxtarsamningur) X X 48 ITALY Innovation Clusters Piedmont X LATVIA Cluster Program X X LITHUANIA Innocluster LT X Innocluster LT+X LUXEMBOURG Luxembourg Cluster Initiative X X NORWAY Norwegian Centres of Expertise (NCE) X Arena Program X POLAND Polish Cluster Support X X PORTUGAL COMPETE X ROMANIA Competitiveness Poles X Clusters X X SERBIA Serbian Cluster Development Support Program X X SLOVAKIA Support to innovative industrial cluster organizations SPAIN Cluster Development Catalonia X SWEDEN Vinnväxt X X TURKEY Support for the Improvement of International Competitiveness (URGE) X X UNITED KINGDOM Knowledge Transfer Networks n. a n. a. 49 2. 2. 3 STRATEGIC OBJECTIVES IN TERMS OF NUMBERS OF CLUSTERS Most programs do not have particular strategic objectives in terms of numbers of clusters that are funded, restrictions on thematic areas and coverage of the most important business sectors. If there are such strategic objectives then they are motivated by the interest in a consolidated cluster landscape (e g. in the case of Innovation Networks Denmark it was decided to limit the number of nationwide clusters) or in the concentration of efforts on the most important business sectors of the economy (e g. Luxembourg Cluster Initiative, Innovation Networks Denmark, the Norwegian Centers of Expertise program or the Cluster Policy Strategy of the Free and Hanseatic City of Hamburg. If a decision was taken to limit the number of clusters per thematic area it was motivated by concentrating efforts on specific clusters to increase the efficiency and effectiveness of the program and to increase the critical mass, the impact and the quality of the individual cluster organizations. To varying degrees this motivation has informed also the decisions of program owners who have decided for strategic limitations with regard to the total number of cluster that should be supported. With regard to the limitation of numbers of clusters per thematic area some program owners pointed out that one has to balance between the interest in concentrating resources for the benefit of efficiency and effectiveness and the potential economic benefits that result from competition between clusters in the same thematic area. Table 10: Strategic objectives of cluster programs COUNTRY NAME OF THE PROGRAM When looking at the overall cluster policy of the country and the program in particular is there a strategy/objective with regard to cluster landscape in terms of THE TOTAL NUMBER OF CLUSTERS? LIMITATIONS IN NUMBERS PER THEMATIC AREA? OF COVERING THE MOST IMPORTANT BUSINESS SECTORS OF THE ECONOMY? AUSTRIA Cluster Program Lower Austria Yes Yes Yes BELGIUM Competence Centres-Light Structures No No Yes Cooperative innovation network integrated project No No Yes CZECH REPUBLIC Cooperation Clusters, Czech republic Yes No No DENMARK Innovation Networks Denmark Yes Yes Yes ESTONIA Cluster Development Program No No Yes 50 FINLAND OSKE Centres of Expertise Program Yes Yes Yes SHOK Strategic Centres for Science, Technology and Innovation No Yes Yes FRANCE Grappe d'enterprises No No No Les Pôles de Compétitivité Yes No Yes GERMANY Competence Networks Germany No No No Go-Cluster No No No Cluster Offensive Bayern No Yes No Cluster Policy Strategy of Hamburg No Yes Yes Zentrales Innovationsprogramm Mittelstand Netzwerkprojekte (ZIM NEMO) No No No HUNGARY Cluster Development Program of the New Széchenyi Plan, Hungary No No No ICELAND Regional Growth Agreements (Vaxtarsamningur) No No No Strategic Research Program for Centres of Excellence and Research Clusters No No No ITALY Innovation Clusters Piedmont Yes No Yes LATVIA Cluster Program No No Yes LITHUANIA Innocluster LT No Yes Yes Innocluster LT+No Yes Yes LUXEMBOURG Luxembourg Cluster Initiative No No No NORWAY Norwegian Centres of Expertise (NCE) Yes No Yes Arena Program No No Yes POLAND Polish Cluster Support No No No 51 Table 12: Instruments of cluster programs Table 13: Term of cluster programs and financial aspects PORTUGAL COMPETE, Portugal Yes Yes Yes ROMANIA Competitiveness Poles, Romania No Yes Yes Clusters, Romania Yes No Yes SERBIA Serbian Cluster Development Support Program Yes No Yes SLOVAKIA Support to innovative industrial cluster organizations No No Yes SPAIN Cluster Development, Spain Yes Yes Yes SWEDEN Vinnväxt No No No TURKEY Support for the Improvement of International Competitiveness (URGE) No No No UNITED KINGDOM Knowledge Transfer Networks n. a n. a n. a. With regard to the strategic decision whether there should be a limit of the number of clusters per thematic area the discussion of this pattern with some of the program owners put a very interesting question on the table. According to Porter c lusters promote competition and cooperation. Rivals compete intensively to win and retain customers. Without vigorous competition, a cluster will fail. 10 Porter's argument is focusing on competition between companies within the cluster. Why should not there be also competition between the cluster management organizations when they apply for public support? Competition for limited public funds due to the decision of the program agency to support only one cluster management organization in the thematic area of XYZ puts pressure on cluster management organizations to focus their efforts on areas and activities where they can create the most benefits for their cluster members. A wider spectrum and a higher frequency of services for the cluster members which in turn trigger economic activities e g. of SME (for further details about the link between services and impact) would be one of the results of such a competition. Although there are certainly restrictions for such an approach e g. in larger countries it can make economic sense to have several clusters in a specific thematic area due to the regional concentrations of relevant cluster stakeholders, -limiting public means to a few eventual beneficiaries would definitely encourage cluster management organizations to think about how they can be better than their competitors. Competition is always good to encourage rethinking whether one is taking the right decisions. 2. 2. 4 TOP-DOWN OR BOTTOM-UP Bottom-up is the approach of program implementation favored by the majority of the program owners (see table 11). Although setting the legal frame of the program through funding guidelines, most programs take only general decisions in terms of which sectors or projects should be developed by cluster management organizations. In this regard the implementation of the program is left to the cluster management organization. Program owners agreed on the opinion 10 Michael E. Porter, 1998: Clusters and the New Economics of Competition, in: Harvard Business Review, November 1998, p. 78 52 that cluster management organizations and their affiliated members know best which projects they should focus on to create value or which organizational models they should follow to ensure efficiency and effectiveness of operations. In cases where program owners answered that they follow both a top-down and a bottom-up approach bottom-up implementation was clearly the dominating program rationale. In these cases the top-down element was motivated either because program owners had specific requirements with regard to the structure of the project consortium or they emphasized their interest in interfering in cluster operations e g. to motivate mergers with other clusters or a strategic reorientation. There are only three cluster programs the Cluster Offensive Bayern, the Innovation Clusters Piedmont, and Competence Centers Light Structures of Belgium which follow a dedicated top-down approach. Within Cluster Offensive Bayern both the industry areas in which clusters are supported as well as the organizations that are responsible for the development of the cluster were chosen by the ministry prior to the start of the program. However, in terms of their operations the cluster organizations act without interference from the supervising Ministry of Economic Affairs, Infrastructure, Transport and Technology. The initiative Innovative Clusters Piedmont created 12 innovation clusters from 12 technological domains by benefitting from the ERDF Regional Operational Program. The cluster managing authorities needed to control the 12 domains were installed through a national call for proposals in 2009 Table 11: Strategic approach: top-down or bottom-up COUNTRY NAME OF THE PROGRAM TOP-DOWN BOTTOM-UP AUSTRIA Cluster Program Lower Austria X X BELGIUM Competence Centres-Light Structures X Cooperative innovation network integrated project X CZECH REPUBLIC Cooperation Clusters X X DENMARK Innovation Networks Denmark X X ESTONIA Cluster Development Program X X FINLAND OSKE Centres of Expertise Program X SHOK Strategic Centres for Science, Technology and Innovation X X FRANCE Grappe d 'enterprises X Les Pôles de Compétitivité X X 53 GERMANY Competence Networks Germany n. a n. a. Go-Cluster n. a n. a . Cluster Offensive Bayern X Cluster Policy Strategy of Hamburg X X Zentrales Innovationsprogramm Mittelstand Netzwerkprojekte (ZIM NEMO) X HUNGARY Cluster Development Program of the New Széchenyi Plan X X ICELAND Regional Growth Agreements (Vaxtarsamningur) X Strategic Research Program for Centres of Excellence and Research Clusters X ITALY Innovation Clusters Piedmont X LATVIA Cluster Program X X LITHUANIA Innocluster LT X Innocluster LT+X LUXEMBOURG Luxembourg Cluster Initiative X X NORWAY Norwegian Centres of Expertise (NCE) X Arena Program X POLAND Polish Cluster Support X PORTUGAL COMPETE X X ROMANIA Competitiveness Poles X Clusters, Romania X SERBIA Serbian Cluster Development Support Program X SLOVAKIA Support to innovative industrial cluster organizations X SPAIN Cluster Development X SWEDEN Vinnväxt X X TURKEY Support for the Improvement of International Competitiveness (URGE) X X UNITED KINGDOM Knowledge Transfer Networks X 54 2. 2 . 