Exploratory Techniques for Examining Cluster Dynamics: A Systems Thinking Approach

Abstract

Economic development agencies worldwide have eagerly embraced clusters as a strategy to boost local economic development. When implementing cluster-based interventions, one of the main issues encountered by many public sector bodies is that the majority of cluster analysis and measurement techniques only give a partial overview of how they actually operate. Often it is the dynamics of collaboration within a cluster that has the biggest influence on overall success. This paper adopts a system thinking approach to help us understand cluster development and inter-firm collaboration. The outcome of this work was the development of a basic five stage conceptual model that helps explain how a cluster develops, together with the changes in company behaviour and company interaction that might be seen at different stages of this developmental trajectory. Using Scotland as an empirical test case, this article highlights the model and examines the problems associated with the adoption of this approach. This methodological approach was shared with other regions working to support clusters to ascertain the relevance of this approach elsewhere. Overall this paper concludes that the model proves to be a useful tool in assessing the varying stages of a cluster's development both within and outside Scotland.

Acknowledgements

The authors wish to thank Scottish Enterprise for their support during this research exercise. They wish to acknowledge the extremely valuable comments received on an earlier version of this paper from David Newlands and Ron McQuaid. The usual disclaimer applies.

Notes

¹ This analysis was carried out in addition to more traditional indicators of sectoral growth and performance, e.g. employment, number and size of companies, exporting levels and Gross Value Add (GVA) from the sector.

² It was found that the most successful approach was if the process was undertaken during a workshop format. This helped the participants analyse the sector using the questionnaire, giving examples from the cluster. The questionnaire helped challenge perceptions and reduce any ‘optimism bias’ that can sometimes occur. At the end of the session the completed questionnaire was able to identify the level of performance of the cluster and to have captured evidence of the scoring. The team involved would then reach consensus on this assessment through discussion and challenge.