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SCIENTIFIC REVIEW
Innovation Policy Based on Network Paradigm
Pachura Piotr*, Czestochowa University of Technology, The Management Faculty,
Czestochowa, Poland
UDC: 330.354 JEL: 031
ABSTARCT – The aim of this paper is to present the role of cluster and network collaboration in
innovativeness process and knowledge based economy. The paper describes the clustering pagadigm in
EU policy and examples of the network creating process and organizing cluster initiatives in EU
countries.
According to the results of literary research it is possible to univocally state that the
geographical proximity between enterprises of a similar profile of activity facilitates the
achievement of a higher level of productivity and innovativeness. The clusters covering the
spatial sphere of its location: producers, suppliers, service providers, research units,
educational institutions and other units supporting a given sector became an important
factor in the economic development of regions. The trend towards interaction and basing on
the resources of business partners operating in a given location results from the new trends
of management, among others, the school of resources in strategic management at the top
with key competences and the open innovation paradigm.
Directing the regional policies of the EU along the concept of clusters also results from
the wide impact of the progressing globalization on the essence of inter-regional
competitiveness as well as regional cohesion (Matlovič R., Matlovičová K. 2008). Increasingly
lower costs of transport and communication and the simultaneous liberalization of
international trade revealed the weaknesses of regional economies and exposed them to
global competition. With regard to the increasing number of locations with attractive
conditions for investment, European regions faced the necessity of offering foreign investors
even more unique benefits. Clusters became in this situation a magnet attracting a bunch of
highly specialized resources of knowledge in a given sector which are not present in other
locations.
Therefore, due to its practical application, the concept of the theoretical clusters
regardless of whether the work of M. Porter or as a stage in the evolution of industrial
districts of Marshall in the direction of the systems of innovation became one of the most
important elements of economic, innovative and regional policies of the EU. The reasons for
such a turnaround in the activities of the European Commission have been previously
indicated. It is possible to add that the traditional instruments of supporting economic
growth and the competitiveness of regions, for instance by supporting whole branches of the
industrial sector, have not succeeded and had to be replaced by a mechanism that is more
adjusted to the challenges of the global economy.
* Address: Armii Krajowej 19B, 42-200 Czestochowa, Poland, e-mail: ppachura@zim.pcz.pl
Pachura, P., Innovation Policy Based on Network Paradigm, EA (2010, Vol. 43, No. 1-2, 126-133)
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The network approach to innovation and the according theory of clusters became the
central point of interest for the EU. A key element in the policies of innovation of the EU
became the cluster-based policy. This type of policy is defined as a grouping of activities and
instruments used by the authorities at various levels for the improvement of the level of
competitiveness of the economy by stimulating the development of the existing cluster
systems or their creation at first and foremost the regional level (Brodnicki, Szultka, 2004).
Among the elements that decide on the effectiveness of policies of supporting clusters the
following assumptions can be listed (EDA, 1997):
• The driving strength of the cluster policy is the free market;
• This combines various units of the regional economy;
• This is based on cooperation and mutual activity;
• This takes the form of a strategic nature and helps to shape a common vision;
• This creates new value.
Involvement in initiating policies based on clusters can be naturally explained by the
determination of EU member countries in the realization of the aims of the Lisbon Strategy
whose achievement at the first deadline turned out to be impossible. Clusters seem to be the
appropriate direction for the realization of the innovative policies of the EU. From the point
of view of the European Commission, promoting policies based on clusters is to lead to the
achievement of the aims of the Lisbon Strategy. The competing conglomeration of
enterprises provides the possibility of access to the network filled with skills and abilities to
generate innovation. They are becoming an effective environment in which it is easier to
realize the initiation of new products immediately after their development in research
laboratories.
A policy based on clusters is not a separate element of activities on the part of national
and regional authorities, but should be rather treated as an integral element of various
policies. This is most frequently reflected in the assumptions of scientific policy or scientific
and technological, innovative, economic, and regional development. In this way the idea of
clusters penetrates into the strategy of development for regions, but is also taken into
account in state programmes that are financed by the EU structural funds. Most often
however, the philosophy of policies based on clusters takes on a horizontal nature and finds
itself in all the afore-mentioned policies. It fits in perfectly into the policies of regional
development based on the model of the innovation system. Clusters as a way of arousing the
innovativeness of regions usually find themselves among the priorities of regional strategies
of innovation. The cluster policy is part of the model of strengthening interactions within the
framework of the so-called triple helix, or in other words, the system of interactions between
the key players of the system of innovation: enteprises, scientific and research units and local
authorities.