5 INSTRUMENTATION Grant funding is the main instrument of nearly all cluster programs, while technical assistance for capacity development of cluster management organizations and its members is applied by only half of the programs (see table 12. All program owners agreed that the provision of funding is not sufficient to develop cluster management organizations that are capable to drive the sustainable development of a cluster. However, not all program owners provide technical assistance for capacity development (e g. through trainings and consultancy services) that goes beyond internet platforms and regular meetings between program owners and cluster managers. The Luxembourg Cluster Initiative and the Cluster Program Lower Austria do not provide grant funding at all, but only technical assistance for cluster management organizations through different workshops, working groups, benchmarking, matchmaking but also individual services. In most cases where programs provide technical assistance this was done right from the start of the program being a part of the program strategy. Programs that do not provide technical assistance are either considering this (e g. the Icelandic Strategic Research Program for Centres of Excellence and Research Clusters) or have to rely on other institutions that are affiliated not directly with the program (e g. The french program Grappe d'entreprises. The extent to which technical assistance can be provided depends on the resources available to the programs. While the German project go-cluster can rely on more than 15 people to organize trainings and workshops, other programs have smaller resources available which in turn results into a less frequent and rather small-scale provision of technical assistance. COUNTRY NAME OF THE PROGRAM FUNDING TECHNICAL ASSISTANCE (E g. PROVISION OF TRAINING AND CONSULTANCY SERVICES) AUSTRIA Cluster Program Lower Austria X BELGIUM Competence Centres-Light Structures X X Cooperative innovation network integrated project X X CZECH REPUBLIC Cooperation Clusters X DENMARK Innovation Networks Denmark X X ESTONIA Cluster Development Program X X FINLAND OSKE Centres of Expertise Program X SHOK Strategic Centres for Science Technology and Innovation X FRANCE Grappe d'enterprises X Les Pôles de Compétitivité X Table 12: Instruments of cluster programs 55 GERMANY Competence Networks Germany X Go-Cluster X Cluster Offensive Bayern X X Cluster Policy Strategy of Hamburg X Zentrales Innovationsprogramm Mittelstand Netzwerkprojekte (ZIM NEMO) X HUNGARY Cluster Development Program of the New Széchenyi Plan X X ICELAND Regional Growth Agreements (Vaxtarsamningur) X Strategic Research Program for Centres of Excellence and Research Clusters X ITALY Innovation Clusters Piedmont X X LATVIA Cluster Program X X LITHUANIA Innocluster LT X Innocluster LT +X LUXEMBOURG Luxembourg Cluster Initiative X NORWAY Norwegian Centres of Expertise (NCE) X X Arena Program X X POLAND Polish Cluster Support X X PORTUGAL COMPETE X ROMANIA Competitiveness Poles X X Clusters X X SERBIA Serbian Cluster Development Support Program X X SLOVAKIA Support to innovative industrial cluster organizations X SPAIN Cluster Development X X SWEDEN Vinnväxt X X TURKEY Support for the Improvement of International Competitiveness (URGE) X X UNITED KINGDOM Knowledge Transfer Networks X X Cluster Program Lower Austriacompetence Centres-Light Structures, Belgiumcooperative innovation network integrated project, Belgiumcooperation Clusters , Czech Republicinnovation Networks Denmarkcluster Development Program, Estoniaoske Centres of Expertise Program, Finlandshok Strategic Centres for Science, Technology and Innovation, Finlandgrappe d'entreprises, Franceles Pôles de Compétitivité, Francego-Cluster, Germanycluster Offensive Bayern, Germanyzentrales Innovationsprogramm Mittelstand Netzwerkprojekte (ZIM NEMO), Germanycompetence Networks, Germanycluster Development Program of the New Széchenyi Plan, Hungaryregional Growth Agreements (Vaxtarsamningur), Icelandstrategic Research Program for Centres of Excellence and Research Clusters Icelandinnovation Clusters Piedmont, Italycluster Program, Latviainnocluster LT, Lithuaniainnocluster LT+,Lithuanialuxembourg Cluster Initiativenorwegian Centres of Expertise (NCE), Norwayarena Program, Norwayinnovative Economy Operational Program, Measure 5. 1 Support of the Development of supra-regional clusters, Polandoperational Program Development of Eastern Poland 2007-2013, Priority 1. 4 Promotion and cooperation with Measure 1. 4 Cooperation cluster creation and development, Polandcompete, Portugalcompetitiveness Poles, Romaniaclusters, Romaniaserbian Cluster Development Support Program, Serbiasupport to innovative industrial cluster organizations, Slovakiacluster Development, Catalonia, Spainvinnväxt, Swedensupport for the Improvement of International Competitiveness (URGE), Turkeyknowledge Transfer Networks, UKTERM OF THE PROGRAM2007-20132011-ongoing2010-ongoing2007-20132005-ongoing2007 -20132007-2013since 20062009-ongoing2005-20122012-20142006-ongoing2008-20131997-20122007-20132010-2013 (current period) 2009-20152007-20132007-20132007-20132007-20132010-ongoing2006 -ongoing2002-ongoing2007-20132009-20152007-20132012-20152012-20152007-20132011-20132005-ongoing2002-201520102005-2014budgeteur 20.5 million in totaleur 19 million p. a. EUR 15 million p. a. EUR 90 million in totaleur 8 -10 million p. a. EUR 10.4 millionn. a n. a. EUR 24 millioneur 1. 5 milliardeur 1 million p. a. EUR 6 million p. a. EUR 52.2 millioneur 1 million p. a. EUR 600 millioneur 3. 8 millioneur 6. 8 millioneur 90 million in total Cluster program (2012-2015: EUR 4. 8 million (ERDF) Cluster development program (2009-2011: EUR 0, 75 million (State budget) EUR 9. 5 million in totaleur 57 million in totalthe Luxembourg Cluster Initiative has allocated no budget, but benefits from resources provided by Luxinnovation, the National Agency for Innovation and Research, to enable it to develop its various services. EUR 8. 3 million p. a. EUR 5 million p. a. EUR 104 millioneur 11 millioneur 452 millioneur 60 million in totaleur 20 million in totaleur 1. 6 millionn. a. EUR 5. 1 millioneur 8. 8 million p. a. EUR 5 million p. a. EUR 21 Million p. a. TYPE OF FUNDINGTECHNICAL assistance(=Basic Support for Cluster Management) Subsidies 80%of accepted costssubsidies 80%of accepted costsgrant fundinggrant funding and technical assistancegrant Fundinggrant fundinggrant funding and loansgrant fundinggrant Fundingonly the management agency is funded to provide technical assistance. No funding of individual clusters. Grant funding and technical assistancegrant fundingonly the management agency is funded to provide technical assistance. No funding of individual clusters. Grant fundinggrant fundinggrant fundinggrant fundinggrant Fundinggrant fundinggrant fundingprovision of technical assistance. No funding of individual clusters. Grant funding and technical assistancegrant funding and technical assistancegrant fundinggrant fundingpublic System of Incentivesgrant fundinggrant fundinggrant fundingn. a. Grant fundinggrant funding and technical assistancegrant Fundinggrant fundingdoes THE PROGRAM HAVE A SPECIFIC TECHNOLOGY FOCUS? Nononononoto some extent. The following sectors are prioritized: biotechnology, ICT and material technology, energy, healthcare and environmental protection. A project that is directly or indirectly involved with these sectors will get bonus points in the evaluation process (5%out of 100%.%Noyes Nonono Nonono Nonononononononononononononononon. a. Nonononomaximum FUNDING PERIOD FOR A PROJECTN. a. Four yearssix yearsup to three yearsfour years per period (can be extended after a positive evaluation) Preliminary applications: max. 12 monthsfull applications: max. 48 monthsone yearfive yearsthree yearsfor R&d projects: No, normally 5-year projects. For innovation platforms: 5 years (possible extension) For the cluster management: Until the end of the second phase of the program 2012. A third phase should begin in 2013. n. a. There is no maximum funding period. Four yearsn. a. Three yearsthere is no maximum funding period. Seven yearsup to one year3 yearsup to 30 monthsup to three yearsn. a. Ten yearsup to five yearsthere is no maximum funding period. There is no maximum funding period. n. a. Up to two yearsup to two yearseight monthsn. a. One yearten years3 years3 years with an option of an extension of 2 yearsis THERE A MAXIMUM AMOUNT OF FUNDING AN APPLICANT CAN APPLY FOR? n. a. EUR 2. 5 million, depending on type of projectnomax. EUR 3. 5 million in totalnot formally. But in reality max EUR 1 million p. a. Preliminary applications: max. EUR 26.000 Full applications: no specific limit seteur 140, 000there is no maximum amount. EUR 500, 000non. a. There is no maximum amount. EUR 350, 000n. a. EUR 500, 000there is no maximum amount of funding. EUR 3. 4 millionmax. EUR 20 millionyes. Max. EUR 0. 42 million per one cluster and max. EUR 14 thousands for one collaboration partner. Max. EUR 450. 000max. EUR 11 millionn. a. Max. EUR 770.500 p. a. Max. EUR 300,000 p. a. EUR 5 millionthere is no maximum amount. The maximum funding granted to each of the applicant is related with the number of project approvedmax. EUR 20 millionmax. EUR 1 millioneur 25. 000n. a. Nomax. EUR 1. 1 million p. a. Max: EUR 1. 6 miooverall expenditure needs to fit with programme envelope, individual budgets vary, max. currently EUR 2. 1 Million p. a, . but is not fixedfinancing STRUCTURE OF PROJECTS60%of regional fund of program, 28%ERDF, 12%feescoordination activities 80%of eligible costs are accepted80%of eligible costs are acceptedmax. 60%funding from the programmax. 50%national government co-financing Preliminary applications: max. 75%fundingfull applications: max. 70%fundingentrepreneurs must provide at least 50%of the entire amount of self-financing. Max. 50%from the OSKE programmax. 75%for the establishment of the centers and for research programs carried out by them. Max. 50%for cluster projects by companies. Max. 25%funding from the programfor R&d projects: between 25%and 45%For innovation platforms: from 15%to 50%n. a. Max. 75%funding from the program, share is decreased currently as clusters are expected to increase the share of private co-financingin the initial phase the project can be funded co with up to 90%of eligible costs to develop a network concept, but the share of public funding will be decreased in three steps in the course of the project duration when the network concept is implemented (70%50%30%).%n. a. Max. 50%funding from New Hungary Development plan and private sourcesmax. 50%funding from the programmax. 25%funding from the programmax. 50%funding from the programcluster management activities: up to 90%Cluster services provided for collaboration partners: up to 85%Up to 50%50%,60%,70%funding from the program depending on conditionsn. a. 50%funding from the NCE programmax. 50%funding from the programup to 100 %funding from the programup to 75%funding from the program. n. afrom 25%up to 100%funding from the program depending on conditionsfrom 25%up to 100%funding from the program depending on conditionsup to 50%eligible costsn. a. Max. 75%funding from the programmax. 50%funding from the programneed Analysis including training and joint consultancy for companiestrade Missionbuyers'Mission Employment (two project staff for each collaboration organization for 3 years) Consultancy (optional after completion of joint 3 years) 100%grant funding for core programme, but extra income from public and private sources is encouraged (ranges from 0 to 100%currently). 2. 2. 