Cluster Life Cycles

Ample research has been carried out on the mode of functioning of clusters. Little scholarly attention, however, has received the way how clusters evolve over time, i.e. how clusters actually become clusters, how and why they decline, and how they shift into new fields. The main objectives of this collaborative research project are therefore to analyse the factors and processes that are responsible for the evolution and transformation of clusters; to distinguish between endogenous and exogenous drivers through the cluster life cycle; and to give policy advice which helps to create new clusters, prevent existent clusters from decline and transform declining clusters into new clusters. The proposed research project investigates 20 clusters in different phases of their life cycle in 7 countries of Europe. It will lead to new theoretical insights regarding the dynamics of cluster evolution and transformation, an aspect which has been often neglected in favour of a more static approach. In particular the role of specific actors, networks and institutions will be highlighted for different cluster phases. Furthermore, clusters have become a key policy instrument for promoting innovativeness and competitiveness of regional and national economies in recent years. In order to tailor policy measures to the specific needs of clusters, we need to know more about those factors and processes which are relevant in different developmental stages of the cluster life cycle. This might help to design policies for the innovative renewal and transformation of clusters and to create conditions for the emergence of new ones. For Austria three clusters in different phases of their life cycles will be investigated: The environmental technology industry in Upper Austria representing a growing cluster within a traditional industrial region; the "creative industries" in Vienna representing a growing cluster within a diversified agglomeration; and the food industry in Lower Austria, a mature industry which has seen considerable transformation and challenges recently. The analysis of the Austrian cases will focus on cluster evolution in these industries of different age and in different regional settings, on the role of internal and external drivers in this respect, and on factors and appropriate policy support for cluster renewal and innovative change.

Clusters are defined as "geographic concentrations of interconnected companies and institutions in a particular field" (Porter 1998, 78), and they are often regarded as driving forces of economic development for regions and countries. Much research has been carried out on the functioning and performance e.g. of high-tech clusters in Silicon Valley, USA or in Cambridge, UK. Little attention, however, has been paid to the ways in which clusters evolve over time, their emergence, growth and eventually decline, and shift to new sectors. The main objectives of this international collaborative research project with partners from Austria, Germany, Czech Republic, Denmark, Norway, Sweden and Switzerland has been to understand the factors and processes underlying cluster emergence, evolution and transformation, to distinguish between endogenous and exogenous drivers, and to inform policy actors on useful strategies for different phases of cluster development taking into account sectoral conditions and regional contexts. For this purpose the international research collaboration has investigated 19 clusters in those countries and in different sectors and regions. The Austrian team has been studying the environmental technology cluster in Upper Austria, as well as the New Media- and the medical technology clusters in Vienna. Driving factors and mechanisms for cluster development have often been investigated based on the standard cluster approach as conceptualised e.g. by Michael Porter. These studies have revealed certain insights regarding the role of local entrepreneurship and supporting conditions. However, often a static competitiveness-perspective has been applied, and factors were seen as being rooted predominantly in the respective region. For the clusters investigated in Austria we found instead that driving factors of cluster development could be identified at several spatial scales such as regional, national, European and global ones. We also found that the importance of specific factors changes from early to later stages of cluster development. Patterns and shifts were partly similar and partly different in the investigated clusters. In all three cases we find a strong role of local labour qualifications and social relationships in the initial years of company- and cluster development. Also, demand and clients from the region and the country, as well as qualifications and skills on the labour market matter most strongly in the early stages. This is basically in line with other studies on this issue. Different from other cluster studies we find that networks with supporting firms and services in the region are not well developed initially, but become more relevant later on. Obviously, a certain time and concentration of firms are needed to build up such networks. In later phases of cluster development, driving factors have clearly reached beyond the region and the country in several dimensions. For companies in all three clusters, international (often European) markets and clients have become more relevant, as well as relationships to supporting firms and services. Also, networks of knowledge sourcing and innovation become extended in geographical space and include increasingly European and global partners. However, despite much talk on globalisation in the literature, we do not find a replacement or hollowing out of the region or the country as interaction spaces since these territories keep their importance in various respects. Instead, we observe is a shift towards multi-scalar factors and interactions. There are marked differences between the investigated clusters in this process of spatial extension. For environmental technologies firms in Upper Austria we observe that International (mainly European) regulations have become a key factor recently, whereas for New Media firms in Vienna it is demand both on local and international scales, as well as knowledge- and innovation networks that matter strongly in later phases. Medical technology companies in turn stay strongly oriented to regional and national health regulations and hospital demand. As regards policy conclusions we found that cluster policies should be fine-tuned and take account of sectoral and regional contexts. Policies, however, should also be targeted to the specific cluster phases since driving factors and bottlenecks change over time. Theories and concepts of cluster policy have largely disregarded such a differentiated role so far. The investigated clusters in Austria differ with regard to the role of policies. While in the environmental technologies cluster in Upper Austria policy had a certain role in the growing phase with the support of funding and network initiatives, the medical technology cluster is rather implicitly shaped by health policies, regulations and hospital demand. The New Media cluster in Vienna appeared to be least dependent on local cluster policies in the past and to be more shaped by industry- and technology developments often at global scale.