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Friday, March 17, 2017

Buttom-up National Cluster Policies

Each country managers their clusters in different ways depending on their cultural and economic backgrounds. A study in the Administrative Sciences analyzes six biotech clusters in Japan, Germany, and France helped to determine which approaches each uses (Okamuro & Nishimura,2015). What they found was that clusters typically take a bottom-up versus top-down approach to management that leads to different costs and benefits.

Bottom-up driven clusters are initiated, driven, and financed mainly by local firms that seek self gain within the system. Top-down clusters are publicly funded and pushed by policy makers.  Cluster management can run the whole range between these two approaches.

Bottom-up clusters appear to be more cost effective for countries that seek to develop homegrown skills based on previous businesses within the region. It doesn't require high amounts of excess capital to "force" these clusters to emerge but instead uses policies that seek to set in place the right conditions that lead to organic growth.

1. Government incentives in terms of tax breaks and research funding support are positively associated to private-driven clusters.

2. Private-driven clusters tend to support private-driven bottom-up management styles.

3. High-incentive cluster policies is consistent with private-drive bottom-up cluster management.

The study helps us understand that the development of clusters doesn't need to be an expensive proposition but that government should put in place appropriate incentives to create the right environment that supports cluster growth. Government has a significant place in passing pro-cluster policies and supporting research that comes out of such clusters. They should pave the way through tax breaks and better city management that leads to attracting and locating businesses in close proximity to each other based on shared similarities.

Okamuro, H. & Nishimura, J. (2015). Local management of national cluster policies: comparative case studies of Japanese, German and French Biotechnology Clusters. Administrative Sciences, 5 (4).

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