6 TECHNICAL DETAILS: TERM AND FINANCIAL ASPECTS OF CLUSTER PROGRAMSTABLE 13 (next page) provides an overview for each cluster program about its term, budget, and type of funding, technology focus, funding periods, maximum funding and financing structure of projects. Like in terms of their objectives cluster programs are also quite diverse with regard to their technical details. Programs very much differ in terms of the maximum amount of funding for a project and the duration of funding. Only a few programs support cluster initiatives to 100 per cent, most programs co-fund initiatives to 50 or 75 per cent of the total project budget. Table 13: Term of cluster programs and financial aspects11 11 The Cluster Policy Strategy of the Free and Hanseatic City and the Slovakian cluster program do not feature in this overview as it is no funding program in the narrow sense. It incorporates a wide array of different funding programs from different ministries and governance levels. For an introduction to the Cluster Policy Strategy please see the appendix of this report. 56 57 2. 3 KEY FINDINGS The benchmarking of cluster programs has yielded twelve key findings which are further detailed in this chapter (see Table 14). The key findings provide further insight in the specific characteristics of the different cluster programs and give guidance for the future development of cluster programs. 2. 3. 1 DIFFERENT TYPES OF CLUSTER PROGRAMS SERVE DIFFERENT PURPOSES There are four principle types of cluster programs. Of course, there are overlaps between the different types and a program can feature elements that are also typical of a different type of program. However, the analysis of the objectives and strategies of the different cluster program reveals the following main types of cluster programs: I) Cluster programs that focus on regional economic development: All programs that fit into this category aim at the promotion of regional growth through the development of business-driven clusters that are internationally competitive. Common to all these programs is a focus on specific regions that are limited geographically. There are different ways of setting such a limit: programs may set their geographical limit in terms of administrative borders (e g. in Germany the cluster programs of the federal states) or they define regions from an economic geography perspective, e g. by referring to functional regions 12 that do not have to be congruent with administrative regions and their borders. In this context the rationale of developing regional systems of innovation13 is stressed explicitly by some programs (the Swedish Vinnväxt, Innovation Clusters Piedmont (Italy) and Cluster Development Catalonia (Spain. II) Cluster programs that focus on the development of national industries Characteristic of this type of cluster program is the objective of developing business-driven clusters that represent national industries that are internationally competitive. This type of program supports already developed regional systems of innovation in their efforts to utilize their potential for further national and international growth. The national cluster champions are targeted by this kind of programs. Often rooted in a regional economic development rationale the programs go beyond the regional dimension as they try to overcome regional lock in effects by promoting national and international collaboration with other clusters. III) Cluster programs that focus on the commercial exploitation of the R&d potential of a country's economy The third type of cluster programs is characterized by a focus on the establishment of clusters or centers of excellence that are driven either mainly by research actors or are aimed at bridging gaps between the research and the business sectors. Although these type of program shares the objective of promoting economic growth with KEY FINDINGS 1. Different types of cluster programs serve different purposes. 2. Most cluster programs feature high on the government's agenda. 3. Coordination with other funding programs shows room for improvement. 4. Internationalization of clusters is considered to be important, but the relevance of supporting internationalization of clusters varies between the different programs. 5. Program owners take over a more active role towards developing individual clusters. 6. Cluster Management Excellence has become more and more important in recent years. 7. Monitoring and evaluation is important, but difficult. 8. Cluster policy has become more important with the EU enlargement. 9. The European Regional Development Fund Approach has led to good linkages between innovation support programs and cluster programs. 10. Independent from the kind of support they provide the cluster programs are integrated equally in national policies. 11. The cluster programs'strategic focus of either launching new clusters or supporting matured ones towards excellence is integrated equally in the policy agendas of the EU Member States. 12. The budget provided for cluster programs is independent from the gross domestic product p. c. of the respective country. Table 14: Overview of key findings 12 A functional region is a territorial unit resulting from the organisation of social and economic relations in that its boundaries do not reflect geographical particularities or historical events. It is thus a functional subdivision of territories. The most typical concept used in defining a functional region is that of labour markets (OECD, 2002: Redefining Territories. The Functional Regions, p. 11). 13 There is no commonly accepted definition of a regional system of innovation. Common to all understandings is a set of interacting public and private interests, formal institutions and other organizations that function according to organizational and institutional arrangements and relationships conducive to the generation, use and dissemination of knowledge. This set of actors produces pervasive and systemic effects that encourage companies within the region to develop specific forms for capital that is derived from social relations, norms, values and interaction within the community in order to reinforce regional innovative capability and compettiveness (Doloreux, David/Parto, Saaed, 2004: Regional Innovation Systems: A Critical review, p. 9, United nations University INTECH Institute for New Technologies Discussion Paper Series, Maastricht. 58 the other types of cluster programs, it is different as it puts more emphasis on the development of the research sector in terms of the commercialization of its R&d results. IV) Network programs to support the competitiveness of national industries This type of program is not a cluster program in the narrow sense as it promotes the establishment of industrydriven R&d networks that need not necessarily be rooted in regional environments, but can be organized nationwide. However, a network created through this kind of program may form the nucleus of a cluster. The programs that have participated in the policy bench marking can be structured according to the different categories of programs as follows: Table 15: Different categories of cluster programs TYPE OF CLUSTER PROGRAM NAME AND COUNTRY OF CLUSTER PROGRAM CLUSTER PROGRAMS THAT FOCUS ON REGIONAL ECONOMIC DEVELOPMENT Cluster Offensive Bayern (Germany) Cluster Strategy of Hamburg (Germany) Vinnväxt (Sweden) Arena (Norway) Polish Cluster Support (Poland) Regional Growth Agreements (Vaxtarsamningur)( Iceland) Cluster Program Lower Austria (Austria ) Innovation Clusters Piedmont (Italy) Cluster Development Catalonia (Spain) CLUSTER PROGRAMS THAT FOCUS ON THE DEVELOPMENT OF NATIONAL INDUSTRIES Innovation Networks Denmark OSKE Centre of Expertise Program (Finland) Competence Networks Germany Go Cluster, Germany Norwegian Centres of Expertise (Norway) Polish Cluster Support (Poland) Grappe d'entreprises (France) Les Pôles de Compétitivité (France) Competence Centres Light Structures (Belgium) Cooperative Innovation Network Integrated Project (Belgium) Cooperation-Clusters (Czech republic) Cluster Development Program (Estonia) Innocluster LT and Innocluster LT +Lithuania) COMPETE (Portugal) Competitivness Poles (Romania) Clusters (Romania) Serbian Cluster Development Program (Serbia) Cluster Program, Latvia Support for the Improvement of International Competitiveness (URGE), Turkey Support to innovative industrial cluster organizations, Slovakia Luxembourg Cluster Initiative CLUSTER PROGRAMS THAT FOCUS ON THE COMMERCIAL EXPLOITATION OF THE R&d POTENTIAL OF A COUNTRY'S ECONOMY Strategic Research Program for Centres of Excellence and Research Clusters (Iceland) Strategic Centres of Excellence (SHOK)( Finland) Cluster Development Program of the New Széchenyi Plan (Hungary) NETWORK PROGRAMS TO SUPPORT THE COMPETITIVENESS OF NATIONAL INDUSTRIES Zentrales Innovationsprogramm Mittelstand-Netzwerkprojekte (ZIM-NEMO)( Germany) 59 Norway and Germany, but also France are good examples of how different types of cluster programs with their corresponding purposes are linked with each other: According to the program strategies the Norwegian Arena program can act as a qualifying arena for the Norwegian Centres of Expertise program for regional clusters with a development potential which have not yet developed sophisticated cooperative and strategy fundamentals. Many clusters that are member of Go-Cluster (Germany) are supported by different regional cluster programs of the Federal States in Germany. Furthermore, many members of Go-Cluster are funded also by other programs of the Federal government such as the Zentrales Innovationsprogramm Mittelstand (ZIM) of the Federal Ministry of Economics and Technology (BMWI. 14 Some clusters of Go-Cluster are also part of the Spitzencluster-Wettbewerb of the Federal Ministry of Education and Research; a program which supports leading research-driven clusters in Germany. 15 This program setting, which consists of a wide array of programs both from the federal and the regional level, complements technical assistance for cluster development through Go-Cluster with grant funding from other programs. Clusters that are members of Innovation Networks Denmark can also participate in other innovation support programs. There are several projects of cluster members which are financed by the Danish innovation consortium scheme, which is a scheme similar to the German Zentrales Innovationsprogramm Mittelstand (ZIM) Netzwerkprojekte (ZIM-NEMO) program. Some clusters of the Innovation Networks Denmark initiative also participate in the three large Danish Strategic Platforms for Research and Innovation (the Danish SPIR Clusters. The french program Grappe d'entreprises was set up to bridge the gap between the program Pôle de Compétitivité that supports R&d-driven cluster development and the business sector through the establishment of business-driven cluster of Grappe d'entreprises with links to cluster of Pôle de Compétitivité. Such linkages can create synergy effects through complementary objectives and funding lines, but in terms of overall efficiency and effectiveness as well as less bureaucracy special coordination efforts on behalf of the program agencies may be required. 