Every week, the Lab selects a document or project deemed particularly interesting and relevant and presents it in a few lines. This week, the Lab is interested in an article "Clusters – to finally understand everything" published on the website of the innovation notebooks which presents clusters as an effective tool for ensuring territorial development in the current context of globalization of trade exchanges. A particularly interesting and complex subject, the Lab will help you see more clearly!
Cover image: Silicon Valley, the example of a successful cluster
Presentation of cluster analysis
Cluster analysis was developed by American economist Michael E. Porter, currently a professor at Harvard University, in his 1990 book "The Competitive Advantage of Nations". He constructed an economic theory to explain how a territory can increase its competitiveness in the current context of globalization. Professor Porter's original idea is to show that a company's competitiveness is not only explained by its internal management policy (e.g., managing operating costs to minimize product price) but rather by the environment in which the company operates.
Professor Porter defines a cluster as "a geographic concentration of interconnected actors consisting of companies and institutional organizations (e.g., research laboratories and public authorities)". The geographic scope of a cluster can vary in size: a city, a region, or even a nation.
Two types of clusters can be created: horizontal clusters and vertical clusters. Horizontal clusters are characterized by a strong concentration of companies grouped in the same sector of activity. Although competitive, these companies collaborate to finance research projects and find strategies to export their products. Vertical clusters aim to integrate a large part of the companies involved in the value chain of a product (with strong supplier/customer links) in the same geographic location. These companies collaborate to enhance and further develop the products of the sector.
In cluster analysis, the geographic location of companies becomes crucial. Indeed, globalization implies the development of complex economies based largely on knowledge. In this context, the rise of clusters allows territories to become more competitive, as they are a source of innovation for companies.
Although companies compete with each other, they still have an interest in spatially grouping and cooperating to gain market share through exporting. A territory hosting a cluster develops specific skills that allow it to increase its competitiveness, innovate, and thus stand out from other territories. It is important to mention that these clusters rely on the unique skills of the territory. Therefore, a cluster developed in one territory cannot be exported to another territory. This is why the presence of a cluster provides the territory with a competitive advantage.
The interest of creating a cluster for the territory
The territory can increase its wealth through three main channels as presented in the graph below.
By acting on the three channels above, a cluster is an important source of wealth creation for the territory:
- It increases the export capacity of the cluster's activities
- It reduces external dependence by diversifying the territory's economy
- It encourages actors (businesses, institutional organizations) to invest more in the territory
The activities forming the cluster have socioeconomic impacts on a large number of economic sectors at the scale of a territory due to their spillover effects. The activities involved in the existence of a cluster are grouped into four types:
- Upstream activities of the cluster: suppliers
- Downstream activities of the cluster: the clients<
- The activities providing the necessary infrastructures for the proper functioning of the cluster (e.g., specialized activities in construction, IT equipment, and transportation)
- The support activities< (e.g., marketing activities, legal activities, and accounting activities)
This sectoral diversification increases the value of multipliers due to a greater number of inter-industry exchanges. Multipliers represent the total socioeconomic impacts for the territory by incorporating all direct, indirect, and induced effects of spending one euro on the purchase of a locally manufactured good or service. The higher the value of the multipliers, the more spending generates wealth for the territory. Thus, a policy aimed at developing a cluster in a territory induces an increase in the value of these multipliers.
The public policy of clusters in France
France has established a number of institutional instruments to promote clusters. The France cluster association is the national network of clusters, aiming to support the creation and development of clusters in France. Two main types of clusters exist: competitiveness poles and business clusters.
- Competitiveness clusters aim to bring together companies, research laboratories, and training institutions in the same territory. Their main mission is to promote the emergence of collaborative research projects between businesses and research labs. Competitiveness clusters are therefore heavily focused on R&D. Currently, these clusters are concentrating more downstream and focusing on product innovations. France has about 71 competitiveness clusters.
- Business clusters are groups of medium-sized businesses (SMEs, micro-enterprises) with a strong local presence. These companies are typically integrated into networks that include training centers as well as research laboratories. Unlike competitiveness poles, they are less focused on R&D and more on market innovation. Currently, there are 126 business clusters in France.
Towards new models of territorial innovation
Alongside these large networks, many initiatives are being launched to develop clusters. For example, we can mention regional initiative clusters or territorial clusters.
Vertigo Lab is currently working on the development of clusters as part of the study project on energy and ecological transition for Grand Dax. A socioeconomic study has been conducted to identify the strengths and weaknesses of the Grand Dax economy and to identify potential clusters. Vertigo Lab is also interested in the rise of new open innovation workshops such as Fablabs and Livinglabs, which can serve as innovative mechanisms in cluster development.