The concept of clusters became a topic of interest for national and regional governments,
organizations of entrepreneurs, international organizations particularly OECD countries and
the EU in the second half of the 1990s. This interest can be observed through successive
cluster initiatives, starting from the theoretical work explaining the essence of clusters to the
attempts of working out the methodology of their identification and finally the guiding rules
in the sphere of the policies of stimulating clusters in regions. These last initiatives are worth
Economic Analysis (2010, Vol. 43, No. 1-2, 126-133) 128
devoting more time to in order to illustrate the factors of success in undertaking activities
within the framework of regional policies on behalf of the development of clusters, which
has been done in the later stages of this paper. The guiding rules of the programme and the
strategic documents of the EU took account of the concept of clusters relatively late as it
occurred at the beginning of this century but it is necessary to explain this as a rather
different approach to the issue of the innovativeness of regions. The efforts in this area were
from the very beginning directed towards the issue of the systems of innovation, industrial
districts and local innovative environments, which in their own essence are also based on the
network paradigm of innovativeness.
Apart from the initiation of the afore-mentioned models of regional development,
another trend of activity in the EU associated with clusters was the creation of networks of
interaction between regions. The stimulation of networks of interaction appears in various
aspects and policies of the EU. The scientific and research policies can be used here as an
example together with its main instrument in the form of the Framework Programmes that
support the networks of interaction of scientific centres and their relations with industry. In
the middle of the 1990s, the EU started to place particular emphasis on the issue of regional
innovativeness. The breakthrough moment was the passing of the Lisbon Declaration by the
European Council in 2000 and the acceptance of the aim of transforming the EU economy in
the most competitive market based on knowledge in the world. In this context the policy of
supporting clusters in EU member countries grew in importance and the regional authorities
acknowledged that the foundation of competitiveness is that of small enterprises. The
creation of an environment that is friendly towards the development of small firms became a
priority, particularly through the stimulation of interaction between them and also creating
interaction with the R&D sector. The strategy of development for EU member countries
initiated with the aid of programmes financed by EU funds that were assigned priorities in
the sphere of supporting networks of interaction at the level of enterprises and the area of
R&D. The network model of innovativeness was accepted as binding, in which the theory of
clusters fits perfectly.
The activity of the EU Commission in the area of creating a favourable regulatory
framework and the popularization of knowledge on the topic of clusters is confirmed by
many conceptual papers and documents among which the following can be mentioned:
• “Industrial Policy in an Enlarged Europe” from 2002, in which the creation of
innovative clusters became acknowledged as the key priority of the new
industrial policy,
• Communiqué entitled “Some Key Issues in Europe’s Competitiveness – Towards
an Integrated Approach”, according to which one of the proposed activities was
to be the European project of identifying the best practices in the sphere of of
initiatives of developing clusters,
• Programme document entitled “Industrial Policy in an Enlarged Europe” from
2004, in which the innovative policies and supporting initiatives based on clusters
were listed as being of key importance (Ślusarczyk B., 2008),
• Consultation document entitled “Innovate for a competitive Europe”, which
states that the structural funds can support the internationalization of regional
Pachura, P., Innovation Policy Based on Network Paradigm, EA (2010, Vol. 43, No. 1-2, 126-133)
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clusters, which according to the European Commission became the effective
mechanism of stimulating innovation.
The policy of regional development based on clusters can be the effect of bottom-up
initiatives, as well as resulting from top-down initiatives. The second type of operation is the
effect of the activity of the local authorities, however the bottom-up activity is usually
characterized by the activity of the branch environment. Regardless of the way of realization
of the cluster initiatives, a significant role should be attributed to the public authorities.
According to M. Porter, the role of the public factor in creating and stimulating the
development of the cluster in the area of shaping the factors of production, related and
supporting sectors, conditions of demand, as well as the strategy and rivalry between
enterprises (Porter M. 2001).
The first paper that carried out a complex analysis on the effects of policies based on
clusters realized in selected countries is the document entitled “The Cluster Initiative
Greenbook”. In this document the results of research into cluster initiatives were presented
within the dimension of their effectiveness and range. Interesting results were also presented
within the framework of a range of OECD projects (OECD 2001) directed at the analysis of
practical aspects of the functioning of clusters. The afore-mentioned projects were aimed at
diagnosing the existing state in the area of cluster initiatives, as well as working out the
guiding principles in the area of formulating and initiating innovative policies based on
networks. A compendium of knowledge and a type of guidebook on the topic of shaping
policies based on clusters is constituted by the work prepared by the non-governmental
organization IKED (International Organization for Knowledge Economy and Enterprise
Development) (Anderson 2004). In the identification of the recommendations and factors of
success in the realization of cluster initiatives the report prepared at the request of the
Ministry of Trade and Industry of Great Britain was also used (A Practical Guide...) .
On the basis of the afore-mentioned documents it is possible to indicate the experience of
particular countries in the area of initiating policies based on clusters. The results of research
facilitate the creation of the basic recommendations for the practical formulation and
initiation of the policies of regional development based on the concept of clusters.