2. 3. 2 MOST CLUSTER PROGRAMS FEATURE HIGH ON THE GOVERNMENT'S AGENDA Asked how important their program features in the overall national or regional policy context16 24 out of 32 experts assessed its relevance as important or very important in relation to the overall economic/industrial development strategy (see Figure 20). Programs were rated high in terms of importance if they were embedded either in an overall national strategy or do matter in terms of their budget. being embedded in an overall national or regional strategy seems to be a key factor for the relevance of a cluster program as program officials who have ranked their programs as either medium relevant or not relevant explained their assessment with the absence of such a strategy. Some program officials explained the low or medium relevance by referring to small program budgets. Against this backdrop the importance of a cluster program has to be understood in the context of this analysis in terms of being embedded in an overall policy strategy and availability of a significant budget. Low relevance should not be understood as cluster programs do not matter from the government's point of view. All cluster programs that were benchmarked in this project matter from the government's point of view and are considered as being important from an economic policy point of view. 14 The Zentrale Innovationsprogramm Mittelstand (ZIM)( Central Innovation Program SME) of the Federal Ministry of Economics and Technology supports innovation activities through three subprograms: 1) Support of collaborative projects (ZIM-KOOP), 2) Support of individual projects of SME (ZIM-Solo) and 3) Support of network projects (ZIM-NEMO. For further details on the ZIM program please see www. zim-bmwi. de. For further information about the third subprogram, Support of network projects (ZIMNEMO), please see also the appendix to this report. 15 Four out of the ten current Spitzencluster are member of the Go-Cluster initiative. For more information about the Spitzencluster-Wettbewerb (Leading-edge cluster competition) please see www. bmbf. de/en/10726. php. 16 The majority of the programs that were benchmarked in this project are programs that were initiated or are implemented by national agencies or government departments. Exemptions from this rule include the German federal state programs Cluster Offensive Bayern and Clusterstrategie Hamburg. 60 2. 3. 3 COORDINATION WITH OTHER FUNDING PROGRAMS SHOWS ROOM FOR IMPROVEMENT High relevance of the cluster program does not necessarily translate into a good coordination with other funding programs that could provide additional support for the development of clusters through funding of business, R&d and infrastructure (including educational infrastructure) projects. Cluster programs seem to be much better coordinated with other R&d programs (20 programs out of 33 are rated as strongly coordinated with other R&d programs) than with business and infrastructure programs (11 programs out of 33 are rated as strongly coordinated with business and infrastructure programs)( see Figure 21-24). Although the specific national policy context and the specific objectives of the cluster programs have to be kept in mind when analyzing the coordination with other programs in more detail, further attention should be paid in future analysis to this finding, as a well-coordinated framework of funding programs can be expected to increase the efficiency and effectiveness of public support measures. With a cluster support program at the core, additional individual R&d/innovation, business development and infrastructure programs can address the specific needs of the different actors within a cluster. In this regard strategies, instruments time frames and target groups of programs should be coordinated and efforts should be made to limit administrative burdens for applicants as much as possible. Figure 20: How important is the cluster program in relation to the overall national or regional economic/industrial development strategy? 4 3, 53 2, 52 1, 51 0, 50ind NCE ARENAKOM COB ZIM NEMO HHOSKE SHOK POL VAX RANNIS Grappe Lower Austria KTN URGE, TR LAT EST CZ HU Piedmont Lux LT LT+Compete Clusters, RO CP, RO Serbia Belg VIS Belg LS Spain Cat Pdc 0=little important 4=very important 61 Figure 21: Coordination of cluster programs with other business development programs Coordination with business development programs Relevance in relation to the overall economic/industrial development strategy 01234 IND NCE ARENAKOM COB ZIM NEMO OSKE SHOK POL VAX RANNIS Grappe Lower Austria KTN URGE, TR LAT CZ HU Lux Piedmont LT LT+Compete Clusters, RO CP, RO Serbia Belg LSBELG VISSPAIN Cat Pdc EST COORDINATION: 0=weak>4=strong RELEVANCE: 0=not important at all>4=very important 62 Figure 22: Coordination of cluster programs with infrastructure programs (e g. support of universities and other educational institutions) 01234 IND NCE ARENA KOM COB ZIM NEMO OSKE SHOK POL VAX RANNIS FR Lower Austria KTN EST URGE, TR LAT CZ HU Lux Piedmont LT LT+Compete Clusters, RO CP, RO Serbia Belg LS Belg VIS Spain Catfrance Pdc Coordination with infrastructure programs Relevance in relation to the overall economic/industrial development strategy COORDINATION: 0=weak>4=strong RELEVANCE: 0=not important at all>4=very important 63 Figure 23: Coordination of cluster programs with other R&d/innovation support programs 01234 IND NCE ARENA KOM COB ZIM NEMO OSKE SHOK POL VAX RANNIS Grappe Lower Austria KTN EST URGE, TR LAT CZ HU Lux Piedmont LT LT+Compete Clusters, RO CP, RO Serbia Belg LSBELG VISSPAIN Cat Pdc Coordination with R&d /innovation programs Relevance in relation to the overall economic/industrial development strategy COORDINATION: 0=weak>4=strong RELEVANCE: 0=not important at all>4=very important 64 2. 3. 4 INTERNATIONALIZATION OF CLUSTERS IS CONSIDERED TO BE IMPORTANT, BUT THE RELEVANCE OF SUPPORTING INTERNATIONALIZATION OF CLUSTERS VARIES BETWEEN THE DIFFERENT PROGRAMS All program owners consider internationalization of clusters as an important objective of cluster programs. International competitiveness of clusters is considered to be a key element of maintaining and further developing the competitiveness of the country's economy in the global context. From the survey it can concluded that all program owners agree on the importance of internationalized clusters which has to be facilitated through support instruments that meet the needs of the clusters. Consequently this is reflected by program guidelines and evaluation criteria for project proposals. However, the programs differ in terms of actual relevance of internationalization support and instruments that are used to facilitate internationalization of clusters. Table 16 provides an overview of the self-assessment given by program officials (23 answers) in terms of the relevance attached to the support of international activities. They were asked to indicate how prominent the support of internationalization features in their program: Table 16: Relevance of the support of international activities of clusters RELEVANCE NAME OF THE PROGRAM HIGH Norwegian Centres of Expertise Polish Cluster Support Grappe d'entreprises (France) Cluster Offensive Bayern (Bavarian Cluster Initiative) Competence Networks Germany Go-Cluster Germany Cluster Program, Latvia Cluster Development Program, Estonia Innovation Networks Denmark Cluster Development Program of the New Széchenyi Plan (Hungary) Cooperation-Clusters (Czech republic) Innovation Clusters Piedmont (Italy) Support for the Improvement of International Competitiveness (URGE)( Turkey ) Luxembourg Cluster Initiative MEDIUM Vinnväxt (Sweden) ARENA (Norway) OSKE Centre of Expertise Program Finland Strategic Research Program for Centres of Excellence and Research Clusters (Iceland) Regional Growth Agreements (Vaxtarsamningur)( Iceland) Competitiveness Poles (Romania) Support to integration of enterprises in suppliers'chains or networks (Romania) Support to innovative industrial cluster organizations Slovakia) LOW ZIM NEMO Zentrales Innovationsprogramm Mittelstand-Netzwerkprojekt NOT AT ALL 65 Table 17: Instruments that are used to support international activities of clusters INSTRUMENTS TO SUPPORT INTERNATIONALIZATION ACTIVITIES OF CLUSTERS Name of the program Training Funding Matchmaking and study trips Support through export promotion agencies or other offices abroad Cooperation with other funding initiatives CZECH REPUBLIC Cooperation-Clusters X X X X DENMARK Innovation Networks Denmark X X X X ESTONIA Cluster Development Program X X X FINLAND OSKE Centre of Expertise Program Finland X GERMANY Competence Networks Germany X X X Cluster Offensive Bayern (Bavarian Cluster Initiative) X X X X ZIM NEMO Zentrales Innovationsprogramm Mittelstand-Netzwerkprojekte X HUNGARY Cluster Development Program of the New Széchenyi Plan X X X X ICELAND Regional Growth Agreements (Vaxtarsamningur)( Iceland) X X Table 17 gives an overview of the instruments that are used by the programs to support international activities of clusters: 66 ITALY Innovation Clusters Piedmont X X X LATVIA Cluster Program X X X LUXEMBOURG Luxembourg Cluster Initiative X X X NORWAY Norwegian Centres of Expertise X X X ARENA (Norway) X POLAND Polish Cluster Support X X X ROMANIA Competitiveness Poles, Romania X X X Clusters, Romania X X X SLOVAKIA Support to innovative industrial cluster organizations X X SWEDEN Vinnväxt (Sweden) X X X X X TURKEY Support for the Improvement of International Competitiveness (URGE) X X X X X Programs that attach high relevance to internationalization activities of clusters typically follow a dedicated strategic international outlook in terms of their program objectives and instruments; although, due to e g. the short period the program has been existing for now not in all cases this has translated in a huge number of corresponding activities yet. Two examples of program that have attached a high priority on internationalization activities from the very beginning are the Norwegian Centers of Expertise and the Luxembourg Cluster Initiative: Based on an international strategy the Norwegian Centers of Expertise program, for example, is directed towards regional clusters with an international growth potential. The focus of support is on adding value to the innovation and internationalization in the business sector. NCE clusters receive regular support with internationalization activities through services provided by the program management agency Innovation Norway. Likewise the Luxembourg Cluster Initiative has dedicated a internationalization strategy which includes: o International Networking among the cluster members o Fostering the collaboration with comparable and/or complementary clusters, both regionally and internationally o Participating in international technology fairs and brokerage events o Identifying new business and market opportunities worldwide o Facilitating participation in EU projects. These two examples reflect a commonality of all programs that attach high relevance to internationalization activities of clusters: the existence of a set of instruments to support international activities. Specific workshops and events are typical, but in some cases programs also make budgets for travel expenses of the cluster management, event organization and consultancy services available. N. B.:Not all cluster programs have provided information on the instruments in detail. 