Cluster planning and cluster strategy in regional economic development organizations

Green, Timothy

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https://hdl.handle.net/2142/50748 Copy

Description

Title

Cluster planning and cluster strategy in regional economic development organizations

Author(s)

Green, Timothy

Issue Date

2014-09-16

Director of Research (if dissertation) or Advisor (if thesis)

Feser, Edward J.

Doctoral Committee Chair(s)

Feser, Edward J.

Committee Member(s)

• Hopkins, Lewis D.
• Schwandt, Thomas A.
• Weber, Rachel

Department of Study

Urban & Regional Planning

Discipline

Regional Planning

Degree Granting Institution

University of Illinois at Urbana-Champaign

Degree Name

Ph.D.

Degree Level

Dissertation

Keyword(s)

• economic development
• regional economic development
• economic development organizations
• industry clusters
• economic development planning

Abstract

Paper 1: The changing landscape of regional economic development practice: Findings from a survey of regional economic development organizations in US metropolitan areas Regional-scale economic development practice has evolved considerably in the past few decades. The change has been influenced by trends in regional governance of many policy spheres, particularly the expanding role of the private sector. It has also been driven by federal support for a private sector voice in regional organizations in economic development and related fields like workforce development. As a result, regional economic development policy is shaped by organizations that differ considerably from the regional councils and regional planning districts that characterized the organizational landscape a few decades ago. Because this new generation of organizations, whose members are variously called “regional partnerships for economic development” or “regional marketing partnerships,” was created outside of formal government, no systematic national census of them exists. This paper presents the results of a census and survey of such organizations, only the second of its kind and the first in over a decade. The data show that the number of such organizations continues to grow, to the point where they exist in nearly every metropolitan area over a certain size. The data also show that while their focus remains marketing and attraction efforts, the organizations engage in a wide range of activities including workforce development, local policy advocacy, business retention, and various collaborative efforts with other regional partners. It also shows that the organizations take widely varying forms involving different relationships between the public and private sector, and that their association with a particular geographic scope, and sometimes their very existence, is fluid and for some continuously negotiated. Though only a first look at regional economic development organizations, this paper makes several important contributions. First, it proposes and implements a method of identifying the organizations that might be repeated at specific intervals in order to track the existence of them over time and by place. Second, it presents an updated picture of such organizations in terms of basic factors like size, budget, and frequency. Third, it shows that considering the organizations only as “regional marketing partnerships” suggests on overly narrow view of them given the many activities in which they engage and their expanding role in regional economic development policy. Paper 2: Equal parts location quotients and press releases: the results of a cross-sectional survey of cluster-based regional economic development efforts in the US In a much cited article from 1990, Levy distinguished between rational model and sales activities in local economic development practice. More recently, the debate around cluster-based economic development practice has broken along similar lines. Clusters are understood as either a critically important object of analysis or an updated form of industrial targeting. This paper, which presents the findings from a national survey of regional economic development organizations in the US, shows that the sharp distinction made by Levy and those in the cluster debate may be a poor lens through which to understand cluster policy and practice, and economic development policy more generally. The survey was sent to 234 regional economic development t organizations in the US, and yielded 104 responses, for a response rate of 44%. The findings show that nearly every organization claimed to have identified clusters in its region though the clusters vary in sophistication. The prevalence of “advanced manufacturing” and “green tech” clusters suggests that criticism of cluster practice is well founded, but seemingly more sophisticated clusters were common. Furthermore, individual organizations often had a mix of what might be termed “real” and “aspirational” clusters, and the level of analytical sophistication in different efforts did not explain the variation in cluster types. Instead, the findings suggest that cluster-based economic development practice is more complicated than simply identifying and targeting certain clusters. The survey findings show that while targeting and marketing activities were the main motivation for cluster identification efforts, small business development and workforce development were also important. Respondents also reported that the outputs of cluster analysis affected not only recruiting efforts but also organizational budgets and strategic plans, as well as outreach to local firms. The general picture that emerges from the findings is one in which cluster practice involves the application of “rational” type findings to building local relationships, and where successful local relationships are valued jointly for the increased capacity for action they create and as a powerful tool in successful marketing campaigns. This complicated mix of sales and rational activity that comprises cluster-based economic development practice shows Levy’s distinction to be somewhat artificial. Cluster-based economic development practice is shown to involve significant parts reasoned decisions and unrealistic aspirations, and seems well-suited to encouraging a dual focus on firms currently in the region and those which might locate there. This last finding is likely to be one of the enduring strengths of cluster policy, in that it forces economic development organizations to take the concerns of local firms seriously while allowing a large role for traditional marketing and recruitment. Paper 3: All Planning, No Strategy: Explaining Cluster Policy Decisions of Regional Economic Development Organizations The widespread adoption of cluster-based economic development strategies by regional economic development organizations has generated excitement and derision in equal measure. Cluster enthusiasts point to the concept’s potential for encouraging locally-focused development around agglomeration economies, and for increasing understanding of regional economies more generally. Critics argue that the concept fails to introduce new ideas in to practice, and that it serves merely to cloak traditional business attraction efforts in more sophisticated language. At the heart of this debate is the question that this research attempts to address: does the use of a cluster-based approach add anything of value to economic development practice, and if so how? Through a set of four case studies of decisions in two different regional economic development organizations, this research attempts to understand how cluster analysis and the cluster concept itself informs major decisions by the organizations. In order to do so, the research rejects the rational comprehensive model that dominates much of economic development planning literature and that entails multiple unrealistic assumptions about the environment in which economic development policy evolves. It relies instead on a conception of the policy process that assumes neither agreement nor cooperation as a precursor to planning, and the idea that plans inform rather than control decisions. By constructing each case from interviews with key informants and reviews of relevant studies, plans, and progress reports, the research works backward from each decision to identify how and where the cluster concept and cluster analysis informed them. The study finds that cluster analysis and the cluster concept do inform major economic development policy decisions in important ways. However, the outputs of a traditional cluster identification analysis were never sufficient to suggest concrete policy proposals. Instead, such analysis served as the beginning of an extended, multi-year process that involved further research on specific clusters and outreach to specific cluster firms. The final decisions were affected more by information and relationships that arose during that process than by the initial analysis. The eventual decisions all embodied the cluster concept to some degree. In particular, the concept helped organizations identify sets of firms that were potential collaborators, understand connections between local forms and those in nearby regions, and prioritize limited organizational resources. In sum, the research shows that cluster-based economic development planning approaches can usefully inform economic development practice, but that analytical techniques to “identify” clusters contribute only a small part of that value.

Graduation Semester

2014-08

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http://hdl.handle.net/2142/50748

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Copyright 2014 Timothy F. Green

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