Cluster initiatives most frequently appear in highly developed countries, mainly in the
sectors of large technological intensities with regard to the following: IT,
telecommunications, medical equipment, production technology, pharmaceuticals,
automotive. Most initiatives were directed at the development of a specific cluster and were
started between the years 1999 – 2002. The aims of creating cluster initiatives are very varied
and can be classified within the framework of the following 6 categories: research and the
creation of network interactions, education and training, innovation and technology,
expansion of cluster, political activity, commercial interaction. Within the framework of the
distinguished categories of aims, most participants of clusters (over 75%) indicate the main
aims of their participation in cluster initiatives as follows: the creation of interaction between
enterprises and creating relations between people, development of their own company,
easier access to new technologies and the ability to create innovation. Initiatives that have a
priority goal in promoting innovation and new technology achieve significantly greater
success in the area of improving the competitiveness of particular enterprises.
Economic Analysis (2010, Vol. 43, No. 1-2, 126-133) 130
The process of creating and organizing cluster initiatives takes on different forms despite
the fact that the nature of such initiatives enforces the principles of creating a partnership
between the industrial sector, research and public authorities. The participation of particular
parties is varied in individual cases. The idea of constructing a cluster is most frequently
becoming an initiative of local authorities and the sector of enterprises at a more or less equal
pace. A decidedly greater role in the aspect of financing cluster projects is played by public
authorities. In over half of the clusters analysed, the main source of financing was the
regional budget or national public units. In turn, the involvement of colleges in initiating
clusters in their initial phase of development was very small, which clearly confirms the low
financing coming from these units. A dominating role in managing clusters is played by the
sector of enterprises, while the role of public authorities in some decisions is also envisaged.
The involvement of local authorities, most often in the form of neutral organizational units,
is to lead to the balancing of interests of the competing enterprises. The source of financing
does not seem to have great significance in achieving results both in the aspect of
competitiveness as well as the numbers of members of a cluster.
According to the theory of clustering, most initiatives are directed in their own sphere in
a given industrial branch or geographical zone. Most existing clusters include units that are
located within a radius of one hour’s drive. The aspect of geographical distances was
indicated as a significant factor in facilitating mutual personal contact. Clusters are not
limited to the type of enterprises which can become its member. Both direct competitors and
foreign business units can freely participate in the aforesaid initiatives. The only restriction
in this regard refers to one level in the value chain, which means for instance a greater role in
including specific producers but not their suppliers and clients.
The fundamentality of initiating policies based on clusters is becoming univocally
confirmed by the benefits indicated which are provided to enterprises in these types of
initiatives. Entrepreneurs identify the success resulting from the membership of a cluster
through the prism of competitiveness and achievement of business goals. Most
entrepreneurs confirm that the initiatives led to the improvement of their competitiveness
and the most frequent effect is the tightening of interaction between the industrial sector and
the R&D area. The factors that are decisive in the success of clusters include the following:
the quality of the business environment, structure and way of running economic policies, as
well as the internal strength of the cluster itself. Within the framework of the first category
two key factors should be listed which attract other firms to participate in the cluster
initiative to the highest degree: the presence of an advanced scientific society and a high
level of trust between firms, while also the public and private sectors. Economic policy is also
significant with such elements as: promotion of scientific research and innovation, the
possibility of taking economic decisions at a regional level, protection of the high level of
market competition. The trend of achieving better results in the area of competitiveness is
visible through cluster initiatives directed at strong clusters. Clusters with a significant
economic meaning on the scale of the whole region or country and a longer history of
existence are more attractive for new members. They usually attract the presence of
enterprises that compete on an international scale.
Within the framework of research presented in the Green Book a range of factors was
diagnosed that are decisive to the failure of cluster initiatives. The greatest significance is
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attributed to the lack of consensus in the area of taking action, as well as a clearly formulated
vision for the initiatives and undefined aims of a quantifiable nature. Significant meaning in
the failure of initiatives is played by the issue of insufficient resources, both in infrastructure
and financing. Other elements that lead to unsatisfactory results are as follows: restriction of
the range of membership to only groups of large enterprises, one level in the value chain or
enterprises belonging to the location dictated. Large significance in the failure of cluster
initiatives is also played by a lack of trust in the initiatives undertaken by public authorities.
A survey of the reports prepared up to now on the topic of cluster initiatives in various
countries enables us to note that the policy of supporting clusters takes on various forms. In
reality it does not only vary from the level of analysis accepted and the methodology applied
in supporting the process of networking, but also the degree in which the policy based on
clusters was initiated, as well as the instruments used for this purpose.