67 Innovation Networks Denmark, the Hungarian Cluster Development Program, the Cluster Offensive Bayern and the Polish cluster support are examples of programs that feature such instruments to different extents. In addition to program specific instruments such as workshops the Norwegian Centres of Expertise program and the Cluster Offensive Bayern network their clusters with the foreign trade agencies of their country respectively federal state to support the establishment and development of relationships to international counterparts of the clusters. This approach is followed also by programs that attach medium relevance to internationalization activities such as the Norwegian ARENA program the Competitiveness Poles of Romania, and the Finnish OSKE program. The reasons why program officials attach medium relevance to internationalization activities are diverse. In some cases the medium relevance is due to the young age of the program (e g. Strategic Research Program for Centres of Excellence and Research Clusters and OSKE), but program officials indicated that relevance will increase in the future. In other cases such as ARENA, Vinnväxt the overall objective of the programs is to set up firstly regional clusters respectively to create regional systems of innovation which later then should develop into clusters that are internationally competitive. Also in those cases program officials indicated that internationalization activities are already becoming more important. However the currently available set of support instruments appears to be smaller and less frequently implemented in contrast to programs that attach high relevance to international activities of clusters. A similar finding can be stated for the program Innovation Networks Denmark. In the past internationalization activities of clusters have not played an important role in calls for proposals, but in 2010 it was decided by the government that the program should support internationalization through international collaboration projects, increased participation in EU's Seventh Framework Program (FP 7) and other international programs and collaboration with clusters and networks from other countries. This included also the allocation of money for internationalization activities of Innovation Networks clusters. With the establishment of NETMATCH in Denmark in the same year there is now also a dedicated agency in place that supports internationalization activities of program beneficiaries. NETMATCH is also partner in the European Enterprise Network. The importance of tailor-made internationalization support for clusters through cluster programs is corroborated by the findings of a survey of international activities of clusters. 17 The survey analyzed clusters from different European countries including clusters that are supported in the programs Pôles de Compétitivité, Norwegian Centres of Expertise, ARENA and Vinnväxt. The study confirmed that international activities of cluster managements translate in an increased international visibility of the clusters. The study also highlights that good cluster management can overcome the barriers of internationalization (e g. lack of financing or capacity; particularly, if an internationalization strategy exists for the cluster and is implemented by the cluster management. By being guided through an internationalization strategy cluster managers are able to implement successful activities for the cluster members. In turn this increases the willingness of companies and other stakeholders such as research institutions or government bodies to engage financially in international cluster activities. The development of international competences of cluster managements and members of the cluster is therefore an important task that should be at the heart of cluster programs if they want to support the internationalization of their clusters. There is a wide set of instruments available but it is not the financial assistance for projects that matters in the first place, but rather the availability of technical assistance, e g. in the form of workshops and trainings to support strategy development and competencies such as language or cross-cultural competencies. The successful internationalization of clusters does not depend only on a professional and capable cluster management and on support from cluster programs. The legal framework of a country, both the home country of the cluster and its target country, may also create barriers for internationalization. This applies in particular to areas such as tax legislation labor law, immigration law and company law. Administrative burdens, e g. in the case of the registration of a company, are also often barriers that are mentioned frequently by cluster managers. 17 Meier zu Köcker, Gerd/Müller, Lysann/Zombori, Zita, 2011: European Clusters Go International. Networks and Clusters as Instruments for the Initiation of International Business Cooperation 68 2. 3. 5 PROGRAM OWNERS TAKE OVER A MORE ACTIVE ROLE TOWARDS DEVELOPING INDIVIDUAL CLUSTERS The majority of the interviewed experts confirmed that individual professional support of cluster managements through tailor-made services has gained more importance in recent years. Many program owners were-as a key element of their strategic approach to cluster development-from the very beginning of the program pro-active in terms of dialogue with clusters, specific criteria for support, provision of best practice and expert consulting. This includes in particular the Swedish program Vinnväxt the Norwegian programs Norwegian Centres of Expertise and ARENA and the Polish cluster support scheme. In the case of the other programs program owners were also aware of the need of pro-active involvement, but did not put that much emphasize on it because it did not feature that high in terms of the strategy of the program. However, these program owners have become more actively involved in individual cluster development in the recent past respectively they plan to do so. There was no program owner who argued that there is no need for an active role in the development of individual clusters but some argued that more attention should be paid to this in the context of future program and policy strategies. The different programs have different sets of instruments available to influence the development of individual clusters: Regular meetings with clusters (both joint meetings with all clusters and bilateral meetings between clusters and program owners) and workshops are instruments that are used frequently by most program owners (e g. Vinnväxt, Norwegian Centres of Expertise and ARENA, Cluster Offensive Bayern and Innovation Networks Denmark. In addition to these instruments the Norwegian programs NCE and ARENA also offer specific toolboxes for cluster managers in order to support cluster development. In the context of the Innovation Network Denmark program NETMATCH is currently developing similar toolboxes for cluster managers. Prior to the NGPEXCELLENCE cluster benchmarking project benchmarking of cluster to facilitate cluster development has been used by only two programs: the Polish cluster support scheme and the terminated initiative Competence Networks Germany. Competence Networks Germany also offered a wide array of different working groups and seminars for cluster managers. They cover topics such as sustainable financing, innovation management, quality management, IPR, internationalization, communication and services. In this regard the program Competence Networks Germany was compared different to other cluster programs as it did not provide funding to cluster managements, but only tailor-made services to facilitate individual cluster development. With the establishment of NETMATCH in 2010 the program Innovation Networks Denmark has set up a similar support organization. In France the association France Clusters offers similar services to clusters that are supported through the Grappe d'entreprises program but the services are also available to other clusters. Several program owners highlighted that cluster managers have to trust the program owners; otherwise the chances of having an influence on the development of individual clusters are limited. Cluster managers have to consider program owners as partners for development and vice versa. The transparent offer of services and the transparent implementation of instruments are important for trust building. The rationale behind a more active, dialogue and guiding role of program owners in individual cluster development can be summarized as follows: cluster support is no longer about the mere establishment of clusters in the first place, but about developing excellent clusters that are internationally competitive and that have an impact on the national economy. In this regard an active involvement in the development of individual clusters has two principal dimensions: First, program owners are interested in improving the management performance of the cluster organization and; Second, program owners want to guide clusters in terms of their thematic and strategic focusing. With regard to the latter cross-fertilization of clusters (bringing together clusters with complementary expertise) is also an important rationale for an increased pro-active role of program owners. However, yet the actual cross-fertilization efforts in the different programs are not based on detailed strategic parameters informed for example through a technological outlook of the program owners. Workshops, networking events and cluster manager forums, regular meetings of clusters with the program agency and in some cases dedicated calls for proposals and small funds (e g. The french program Grappe d'entreprises and the Finnish OSKE Centers of Expertise Program) are typical instruments to facilitate inter-cluster cooperation for the benefit of cross-fertilization. 69 2. 3. 