Fostering the Development of Creative Clusters and Innovation

In a global economy, innovation, learning and competitiveness have become a development priority. As development strategies focus increasingly on regional integration, however, experience has shown that liberalising trade and entering into trade agreements are not enough to improve economic development and generate employment. Government measures must also be taken to improve competitiveness by promoting regional innovation and supporting small business, as well as attracting foreign direct investment and promoting cooperation within global innovation, production and commercialisation networks. Across the world, governments are trying to stimulate the development of innovative regions. Regions have recently re-emerged as a focus for industrial policy because new industries seem to develop in clusters. Silicon Valley is one prominent example. Other high-technology and knowledge-intensive industries, such as pharmaceutical, biotechnology and digital media, cluster as well.

The "UK Innovation Nation" report should bring our memory back at least a decade. The key ideas about how research and innovation policy in the UK should change in future are highlighted in this report. One area that the UK Government is currently focusing is on supporting entrepreneurs to launch 'high-growth’ firms with the intent of significantly growing their companies. A new breed of entrepreneurs is now creating 'micro-multinationals' that are global from day one. The new initiatives include extending the number and improving the accessibility to knowledge transfer partnerships (between universities and firms) and innovation grants to help high-tech SMEs grow internationally, amongst others.

Back in 1998, the UK Government’s White Paper on Competitiveness emphasised on the importance of regions. In a follow-up to the White Paper the Department of Trade and Industry has been looking at how best the UK's high-tech industry could be encouraged. The continuing migration of the European pharmaceutical and IT industry to the US, and growing competition of newcomers, such as Ireland, China, and India, amongst others, has led to growing concern that the UK could be dislodged soon as one of the world's biggest economies. The UK has been far less successful in capturing the commercial benefits of its strong basic and applied research. The disappearance of innovative companies, such as British Biotech, Amersham, PowderJect and Celltech, underlines the difficulty Britain faces in spawning successes with the staying power to compete with US giants Amgen, Genentech and Biogen, for example. Because small and medium-sized (SME) enterprises are already responsible for more than half of UK employment (and three-quarters of EU employment), the UK and European Governments have to focus on creating the kind of fertile environment that would foster the growth of entrepreneurial investment and innovation within regions.

From an analytical standpoint, innovation, competitiveness and growth are fundamentally multidimensional phenomena that span various organisational and spatial levels. Government interventions have traditionally been targeted towards promoting agglomeration and economies of scale and scope. Empirical evidence and experience suggest that interdependent complex resource and capability configurations, mobilized by key economic and social actors, can create and propagate value through long causal chains. Also, not all (networks of) firms within a cluster grow in the same way. Growth patterns tend to be highly heterogeneous. Different regions have clusters of firms at various stages of economic, techno-scientific and business development, and thus have different types and configurations of resources, capabilities and enabling conditions when it comes to developing competitive advantage and economic growth.

Some generic questions I'd like to raise to kick start our dialogue are:

- Why a region and/or industry follows a particular development trajectory?
- Is it determined by the history and path-dependency, or by the (community of) regional actors’ choice of action?
- Which are then the actions and partnerships that will promote the development of sustainable and successful innovation ecosystems?
- What are the key conditions and interventions needed at different stages of development?

Our regional innovation ecosystem is now again organically morfing towards a more sophisticated co-innovation model, where networks of firms are supporting each other at various stages of the business development process. A concrete example of this is the recent partnership between NS 2.0 and Microsoft to provide free access to their technology and product development and commercialization expertise to our community of start-ups in the North. This ecosystem is being supported by additional partnerships with a network of financial, accounting management, legal and marketing firms providing a new generation of services customized to the needs of small businesses in the 21st century.

Feel free to join the online discussion ...