The most frequent elements in the strategies of the development of clusters include:
• Strong competiveness of the economy and the reforms of economic policy in the
area of market regulations,
• Supplying strategic information by way of foresight type projects, cluster analysis
and internet portals,
• Agencies dealing in contacts with entrepreneurs and units supporting
innovativeness e.g. innovation centres;
• Development programmes for the development of clusters financed by public
funds;
• Establishment of centres of excellence connecting the industrial sector with the
R&D area;
• Adhering to public procurement (public tenders);
• Construction of platform for public and private dialogue.
In many countries the process of clustering was initiated by the establishment of
allowances, platform and regular meetings involving enterprises and organizations from the
business environment associated with a given branch. The motive for starting dialogue was
the results of research projects, particularly the technological foresight, which aroused
discussion and prompted joint action. Generally speaking, the process of initiating clusters
and other networks of interaction in a dimension of European regions takes on various forms
depending on the political culture, way of institutionalizing the dialogue between the public
sphere and the private sector, the size of the regional economy, but also depends on the scale
of intervention of public authorities in economic life, as well as the degree of industrial and
technological specialization of the region.
In the afore-mentioned reports and expert analysis a set of key recommendations in the
area of initiating policies based on clusters indicates the factors of success listed below
(IBNGR, 2002):
• The main role should be accepted by the sector of enterprises, however public
authorities take on the role of a catalyst in the development of the cluster in
question. In such an arrangement, the expansion of the public and private sector
partnership is key,
• The aims of the initiated policies should be transparent and measurable,
Economic Analysis (2010, Vol. 43, No. 1-2, 126-133) 132
• Clusters should be built on the basis of existing potential and avoid creating
initiatives in branches which are not sufficiently developed or generally do not
appear in a given location,
• The presence of a large enterprise in a given branch which is seen positively as a
source of new technologies, acquisition of expertise, client base and suppliers, as
well as space for the development of human resources,
• Adequate technical infrastructure is essential together with a developed network
of transportation and telecommunication connections, as well as an accessible
base of attractive real estate for investors. Institutional mechanisms are helpful
here in the form of entrepreneurial incubators, scientific, technological and
industrial centres, due to the conditions of mutual work in a specified physical
space offered by them;
• The presence of an entrepreneurial spirit, especially among employees of a
scientific and research unit and large innovative enterprises which is to lead to the
formation of spin-off and spin-out firms;
• The possibilities of access to financial capital in the form of high risk capital
(venture capital), networks of investors searching for innovative and prospering
enterprises (the so-called business angels), loan funds and finally public
programmes, finance programmes e.g. EU funds;
• The development strategy of a cluster should be realized at an appropriate level of
local government which facilitates the effective initiation,
• In the initial phase of development of a cluster an analysis of the potential or
existing concentration of enterprises of a given branch should be analysed making
use of the existing clusters in other locations. The results of this analysis should be
used for public debate with the aim of working out a wide social consensus,
• The action taken should enable the increase in the specialization of cooperating
enterprises and institutions with the aim of realizing economies of scale and
range, division of labour, as well as development on a local scale of specialized
factors of production which facilitates the strengthening of the competitive
position of the cluster,
• Using the benefits accruing from the geographical proximity should be promoted
by the establishment of associations of sub-suppliers or other forms of mutual
interaction (e.g. associations of mutual credit guarantees) stimulating diffusion of
knowledge and technology, as well as the processes of mutual learning,
• In the case of highly technological clusters, one of the fundamental activities
should be acknowledged as stimulating and creating flexible interactions at the
level of industry and the academic sector,
• For the achievement of success, it is essential to build clusters on the basis of
formal and informal networks of interaction within which the information flows
can take place. This type of social network that emerged on the basis of a high
level of trust and social capital can be stimulated by strong institutional structures
divided by cultural values and common goals;
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133
• The market success of a cluster is conditioned by the access to the base of skills
understood as the highly skilled workforce;
• Mechanisms should be created that enable resignation from cluster initiatives in
the case of their failure.
In summing up, the results of the analysis of the conditioning of the initiated innovative
policy directed at clusters, it should be first and foremost underlined that the key aim of this
policy should be to strive towards the creation of a long lasting competitive advantage in the
economy of the region. The way for achieving the afore-mentioned aim can become a strong
innovative cluster or group of smaller innovative clusters functioning within the framework
of a coherent system of innovation. The policy based on clusters should be supported by a
set of other complementary actions within the framework of related policies, which leads to
the gaining of synergy effects. This is therefore the policy which penetrates into other
policies and in its own essence takes on a nature of horizontal activities. The concept of
clusters is according to other models of development for innovative regions and should be
treated in this way as a supplement for the models of the learning regions, regional systems
of innovation and the innovative environment. All the afore-mentioned theories of regional
development are based on the network paradigm of innovation and enable local spatial
arrangements to meet the challenges of the global knowledge economy.
References
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Received: 18 January 2010 Article history:
Accepted: 22 April 2010