What Accounts for the Resilience and Vulnerability of Clusters? The Case of Istanbul's Film Industry

Abstract

In this paper, the film cluster in Turkey's cultural capital, Istanbul, is examined with the ultimate purpose of contributing towards a better understanding of the dynamics shaping the resilience and vulnerability of clusters. The paper seeks to shed light on the issue of how and why, in the face of a similar set of threats, Hollywood has proved so resilient but Istanbul's film cluster so vulnerable. Scrutinizing the emergence and the subsequent lock-in of the particular path followed by the Istanbul cluster and investigating the attributes of the proximate business environment that have been shaped along the way reveal that sustainability of a cluster seems to depend on three interrelated factors: how the cluster participants strategically respond to the upcoming threats, the structural capacity of the cluster to overcome such threats, and finally, the macro-socio-economic conditions (both at the national and global levels) against which the challenges occur and which mitigate or exacerbate them.

Acknowledgements

Özlem Öz would like to thank the Turkish Academy of Sciences for their financial support. Our thanks also go to Yeliz Günel for helping us with the map.

Notes

For interesting insights on this issue within the context of Silicon Valley, see Saxenian (1994) and Cohen and Fields (1999).

Istanbul is a highly cosmopolitan city, geographically located at the juncture of the European and Asian continents. The city is spread along a strait, with the European sector falling on its western banks and the Asian on the eastern. The former houses the financial as well as the entertainment centres of the city. At the turn of the century when cinema first appeared in Turkey, the financial centre of Istanbul was the Galata district. Further up Galata laid the Pera district (today named as Beyoglu) where foreign embassies were—and, to some degree, still are—clustered. The non-Muslim communities of the city were largely concentrated in these districts.

This forced re-routing through Egypt, which in turn reportedly facilitated the imports of Egyptian films themselves. The Egyptian as well as Indian melodramas which flooded the local market and became very popular with the audiences had arguably provided Turkish film-makers with a model easier to emulate than the Western films.

Most of these were short-lived, going out of business after producing one or two movies. The total output of six companies compromises a quarter of the total number of films produced over the decade, whereas the remaining three-quarters were the products of more than 150 companies.

The average of annual production rose to 95 between 1958 and 1960, up from 54 between 1952 and 1957.

Among the major companies, Erler, Kemal, Er, Acar, Erman, Arzu and Ugur Film can be called as the ‘Big Seven’ of Turkish cinema's golden age from the early 1960s onto the mid-1970s. They accounted for approximately one-fifth of the total film output (∼3000 films) in this era. Note that the degree of oligopolistic control in Hollywood is much more apparent when compared with that seen in Yesilcam.

The term “legitimacy” is used here in line with the use of the concept in institutional theory: organizations pursue legitimacy by adopting norms, values, practices and structures that are prominent in their environment (Schuman, 1995).

The fact that the early managers of the first cinema halls prior to 1914 were all non-Muslims show that the city's minorities played important roles as a connection point (pointedly, one of the first movers to Yesilcam, the Ipekci Brothers, was from a Muslim-convert family of Jewish origin) in a business which was initially highly import-dependent.

The annual growth rate of country's economy had fallen from 9% in 1976 to 3% in 1977, to 1% in 1978 and finally to −0.5% in 1979 and even further down to −3% in 1980.

While Turkish films still managed to hold approximately half of the market in mid-1980s (down from 61.5% in 1980), their share had fallen to 29% in 1990 (Scognamillo, 1998, pp. 425–427). As a result, Erman Film had halted film production completely in 1982 and Arzu Film in 1988; Ugur Film would follow suit in 1992.

In 1995, only 10 Turkish films reached screens in Turkey and the total of their ticket sales was less than half a million (Baran, 1996, p. 215).

Only Erler Film had adapted to the changing circumstances of the 1990s by proceeding with producing popular TV series for private TV networks.

A tremendous growth has been observed in the total volume of exports from Hollywood since the mid-1980s so that foreign box-office earnings now constitute almost half of their total revenues (Waterman & Jayakar, 2000, p. 519). For comparison purposes, we can take a closer look at the export performance of the world's largest film industry in Bollywood. Although India's movie exports grew substantially from $10 million at the end of the 1980s to $100 million by the end of the 1990s, “when compared with Hollywood's $6.7 billion profits from foreign markets in the year 2000, some interesting contrasts begin to emerge between the world's largest film industry in Bollywood and the world's richest film industry in Hollywood” (Kumar, 2006, p. 136). In fact, when DVD and other merchandize are included, this figure rises to $13 billion in the case of Hollywood in the 2000s.

It should be noted here that the importance of the role played by formal education might be different in nature in this sector, due to the creative nature of the industry. See Scott (2005) for a detailed account of this role in the case of Hollywood.

This issue secured a priority on the agenda only in the recent revival observed in Istanbul's film cluster (usually in the form of partnerships with their European counterparts to make use of the EU support mechanisms like Euro-images and Media).

For a discussion of the link between the issue of generalisibility and path dependency, see Mahoney (2000) and Pierson (2000).