Barcelonia, Spain – Belgium – China – Intel Corporation – Israel – Japan – London, UK – Medellin, Colombia – Monterrey, Mexico – Munich, Germany – Recife, Brazil – Silicon Valley, USA Taiwan – VentureWell (NCIIA)
Case Studies Applying the Global Clusters of Innovation Framework
Does Silicon Valley have worldwide relevance? How can it provide guidance for economic development in other regions of the world? Twenty practitioner academics examined the makeup of innovation communities in diverse settings around the world, probing the role and behaviors of key players [institutions, organizations, corporations, universities, government, and individuals], comparing those communities with the trajectory of Silicon Valley, and looking for lessons, insights and strategies useful for emerging innovation economies.
Munich, Germany – After entrepreneurial booms in late 1800s and post WWII that birthed global firms like BMW, Siemens, Allianz, Munich has experienced ongoing economic prosperity, but has not sustained production of high-growth “born global” companies. In the last decade, government-financed initiatives at Technische Universität München(TUM) http://www.tum.de/en/tum-business/ and a donor-backed, self-financed entrepreneurship center (UnternehmerTUM) https://www.unternehmertum.de/index.html have provided spin-out support, entrepreneurship education, seed financing, industry and global linkages. A consortium of 4 Munich Universities (4Entrepreneurship) shares best practices and offers training & incubation programs to the 100,000 university students in Munich
Belgium – With its strategic location, good transportation infrastructure, and skilled workforce, Belgium successfully shifted from manufacturing to service industries and being a global entryway for European markets. Disinvestment and relocation of multinationals in 1960s left Belgium’s economy dominated by local SMEs limited by small local market and talent resources. Recognizing the need for an ecosystem to generate high-growth, globally-oriented companies, the Flemish regional government established a non-profit strategic research organization iMinds https://www.iminds.be/en to fund technology commercialization collaborations between universities and industry, to build a positive venturing climate, and to support company participation in global markets.
Barcelona, Spain –Barcelona was ‘the Catalan Manchester’ in the late 1800s and early 1900s, with manufacturing in urban industrial neighborhoods (Poblenou), but migration of industries to the city’s periphery in 1970s/1980s left these neighborhoods marginalized and economically degraded. Through urban renewal begun during 1992 Olympics, the city government built transportation and other infrastructure, revitalized shoreline and other neighborhoods. In 2000, in collaboration with universities, businesses and other stakeholders, the city created a model for ‘smart city’ redevelopment in the 22@ innovation district http://www.22barcelona.com/index.php?lang=en , combining living and cultural spaces with smart infrastructure and the development of five high-tech industry clusters.
London, UK –Historically a center for trade and finance, London has continued its vitality even during periods of national economic stagnation. Since 2007 a vibrant high-tech startup community has grown organically in East London’s Tech City http://www.techcityuk.com/, fueled by highly skilled international immigrants and supported by existing financial and university institutions. This Cluster of Innovation exhibits many characteristics similar to Silicon Valley, such as mobile resources, short business cycles, alignment of interests, ‘born global’ companies, and entrepreneurial leadership. Government’s role has been minimal, reforming visa & IP laws and providing some funding and tax breaks for early stage investors. Current needs are bridge capital, experienced investors, and UK exit opportunities (acquisitions & IPOs). London’s innovation cluster is developing at a rapid pace.
Israel –Since the 1990s Israel has been strongest high-tech cluster outside the USA. Israel’s entrepreneurial culture and skilled immigrant population, government defense and civilian R&D funding, and a strong local VC industry contribute to its success, as well as its strong ties with Silicon Valley and other global clusters. However, Israel is vulnerable to global economic downswings because of reliance on exports and foreign capital. Many of the best entrepreneurial startups migrate overseas or are acquired early, and with a lack of bridge capital, few large domestic companies are created. Government intervention is needed to support this innovation cluster by expanding the higher education budget, diversifying the high-tech sector, and provide resources to reduce risks for growth of larger companies.
Japan — Post WWII, Japan was an innovative hotbed, birthing global firms like Panasonic, Toyota, Canon, Sony and Honda. However, the last 20 years have been “lost decades” with minimal economic growth and a dearth of new innovative companies. Cultural, educational, legal and financial factors hinder entrepreneurial activity. Early in the 2000s Japan’s national government identified entrepreneurship as a vehicle to restart the economy and universities as drivers of innovation. National universities were made financially independent from the government and given IP rights. As a model, the University of Tokyo developed Innovation and Entrepreneurship Office in the Department of University & Corporate Relations http://www.ducr.u-tokyo.ac.jp/en/, which facilitates entrepreneurship education, technology transfer and seed funding and partners with a private donor to create an incubation facility.