6 CLUSTER MANAGEMENT EXCELLENCE HAS BECOME MORE AND MORE IMPORTANT IN RECENT YEARS Closely related to the interest of program owners in playing a more active role towards developing individual clusters is increased the relevance that is attached by program owners towards cluster management excellence. As already indicated in the previous key finding: Cluster support is not about the mere establishment of clusters in the first place, but about developing excellent clusters that are internationally competitive and that have an impact on the national economy. Therefore, the majority of program owners argued to focus programs on cluster excellence instead of numbers of clusters. Only clusters with a high potential of development and high performance should be supported. From the point of view of some program officials this requires at the same time continuous support of the cluster organization to assist them with quality assurance. In this context program owners play an important role in the development of cluster management excellence as the survey revealed: Targeted, need-focused services such as related workshops and seminars, benchmarking as well as a continuous strategic dialogue with cluster organizations to question and further develop strategies and activities are important elements in this regard as most of the interviewed program owners indicated. Labeling of excellent cluster organizations was referred also to by several program officials as an instrument to promote cluster management excellence. Several programs are involved in developing such cluster excellence labels and therefore participated in the European Cluster Excellence Initiative to develop a meaningful set of quality indicators and peer-assessment procedures for cluster management. The intention is to develop training materials and to set up an approach for quality labeling of cluster management. 18 Financial support of cluster organizations should depend on their performance was mentioned often by program officials. Only excellent clusters should receive financial support and program owners should not hesitate to stop funding if cluster organizations do not live up to the agreed objectives. The Norwegian, Hungarian, Swedish and Danish programs are good examples how this idea can be put into practice: although they commit grant funding for a certain period of years, funding is provided by a series of installments (stage-funding). Prior to installments beneficiaries have to prove through an evaluation that they perform according to the grant agreement (in the Hungarian program a specific accreditation systems decides on further funding. If they do not perform, the program owner is entitled to stop funding. Thus, the support of cluster management excellence through program owners has two dimensions: on the one hand they should support cluster organizations through the provision of services targeting cluster management excellence and on the other hand they should also execute pressure on cluster managements to motivate them to strive for cluster management excellence. 2. 3. 7 MONITORING AND EVALUATION IS IMPORTANT, BUT DIFFICULT Almost all programs have evaluation instruments and processes in place, both with regard to the evaluation of the program itself and the supported cluster initiatives. All program experts consider evaluations as useful tools to improve the governance of a program and its effectiveness and efficiency. In this context many experts consider formative evaluations as more useful than ex-post evaluations as they provide relevant information in the course of the program implementation which can be used for real-time improvements of the program. In contrast to this, ex-post evaluations are considered to be of more use while planning a new program or analyzing long-term effects of the support. The Innovation Network Denmark program and its program authority, the Danish Agency for Science, Technology and Innovation, is a very good example for using annual performance statistics and econometric impact studies for monitoring and evaluation purposes. Since 2006 the annual performance of the clusters that are supported through the program is measured through quantitative data, e g. indicators on number of new services or products number of participating companies and research institutions, number 18 For further information on the European Cluster Excellence Initiative please see www. cluster-excellence. eu; for specific information about the cluster management quality label please see www. cluster-excellence. eu/quality. html. 70 of collaboration projects, usage of services (e g. matchmaking) offered by the cluster managements, etc. 19 The results of the annual performance assessment is used not only to monitor the program performance from a general angle, but also to identify specific weaknesses of the clusters which are addressed then by targeted measures developed by the program management (e g. training courses or matchmaking activities). In 2011 the Danish Agency for Science, Technology and Innovation published an impact analysis of the program for the first time. This econometric analysis, which covered 1, 225 companies participating in the supported clusters, proved-just to give one example of the results-that the participation of a company in a cluster increases its capacity to innovate significantly within a short period of time (compared to companies that do not participate in a cluster). 20 While in principle the measurement of outputs and results of a cluster program is not difficult, it is challenging to measure the economic impact of a program. This applies both to the impact of the supported cluster initiatives-e g. in terms of the cluster's total R&d budget generated by all its members or the number of innovations that are an effect of the cluster initiatives'activities -and the overall impact of the cluster support on the national economy. The challenge of measuring impacts lies in the complexity of the huge array of variables that decide on the actual effect of funding. Economic impacts can be measured e g. through econometric impact analysis but one has to be clear about the limitations: First, economic impacts of support programs can be measured only after a certain period of time. Normally the economic impact of activities can be measured after 5-7 years depending on the number of participating enterprises in the cluster with concrete registered activities. In other cases the economic impact using econometric impact analysis must wait longer and very probably sometimes until the program is terminated already. The results can in the latter case be used to verify the economic impact of the program, but not be used to redefine the strategy of the program. Second, due to the complexity of impact measurement a lot of different information has to be collected from the beneficiaries of the program. As surveys and interviews always require involvement of the beneficiaries in terms of resources one has to balance the cognitive interest in economic impacts of a program with the interest in reducing the burden for the beneficiaries that results from such comprehensive analysis. In this context, Denmark may serve as an international best-practice example for measuring economic impacts of public support by utilizing central civil and business registration systems to collect relevant information for such analysis. Although this reduces the burden for companies and organization involved in the analysis, it cannot fully replace specific surveys and other types of evaluations as those databases do not contain all data in detail that is usually required for the analysis or evaluation of a certain program. Another best practice example is the policy monitoring system of Lower Austria. The Lower Austrian regional Government department for Economy, Tourism and Technology has developed and implemented a system of different monitoring and evaluation tools for Lower Austria's innovation policy to receive an understanding of the results and the impact of state aids and further innovation support services with the aim to improve single innovation policy instruments as well as to coordinate the overall regional innovation system with all involved actors/intermediaries. It combines regional economic reports and analyses by economic research institutes, large scale surveys among companies in the region, evaluation of company projects and last but not least the monitoring of the regional programs implemented by intermediaries based on the Balanced Scorecard method. Many program officials experienced in the course of the program implementation that there is always room for improvement when it comes to monitoring and evaluation of a program and of cluster initiatives. Although most of them were satisfied with their approach and instruments they indicated that they are in a continuous search for a system that balances the interest in obtaining program governancerelated information with the interest in keeping the burdens for beneficiaries that derive from the participation in monitoring and evaluation as low as possible. However, none of them had a textbook-solution for the best system available. Benchmarking of cluster programs and cluster initiatives was indicated frequently by program officials as a very good tool to support the further development of funding schemes and activities of beneficiaries. Benchmarking provides standards for performance assessment and thus 19 Danish Agency for Science, Technology and Innovation, 2011: Innovation Network Denmark. Performance Accounts 2011, Innovation: Analyse og evaluierung 08/2011 20 Danish Agency for Science, Technology and Innovation, 2011: The Impacts of Cluster Policy in Denmark. An Impact Study on Behavior and Economic Effects of Innovation Network Denmark 71 helps to identify potential for improvements and best practice through the comparison with peers. Benchmarking is an ideal supplement to a formative evaluation and is less resource intensive than a fully fledged evaluation exercise. The benchmarking approach of the NGPEXCELLENCE project has over the years developed into a widely respected benchmarking standard in Europe. Benchmarking of cluster programs is a very important tool to facilitate cross-border learning in the European union. Increased collaboration between policy makers on this topic can contribute to the further development of innovation and cluster policies in the European union and thus contribute to the maintenance and further development of the global competitive position of the European union and its Member States. 2. 3. 