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Industry clustering and regional competitive advantage

PRTLI_INDU

The focus of Irish industry policy shifted in the 1990s as a result of the Culliton review (1992) from its preoccupation with attracting foreign direct investment to the promotion of indigenous firms in the fast growing sectors of the world economy. Influenced by the work of Professor Michael Porter (1990), the new policy identified industries which could achieve global competitive advantage not only as low cost supply chains to multinational operations but also as high skill, knowledge-intensive clusters combining the advantages of small firm flexibility with the economies of scale generated by collective learning and collaboration. Accordingly, there was little disagreement with the view that 'the phenomenon of industry clustering is so pervasive that it appears to be a central feature of advanced national economies' (Porter 1990).

However, successful clusters in Ireland have taken a very different form from that envisaged in the Porter model (O'Malley and van Egeraat 2000). First, they tend to be oriented to global markets, and provide little evidence of the domestic rivalry that supposedly acts as the springboard for international competitiveness (O'Donnell 1998). Second, the clusters are largely driven by the multinational firms themselves, which in turn have been embedded in the local economy by skills upgrading, industry policy and the increasing sophistication of the indigenous sector itself (Bergman and Feser 2001).

The central research questions will address the conditions which give rise to successful industry clustering in Ireland, the distinguishing characteristics of these clusters, the consequences for cluster theory and modelling and the implications for public policy in Ireland and more widely. The project will build on current work for the OECD national innovation systems programme (Green et al 2001) with a survey and case study analysis of two regional industry clusters.

Project Leader:

Dr Paul Ryan

Participants:

Caren Crowley

Dr James Cunningham

Will Geoghegan

Majella Giblin

Professor Roy Green

Dr Rachel Hilliard

Dr Laura Martinez-Solano

Dr Paul Ryan

Edel Walshe

Technical Description

Task 1

Review of literature and data on industry clustering in Ireland and other comparable regional economies.

The first task will be to undertake a comprehensive review of the academic and policy literature in the area of industry clustering and the empirical data generated by other studies. This task will proceed in the context of simultaneous work on the nature and characteristics of regional innovation systems. In particular, it will address the issue of whether industrial clusters with links to local and regional innovation networks have been associated with accelerated diffusion of technology and know-how, and the extent to which diffusion depends on the country's industrial structure and technological specialisation, institutional set-up, corporate governance regimes, degree of economic openness and the flexibility of firms' organisational and managerial structures (OECD 1997).

Task 2

Survey analysis of the computer software and medical devices clusters in the Galway region of Ireland.

The major task of the project will be a detailed analysis of two clusters in and around the city of Galway in the west of Ireland. The first is the rapidly expanding computer software cluster, which was stimulated paradoxically by the withdrawal in the early 1990s of the Digital Electronic Corporation from relatively low value adding personal computer production in Galway. The second cluster is the concentration of firms in the medical devices sector, which now represents the largest source of production in Europe. The two clusters are led by US based multinational companies, but have acquired a degree of independence through the growth of local supplier networks, research and development activity, outsourcing and global penetration. The research will investigate the cluster dynamic in both cases through a combination of survey and case study methodologies (Bergman and Feser 2000), and make findings on the conditions for success and sustainability.

Task 3

Implications of cluster analysis for public policy at local, national and European levels.

The final task will be to identify constructive implications for public policy in both the review of literature and the survey of the two regional clusters (Lagendijk and Charles 1999). It will evaluate, among other things, the role of local networking and collaboration among firms, linkages to research and educational institutions, investment attraction policy, business support measures and the quality of skills and infrastructure. More broadly, it will attempt to assess the relative impacts of the market and institutional factors in successful clustering. This, it is hoped, will also make an important contribution to the theoretical literature in the area.

Publications, presentations etc, for this project:

Please visit the Project Participants' webpage for details of publications associated with this research.

 

    

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