Taiwan –In the 1970s, aided by scientists and engineers returning from Silicon Valley, the Taiwanese government invested in technology development with the Industrial Technology Research Institute https://www.itri.org.tw/eng/ and the Hsinchu Science Park http://www.sipa.gov.tw/english/index.jsp and formed linkages with SV firms to become a leading personal computer and semiconductor manufacturer. The government’s ban on videogames also inadvertently fostered PC and semiconductor industry growth. Linkages between US and Taiwan companies progressed from contracts to cooperative and independent product development and, to reduce costs and maintain their competitiveness, Taiwanese companies move production to mainland China. However, increasing competition in linkages with SV and in IT manufacturing from China and SE Asia threaten Taiwan’s niche in the value chain. Taiwan is responding by investing in developing biotechnology industrial hub and working to restore educational & transactional linkages with Silicon Valley.
China – There has been explosive growth of private enterprises since the opening of Chinese economy in 1978. However, lingering restrictions on financing and market entry for private businesses and policies favoring large, state-owned companies force entrepreneurs to rely on family-financing and maintaining social and political relationships (guanxi). The gap between official policies favoring private enterprise and the lack of local implementation compel entrepreneurs to be creative, working around limitations, leveraging networks and innovative business models. This has caused a recent slowing in growth rate of private enterprises. With or without government support, entrepreneurs are looking to clusters to transform China’s production patterns through global interconnectedness and innovation.
Medellin, Colombia and Monterrey, Mexico–Many Latin American regions face underlying challenges to healthy economic development, such as overexploitation of resources with minimal value return, lack of uncorrupted and transparent rule of law, lack of trust and ability to align interests, misguided transplants of developed-nation models, and disregard for social welfare and environmental resilience. Medellin and Monterrey are examples of two cities, both leading industrial and commercial centers in the 20th century, who faced severe economic decline due to drug cartel warfare (1980s in Medellin; mid 2000s in Monterrey), ineffective and corrupt government, and exodus of talent and capital. Both are also experiencing economic and social renaissance as the result of coordinated efforts of public and private sectors. The question remains whether these these successes be sustained in the context of continued external threats and weak rule of law.
- Medellin: In 2002-5 the Colombian military disbanded drug militias. Subsequent partnerships of city government, universities and private industry implemented initiatives to create a revitalized industrial district with a high-tech research park RutaN http://rutanmedellin.org/index.php/en, to develop sustainable “green city” program, and to invest in public transport and services to connect marginalized neighborhoods into the city. In 2013 CitiGroup selected Medellin as “most innovative city in the world.” http://online.wsj.com/ad/cityoftheyear
- Monterrey: In 2005-10 the city of Monterrey and the Nuevo Leon state government focused efforts on a master plan to reverse the city’s decline. Several programs have improved public safety in the metropolitan area, invested in infrastructure and job development, and aligned stakeholders in an initiative to shift to a knowledge-based economy with the creation of the Institute of Innovation and Technology Transfer (I2T2) http://www.mtycic.org:8080/
Recife, Brazil – Brazil experienced robust economic growth 1968-74, followed by recession and then solid recovery with Real Plan of inflation control in the 1990s. The national government played active role, with regional economic development agencies, large state enterprises, and incentives for foreign investment. However, national institutional gaps, known as the custo Brasil (high financing costs, complex regulatory environment, high taxes, skills gaps, corruption, and poor infrastructure) hamper business creation, and dependence on national government spending has hindered transformative regional development. With World Bank funding in 1997, Brazil’s Northeast states launched a clusters initiative including an IT cluster in Recife, the Porto Digital http://www.portodigital.org/ . The early nucleus of this cluster consisted of existing IT companies and informatics professors from the University of Pernambuco, who established CESAR, a commercial R&D center http://www.cesar.org.br/english/ . A broad collaborative process of academia, government and the private sector led to the redevelopment of Recife’s historic downtown into a thriving urban technology park with public spaces and services. Governance by a broadly representative non-profit insures independence and sustainability.
DISSEMINATORS OF ENREPRENEURSHIP AND INNOVATION
VentureWell (NCIIA) — VentureWell (formerly the National Collegiate Inventors and Innovators Alliance) http://venturewell.org/ is a non-governmental organization (NGO) that is leading initiatives to foster technology commercialization and entrepreneurship in public and nonprofit universities and colleges in the USA through experiential learning and mentorship (E-teams). It is also the conduit government programs, such as the National Science Foundation’s Innovation Corps initiative to train scientists across the country in technology commercialization, and it fosters the formation of networks and collaboration through convening meetings, setting standards, giving recognition to role models, and creating of formal collaboration networks. VentureWell’s programs disseminate innovation cluster skills and knowledge and also connect more remote locations to centers of innovation.
Intel Corporation — Intel Corporation is a global enterprise and leader in semiconductor design and fabrication, which for over ten years has supported the development of entrepreneurship and innovation competency in regions all around the world http://www.intel.com/content/www/us/en/education/university/creating-an-entrepreneurial-culture.html . Their efforts have extended from fostering entrepreneurship education and funding innovation with corporate venture capital http://www.intelcapital.com/advantage/power-of-partnership.html to creating entrepreneurship awareness through ideation workshops for youth and adults in developed and developing countries around the world. Intel’s programs not only create value and well-being in global communities but also develop a better context, market and future for its business. Like VentureWell, Intel serves as a curator and disseminator of best practice, but on a global scale.