8 CLUSTER POLICY HAS BECOME MORE IMPORTANT WITH THE EU ENLARGEMENT When looking at the cluster programs of those countries that have entered the European union after 2003, it can be stated that for these younger EU member countries the importance of the cluster programs has increased within the national and/or regional economic/industrial development strategy in comparison to those countries that joined the EU before 2003. This can be interpreted as a very positive development, as spill over effects from the older EU member states have inflamed the new countries'ideas on how to integrate cluster policy in the overall economic strategy. Especially newly started cluster programs such as the Hungarian cluster program which has been integrated from the beginning in the new overall long-term economic development strategy, the New Széchenyi Plan, can become good practice examples. Also, Lithuania incorporated cluster policy into the regular innovation policy, trying to create a favorable environment for innovative clusters and to develop international clusters. This holistic approach can encourage the members of the clusters and the cluster management organizations as they receive more appreciation for their work. The figure below compares the importance of cluster programs in relation to the overall national and regional economic/industrial development strategy among those countries that have entered the EU before and after 2003. Figure 24: Importance of cluster programs in relation to the overall national or regional economic/industrial development strategy 0 0, 51 1, 52 2, 53 3, 54 How important is the cluster program in relation to the overall national and regional economic/industrial development strategy? 0=not important, 4=very important EU entry after 2003 EU entry before 2003 72 2. 3. 9 THE EUROPEAN REGIONAL DEVELOPMENT FUND APPROACH HAS LED TO GOOD LINKAGES BETWEEN INNOVATION SUPPORT PROGRAMS AND CLUSTER PROGRAMS When looking at those cluster programs that have been launched in 2007 or later, it can be said that the coordination with business development programs and with other infrastructure programs of the country is higher as for those cluster programs that have been launched before 2007 (figure 25). This can be reasoned by the fact that within the European Regional Development Fund the support of business networks and clusters is one of the objectives in order to promote regional competitiveness and employment. 21 Many of the cluster programs that have started after 2007 are funded through ERDF and thus follow a highly designated approach with regards to the support of cluster development. Another interesting result can be found when comparing EU countries below and above EU GDP p. c. average. Taking a look at the GDP p. c. of the countries whose cluster programs have been benchmarked it appears that those countries that are below the EU GDP p. c. average evaluate their cluster programs as better coordinated with other business development programs and infrastructure programs. This does not mean that these cluster programs are better, but they are linked more closely to other innovation support measures. Furthermore, these cluster programs rank higher within the overall economic agenda of the respective countries than the cluster programs of those countries above the EU GDP p. c. average. Figure 25: Comparison of older and younger cluster programs with regard to the specific economic environment, and R&d strategy as well as other funding programs 0 0, 51 1, 52 2, 53 3, 54 coordination with infrastructure programs coordination with business development programs relevance to overall economic development relevance to overall R&d strategy 0=low, 4=high program started in 2006 or earlier program started in 2007 or later 21 Official Journal of the European union (2006). Regulation (EC) No 1080/2006 of the European parliament and of the Council of July 2006 on the European Regional Development Fund and repealing Regulation (EC) No 1783/1999. Article 5). 73 2. 3. 10 INDEPENDENT FROM THE KIND OF SUPPORT THEY PROVIDE THE CLUSTER PROGRAMS ARE INTEGRATED EQUALLY IN NATIONAL POLICIES Different cluster programs provide different kind of support. Usually, this support is given either through the provision of funding or the supply of technical assistance. Many cluster programs provide both of these support services. Comparing the programs that exclusively provide fundingwith those that supply technical assistance and funding, it can be stated that in terms of coordination with other funding programs it makes no difference, whether a cluster program focusses on funding only or provides funding and technical assistance to its clusters. Both types of support allow the cluster programs to be coordinated equally strong with other R&d programs business development programs and infrastructure programs. Figure 26: Embedment of cluster programs in the overall economic development and R&d strategy with regard to the GDP of the respective country 0 0, 51 1, 52 2, 53 3 , 54 coordination with infrastructure programs coordination with business development programs relevance to overall economic development relevance to overall R&d strategy 0=low, 4=high GDP p. c. below EU27 average GDP p. c. above EU27 average 74 2. 3. 11 THE CLUSTER PROGRAMS'STRATEGIC FOCUS OF EITHER LAUNCHING NEW CLUSTERS OR SUPPORTING MATURED ONES TOWARDS EXCELLENCE IS INTEGRATED EQUALLY IN THE POLICY AGENDAS OF THE EU MEMBER STATES Cluster programs can focus on elevating new clusters or on strengthening matured ones towards excellence or cluster programs can provide both services. When comparing the cluster programs that focus exclusively on the establishment of new clusters with those that focus exclusively on the further development of matured clusters towards excellence clusters, it can be asserted that both approaches rank high on the respective countries'innovation policy agendas. This is confirmed by the figure below showing only very slight differences between the two groups. Figure 27: Comparison of cluster programs that provide funding only and cluster programs that provide funding and technical assistance 0 0, 51 1, 52 2, 53 3, 54 coordination with R&d programs coordination with infrastructure programs coordination with business development programs relevance to overall economic development relevance to overall R&d strategy 0=low, 4=high establishment of new cluster organizations further development of already existing matured cluster organizations 75 2. 3. 12 THE BUDGET PROVIDED FOR CLUSTER PROGRAMS IS INDEPENDENT FROM THE GROSS DOMESTIC PRODUCT P. C. OF THE RESPECTIVE COUNTRY The cluster programs analyzed in this study dispose of at least 1 Million euros per year (except for Serbia). Most of them have a budget of between 5 and 12 Million euros per year. Three programs come close or are above 100 Million euros in their yearly budget. The budget that is spent for the cluster programs is independent from the gross domestic product p. c. of the respective country. The figure below shows that the countries below the EU GDP p. c. average (marked yellow) and the countries above the EU GDP p. c. average (marked green) are equally spread with regard to their yearly budget of the cluster programs. However, comparing the budgets of the different programs is rather difficult as the objectives of the programs are very different from each other e g. some of the cluster programs provide extensive budget for R&d investment, others supply budget for the development of cluster management organizations only. Figure 28: Comparison of cluster programs that focus exclusively on the establishment of new cluster organization and cluster programs that focus exclusively on the further development of already existing cluster organizations 0 0, 51 1, 52 2, 53 3, 54 coordination with R&d programs coordination with infrastructure programs coordination with business development programs relevance to overall economic development relevance to overall R&d strategy 0=low, 4=high establishment of new cluster organizations further development of already existing matured cluster organizations 76 2. 4 LESSONS LEARNED AND THE IMPACT ON PROGRAM DEVELOPMENT Program officials were asked to report the three key lessons that they have learned since the inception of their program. Although lessons learned are always program-specific as the national policy and economic context and the age of the program matter, one can nonetheless identify some general key lessons learned that apply to all programs. Those key lessons learned can be differentiated into key lessons that have been learned in terms of the program strategy (see Table 18) and into key lessons that have been learned in terms of instruments (see Table 19). 0, 10 1, 00 10,00 100,00 1. 000,00 Million € (Logarithmic scale) Serbiakom LVVAX LT Lower Austriaest ARENASPAIN Cat Clusters, RO COBNCE ZIM NEMOIND LT+Grappecp, RO CZ Piedmontbelg VISPOLBELG LSKTNCOMPETE HU Pdc Figure 29: Estimated yearly budget of the cluster programs (in Million €), (Cluster programs of countries below EU GDP average are marked yellow. Cluster programs of countries above EU GDP average are marked green. 22 22 Please be aware that this figure displays the budget for individual cluster programs only. It does not show the total budget that each country spends for cluster programs. 77 The majority of program officials reported in the survey that they have translated already their corresponding lessons learned into adaptations of their programs. This concerned in particular The implementation of new support tools and measures; An increased attention towards cluster management excellence, e g. through a more pro-active engagement with cluster managements by means of dialogue or benchmarking exercises; Consolidation of the supported cluster landscape and reduction of funding rates for cluster managements. Most cluster programs will continue in the next years without significant changes. In some cases parliamentary elections and ongoing or upcoming elections may have an impact on the program configuration. KEY LESSONS LEARNED WITH REGARD TO THE INSTRUMENTATION OF THE PROGRAM 1. Mutual exchange between cluster managements and networks of cluster managers should be supported through adequate instruments. 2. Cluster managements should get support for the development of value-adding services that can be offered to the cluster members. 3. Cluster managements should get support with the development of cluster strategies. 4. Long-term commitment among the cluster members should be supported. 5. Internationalization of clusters should be part of the cluster strategy and be supported by the program owner. 6. Evaluation and monitoring is crucial for the success of the cluster program. Measuring economic and other types of impacts is very difficult, but should be pursued. 7. Other funding instruments than grants should be used also to support cluster development; e g. technical assistance or capital investments in organizations. 