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Clusters and Cluster Initiatives: the Role of Collaboration and Social Capital in Building a System of Innovation in Ireland

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Clusters and Cluster Initiatives: the Role of Collaboration and Social Capital in Building a System of Innovation in Ireland CLUSTERS AND CLUSTER INITIATIVES: THE ROLE OF COLLABORATION AND SOCIAL CAPITAL IN BUILDING A SYSTEM OF INNOVATION IN IRELAND Patrick R. Ivory B.A. (Econ), M.Litt. University: Dublin City University Supervisors: Professor David Jacobson Dr. Siobhain McGovern School: Business January 2012 Submitted for the degree of PhD at Dublin City University I hereby certify that this material, which I now submit for assessment on the programme of study leading to the award of PhD is entirely my own work, that I have exercised reasonable care to ensure that the work is original, and does not to the best of my knowledge breach any law of copyright, and has not been taken from the work of others save and to the extent that such work has been cited and acknowledged within the text of my work. Signed: ____________ (Candidate) ID No.: 56121831 Date: January 2012 i Acknowledgements I wish to acknowledge the help of a number of people in the research conducted in this thesis. The generosity of the people involved in the different cluster initiatives who provided interviews for the thesis was greatly appreciated. A deeper understanding of how collaboration works would not have been possible without the input and insights of these people (too many to name) from industry, universities, government and state agencies. Thanks is also due to colleagues in my DCU Professional Doctorate Programme (PDP) ‗action set‘ Sinead Brennan, David Kenefick, Peter Robbins and Anthony Briody. I very much appreciated the support of my employers IBEC, Danny McCoy and Brendan Butler, in undertaking the thesis. I would also like to thank my good friend, and IBEC colleague, Tony Donohoe for proof reading the entire thesis. I would like to especially thank my supervisors in DCU, Professor David Jacobson and Dr. Siobhain McGovern. I greatly appreciated David‘s advice and research experience. Siobhain, as the first Director of the PDP in DCU, was also hugely supportive. The challenges they confronted me with helped to make this thesis what it is. Finally, my greatest debt of gratitude is to my wife Bernadette, my son Robert and my daughters Aoife, Kate and Róisín. I could not have completed this thesis without their support and good humour, which enabled me to meet the many challenges faced along the way. ii TABLE OF CONTENTS TABLE OF CONTENTS ....................................................................................................... iii Abstract .................................................................................................................................. vii Lists of Tables ....................................................................................................................... viii List of Figures ......................................................................................................................... ix List of Acronyms ..................................................................................................................... x Chapter 1 Introduction ............................................................................................................ 1 Chapter 2 Clusters for competitiveness and innovation: collaboration– insights from management strategy, institutional economics and innovation systems ................... 6 Section 2.1: Management strategy – the firm, clusters and collaboration .......................... 6 The Positioning school approach and industry ‗clusters‘ 6 Firm location and the evolution of the cluster concept 8 Criticisms of the ‗diamond cluster model‘ 11 A. The emphasis on local demand in the ‗diamond cluster model‘ 11 B. Foreign investment and the role of multinational corporations in clusters 12 C. The role of Government policy in clusters 13 D. Firm and industry collaboration within clusters 15 Section 2.2: Collaboration and the ‘institutional economics’ approach ........................... 17 Old or Original Institutionalism 19 ‗New‘ or neo-institutional economics 21 North ‗Old‘ or ‗New‘ institutionalism: the rules of the game, the players - moral norms and ethical codes 22 Section 2.3: Embeddedness and Social Capital ................................................................... 25 Embeddedness 25 Social capital 28 Definitions: bridging and bonding forms of social capital 29 Further definitions - structural and cognitive social capital 33 Social capital and trust 37 The dark side of social capital in a collaborative business context 39 Social capital and government 41 Section 2.4: Innovation systems - national and regional .................................................... 46 National systems of innovation 46 Sectoral and regional systems of innovation 50 Systems of Innovation (SI) need for conceptual and theoretical clarity 54 Definition and characteristics of organisations for collaboration (OFC) 56 Section 2.5: Collaboration within a new framework ......................................................... 60 Concluding comments 68 iii Chapter 3 Philosophical basis and Methodology of the thesis ......................................... 70 Section 3.1: Philosophical basis of thesis .............................................................................. 70 A pragmatic realist philosophy of research 72 Section 3.2: Methodology of thesis ........................................................................................ 75 Outline and methodology of the case studies 77 Concluding comments 80 Chapter 4 The Irish Context state agency and business organisation evolution ........... 81 Section 4.1: Irish Economic Development – institutional factors ...................................... 81 The impact of institutional economic change on Ireland 82 The changing nature of Irish trade 87 Section 4.2: The industrial cluster concept and a weak system of innovation in Ireland ..................................................................................................................................... 89 Cluster policy in Ireland 89 A weak system of innovation 92 Section 4.3: State agencies for industrial development - the evolution of organisational structure in Ireland ...................................................................................... 95 The foundations of a ‗national innovation systems‘ approach 101 Section 4.4: An assessment of organisational structure and enterprise supports for industry ........................................................................................................................... 104 Section 4.5: Industrial and business representation the evolution of organisation structure in Ireland ........................................................................................ 109 Concluding comments 113 Chapter 5 Clusters, social capital and the building blocks of a national innovation system in the modern economy of Ireland ...................................................... 115 Section 5.1: The modern economy - Irish ICT and software clusters ............................. 115 Electronic hardware and the decline of microcomputer assembly 118 An embedded ICT sector — the potential for cluster initiatives 118 Clustering in the ICT Software and services subsectors 122 Section 5.2: Social capital and Organisations for Collaboration (OFCs): ICT Ireland and the Irish Software Association ....................................................................... 126 Case study 1: ICT Ireland and ISA - bonding social capital 128 Case Study 2: ICT Ireland and the ISA bridging social capital 135 The Customs Consultative Committee (CCC) 135 The ICT Clearing House 137 ISA and Enterprise Ireland 143 ICT Ireland and IBEC 146 Section 5.3: SFI and CSETs – social capital within the building blocks of a national innovation system .................................................................................................. 148 Science Foundation Ireland 148 iv Centres for Science, Engineering & Technology (CSETs) - social capital in early stage cluster initiatives 150 Case Study 3: Centre for Telecommunications Value Chain Driven Research 153 Case Study 4: The Alimentary Pharmabiotic Centre (APC) 158 CSETs a rich area of potential research and analysis 165 Section 5.4: Leadership 4 Growth social capital in a cluster initiative in the software sector ...................................................................................................................... 169 Case Study 5: Leadership 4 Growth (L4G) 170 Setting and Objectives of the Leadership 4 Growth Cluster Initiative 171 Process and design 172 Framework consensus 176 Governance and Financing 178 Scope of member participants 180 Resources and facilitators 182 The Coaching element of the L4G – positive or negative social capital? 185 Performance of the cluster initiative: A successful collaboration between industry, state agency and a university? 188 Concluding comments 193 Chapter 6 Clusters, social capital and the building blocks of an national innovation system in a traditional sector of the Irish economy ...................................... 195 Section 6.1: The traditional economy: The food and dairy sector ................................... 195 Section 6.2: Dairy industry clustering – cheese and ingredients ..................................... 199 Aspects of clustering - Irish dairy sector in the mid-1990s 199 Clustering in cheese and ingredients segment of the Irish dairy sector 203 The evolution of cheese manufacture 1960s - 2010 204 Geographic concentration of the cheese and ingredients industry segment 207 Section 6.3: The diamond model
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