In this Blog Dr. Leonardo Pineda addresses the main
outcomes in Latin America of a strategic
innovation approach as a driver for
industrial clustering
Since the publication in 1990 of Michael
Porter’s book, The Competitive Advantage
of Nations, the cluster approach has
become widely spread and used in both
academic as well as in policy circles.
However, while the term is widely extended,
a universal definition of the term doesn’t
exist. Thus, for the purposes of this
article, we define a cluster as a “spatial
agglomeration of similar and related
economic and knowledge creating activities”,
or as “poles of competitiveness”
using the French approach.
The cluster approach is based on four broad
affirmations. First, in today’s knowledge
based economy, the ability to innovate is
more important than cost efficiency in
determining the long-term ability of
enterprises to flourish. Innovation is
defined broadly here as the ability to
develop new and better ways of organizing
the production and marketing of new and
better products and services. This does not
mean that cost considerations are
irrelevant, but simply that the combined
forces of the globalization of markets and
the deepening divisions of labor make it
increasingly difficult to base a competitive
position on cost-advantages only.
Second, innovations predominantly occur as a
result of interactions between various
actors, rather than as a result of an
isolated individual. This fits with a
Schumpeterian view of innovation as new
combinations of already existing knowledge,
ideas, and artifacts. All of this confirms
the statement that organizations can not
compete as isolated agents.
In an industrial context, these interactions
often follow the value chain and the supply
chain management. An enterprise facing a
particular problem turns to a supplier, a
customer, a competitor, or some other
related actor such as research centers or
financial tools, to get assistance in
specifying the problem and defining the
terms for the solution. From this follows
that the level of analysis for understanding
the processes of industrial innovation and
change is some notion of an industrial
system or network of actors carrying out
similar and related economic activity. Thus,
the cluster is basically an attempt to
recognize an industrial system.
Third, is concerned with the geography.
There are a number of reasons why
interactive learning and innovation
processes are not space-less or global, but
on the contrary unfold in a way where
geographical space plays an active role.
Spatial proximity to empowerment drivers
such as universities, research centers, new
venture capitals, etc, carries with it,
among other things, the potential for
intensified face-to-face interaction,
trustful relations between various actors,
easy observations, and immediate benchmarks.
In short, spatial proximity seems to enhance
the processes of interactive learning and
value creation.
Fourth and finally, an implication of the
above is that there exist reasons to believe
that the knowledge structures of a given
geographical territory are more important
than other characteristics, such as general
factor supply, production costs, etc., when
it comes to determining where we should
expect economic growth and prosperity in
today’s world economy.
In the Latin American environment, this
acceleration of value due to industrial
clustering is not occurring. After analyzing
more than twenty projects in the last 15
years, dedicated to the clustering of SMEs
and supporting organizations, in different
countries of the Latin American region,
fellow practitioners, we have arrived at
some very discouraging conclusions.
Although some exceptional successes can be
found, they are more the outcome of
corporate successes, but not of regional
competitive clusters of industries,
according to world class best practices. In
summary, we claim that the Latin American
region can show very few cases of true
clustering synergies among all the main
players of this industrial organization
framework, the entrepreneurial community,
the academia, the government and the social
communities.
The reasons for this dysfunction are
multiple and complex. Most businessmen blame
local and federal governments and their
politicians. Others cite the financial
costs; the strong cultural isolation of the
companies; the total misalignment of the
public policies and industrial strategies;
the poor competitiveness and innovation of
most SMEs; the lack of research and
development and a poor system of
transferring the results to industry; the
poor connectivity infrastructures and
e-readiness; and also the great nuisance
affecting most countries of the region, the
insufficient technical and technological and
innovation training systems, as well as
obsolete regulatory frameworks and a obscure
and biased rule of law.
Based on this environment, a series of
questionings arise in order to establish the
causes of this poor performance of the
region for this type of structures and
formulate what may be a possible strategy
for developing competitive clusters in the
region. What are the cluster readiness
conditions required to incubate industrial
poles of competitiveness? What are the
barriers for c-readiness for the Latin
America region? Is there a feasible and
effective road map capable to create the
enabling conditions for a c-ready region?
And what is the missing link of the
productive chains in LA, and how to overcome
it?
M. Porter showed that the competitive
advantages of enterprises are not just
characterized by intra-organizational
conditions only, but by the environment
drivers outside the enterprises; i.e. their
surroundings which characterizes the
co-operation between the enterprises and
other enterprises, support agencies (meso
institutions such as chambers of commerce
and industry, technology centers, new
venture capitalists, etc.) and public
players, are at least as important. This
standpoint led to a shift in the priorities
of national regional development policy.
Today, individual enterprises are no longer
at the centre, but rather networking of
enterprises, strengthening their
relationships between each other and to
suppliers and customers as well as to public
bodies.
Pioneering studies in this context were put
forward in the early ‘90s; the newer
approaches in innovation theory no longer
describe innovation as a linear process. It
is far more argued that innovations
represent the result of interactions and
feedback processes by various different
players (firms, knowledge producers,
technology transfer institutions) in
so-called innovation systems. The
development potential of a region (of a
country) from this perspective is based on
the innovation strength of networks which
are characterized by self-steered processes,
co-operative exchange structures and a great
dynamism.
In addition to a large number of studies and
analysis, numerous cluster initiatives in
the EU bear witness to the popularity of the
cluster concept. “Triple Helix” in Sweden,
“Clusterland” in Upper Austria or “Pôle de
compétitivé” in France, are representative
of this tremendous popularity. Clusters are
regarded as features of successful economic
regions which are in position to improve
regional competitiveness through innovations
whereby the different interpretations of
cluster concepts reflect individual regional
– and partly also national – peculiarities.
Therefore, the support of networks of
enterprises promises to be an adequate and
efficient instrument in terms of structural,
SME-oriented and innovation policies.
However, empirical experience with these
approaches to date shows that cluster policy
is no panacea as a regional policy.
Particularly the skill of identifying and
initiating clusters which promise success as
well as of motivating enterprises, meso
institutions, public players and possibly
research organizations to work together must
often first be developed by those
responsible for clusters.
The aforementioned analysis provides enough
reasons to believe that the success of
innovation occurs precisely in the
interaction between global and local
processes. The competitiveness of the
regions themselves depends to an increasing
degree on their innovation capabilities.
Successful regions understand how to network
intelligently local and regional players
such as enterprises, universities, research
institutions, associations, policy makers
and administration in order to bundle and
augment the knowledge distributed over
individual heads and to transfer it into new
products, processes and services (clusters).
To further explore strategic innovation in Latin
America
in more detail
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