8. Quality labeling of cluster organizations should feature as an integral part of cluster programs 9. The program should activate competition among the clusters benefitting from the program by setting up e g. annual contests. KEY LESSONS LEARNED WITH REGARD TO THE PROGRAM STRATEGY 1. Long-term support is key when clusters should be set up sustainably 2. The cluster program should be embedded in a regional and/or national cluster policy respectively economic development strategy. 3. Funding schemes should be flexible in order to be able to adjust support to changing economic environments smoothly and quickly. 4. Clusters have different characteristics depending on their context (e g. history of origin, emerging vs. traditional industries. This requires different support mechanisms. 5. Funding of clusters should depend on their performance. Table 18: Lessons learned with regard to the program strategy Table 19: Lessons learned with regard to the instrumentation of the program 78 Clusters are need individuals who individual support for sustainable growth and enhanced competitiveness in order to become world-class clusters that maintain and extend the global competitiveness of the European union's economy that is the most important conclusion from the benchmarking of 261 cluster management organizations. Support of cluster development by means of cluster programs should therefore be more than just providing grants for office and staff funding of cluster management organizations. It is also about providing tailor-made technical assistance for cluster management organizations in order to support their efforts with the provision of needs-driven and value-adding products and services for the cluster members. And it is also about developing favourable framework conditions in which clusters can flourish through the coordination of cluster policies and programs with other relevant policy areas and programs. Last but not least: cluster programs should focus on the support of cluster management excellence. Only cluster management organizations that are managed excellently can develop and offer the support to cluster members that they need to maintain and extend their global competitiveness. The results of the benchmarking of 34 cluster programs from 24 countries, which are Austria, Belgium, Czech republic, Denmark, Estonia, Finland, France, Germany, Hungary, Iceland, Italy, Latvia, Lithuania, Luxembourg, Norway, Poland, Portugal, Romania, Serbia, Slovakia, Spain, Sweden, Turkey and United kingdom demonstrate that there are many good cluster programs not only in the European union Member States but also in Associated States. All these programs support the above briefly sketched objectives forward looking cluster programs should have. However there is always room for improvement. In order to improve their effectiveness and efficiency these programs can both learn from each other from the results cluster program benchmarking and from the results of the cluster benchmarking. Certainly, these results provide also inspiration for many other cluster programs that have not participated in the NGPEXCELLENCE project. In the following seven policy recommendations are presented that are based on the findings of the cluster and cluster program benchmarking. They provide guidance for the further development of cluster programs and shall contribute to the evolution of outstanding clusters that are driven by excellent cluster management organizations: 1. Improve coordination of cluster programs and other relevant funding programs. Ideally there should be limited only a number of coordinated cluster support programs that target different types of clusters. With a limited number of cluster support programs that support the establishment of cluster management organizations at the core of an overall cluster development strategy additional individual R&d/innovation, business development and infrastructure (e g. in the educational sector) programs can address the specific needs of the different actors within a cluster. In this regard program strategies, instruments, time frames and target groups of programs should be coordinated and efforts should be made to limit administrative burdens for applicants as much as possible. Programs should also be aligned with policies that pursue an improvement of the framework conditions which have an impact on the development of a cluster (e g. educational or labour policies). 2. Tailor-made assistance for clusters should have a high relevance in the program strategy. The economic impact of a cluster depends not only on its size and maturity. It is also the technology domain of the cluster that matters in terms of the structure, the governance and the performance of a cluster. Cluster programs therefore should take the different framework conditions of industries and technology domains into account through assistance that is tailor-made according to the specific needs of a cluster. 3. Programs should put emphasis on cluster management excellence. Cluster support is not about the mere establishment of clusters but about developing excellently managed clusters that are internationally competitive and that have an impact on the national economy. In this context is it important to support cluster management through targeted, need-focussed services such as relevant workshops and seminars, benchmarking as well as a continuous strategic dialogue to question and further develop strategies and activities. Labelling of excellent cluster managements is another important aspect in this context; not only because it creates more visibility for a cluster, but also because it encourages cluster managements to provide excellent management in order to earn and preserve the label. 4. Cluster programs should develop world-class clusters in industry sectors that are internationally competitive. Without limiting the attention to the development of clusters for the purpose of regional economic development, there should also be programs that support 3 POLICY RECOMMENDATIONS 79 the development of clusters that are internationally competitive. The support should focus on those industries in which a country's economy shows pronounced comparative advantages on the global market. Cluster management excellence should be a key priority of such programs. 5. Long-term but flexible support of clusters is required. In order to meet the specific development conditions of clusters support should be provided on a long-term basis of five to ten years. Furthermore, program requirements and processes should not only be less bureaucratic, but also flexible enough to respond quickly to changing economic and technology environments in which clusters are operating in. 6. Monitoring and evaluation of the results and impacts of a program is important and should be done in a smart and purposeful manner. From the very beginning the program should be based on clear targets that can be measured through a purposeful set of indicators that provides information relevant to the implementation processes. The implementation of a program should be accompanied by a formative evaluation which provides recommendations for program adaptation on a continuous basis. It is important that there is a balance between the cognitive interest of program owners and policy makers and the burdens for beneficiaries that result from monitoring and evaluation. 7. Different industry sectors need different support for internationalization activities. There are huge differences between industry sectors when it comes to the effect of the work of cluster managements on international activities of SME. The promotion of cluster management activities for internationalising the cluster should therefore take the specific framework conditions of industry sectors into account. Corresponding instruments should be developed by program owners to provide needbased support for cluster managements. 80 THE AUTHORS THOMAS LÄMMER-GAMP is Director of the European Secretariat for Cluster analysis (ESCA) at VDI/VDE Innovation+Technik Gmbh in Berlin, Germany. Being an expert for the development and implementation of public funding programs, he has been working with regional and economic development policy topics for more than twelve years. Thomas has gathered his experience at two international consultancy companies and the Saxonian State Ministry of Economic Affairs and Labor (German Federal State government. Prior to his current engagement he served for two years as a technical advisor for international cooperation at the Department of Science and Technology of the Republic of south africa. Thomas holds a Master's degree in political science, law and sociology from the University of Göttingen. Email: tlg@vdivde-it. de DR. GERD MEIER ZU KÖCKER is head of the Institute for Innovation and Technology (iit Berlin) and holds a Phd in mechanical engineering. Currently he is serving on various advisory boards, appointed by different European Member States and the European commission. Gerd has led many innovation and cluster projects in several parts of the world, has written widely about innovation, cluster and technology transfer issues and is a frequent speaker on innovation policy and cluster in Europe, North america, Africa and Asia. Email: mzk@vdivde-it. de DR. THOMAS ALSLEV CHRISTENSEN has been working as Head of the Department for Innovation Policy at the Danish Ministry for Science, Technology and Innovation since 2005. He is head of the secretariat of The Danish Council for Technology and Innovation and responsible for Danish innovation policy programs such as the Innovation Networks Denmark Program, the Danish Program for Innovation Projects, the Danish Industrial Phd Program, the Danish Incubator Program and the Danish GTS-system (Danish RTO institutes. Thomas has worked previously at the Nordic Council of ministers, the Ministry of Economic Affairs and the Prime minister's Office. He has also been external associate professor at the University of Copenhagen. He holds a Master's degree in economics from the University of Copenhagen and a Phd degree in international economics from Copenhagen Business school. Email: tac@fi. dk LYSANN MÜLLER has been working as a consultant at the international technology cooperation and cluster policy department of VDI/VDE Innovation+Technik Gmbh in Berlin, Germany since 2005. She has specialized in innovation policy and has worked as analyst of innovation systems. Being involved with European project management for ten years Lysann has grown her professional experience in national and European R&d policy and international technology transfer. Prior to her current engagement she was preoccupied with observing and analyzing European legislative processes and initiatives for the Association of German Engineers in Brussels, Belgium. Lysann holds Master's degrees in Linguistics and Business Administration. Email: lysann. mueller@vdivde-it. de

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