Netwin (Networking for Innovation), funded by the European Commission's Directorate-General for Regional Policy under the Recite II programme, began in 1998 with the formation of 24 small-to-medium-sized enterprise (SME) networks. Its aim was to examine how partnerships between companies in the same geographic zone could be developed to enhance innovation and competitiveness. Project partners included Business Innovation Centres (BICs) in six regions - Aditec in Northern France, BIC in Attika, Greece, Portugal's Cpinal, Westbic in Ireland, the United Kingdom's Norbic and Tecnopolis in Italy.
Networks were specifically developed in these regions, including areas where previous attempts at clustering had been unsuccessful.
The networks were developed and monitored over a three-year period. The success factors identified included local features that facilitated the functioning of networks, clear operational rules, the delivery of competitive advantage to cluster members, and positive impacts on business functions such as strategy, marketing and production. A solid conceptual framework was developed which offers a clear understanding of how business operates within the local environmental context (see diagram).
Netwin's conceptual framework encompasses concepts related to territory, networks and businesses, and the links between these three levels. If the complexity of these linkages is taken into account in developing clusters, they can improve the performance of firms by generating competitive advantages which, in turn, positively impact business functions.
Netwin's fieldwork led to the development of a set of tools for identifying, auditing, constructing and evaluating clusters. The tool kit includes questionnaires, analysis sheets and advice for identifying potential clusters, defining action plans and monitoring overall effectiveness. It includes 14 detailed case studies of successful networks, and a list of the factors that are considered essential for the identification and development of successful networks.
Collating results from six different regions was challenging, but produced a standard and transferable reference framework within which the operational tools were constructed and tested. In-depth information from the six regions also demonstrated the adaptability of the tool kit, which can be applied to a variety of geographical locations and economic contexts. "There are numerous case studies about successful clusters," says Netwin inter-regional project manager Alexandre Desrousseaux. "What the tool kit still lacks is an explanation of how these successes can be reproduced in other countries."
Potential users of the kit include BICs, chambers of commerce, business managers, local and regional development agencies and policy-makers. It will enable development agencies to provide local SMEs and policy-makers with new opportunities for service provision, and will also assist in communicating the benefits of clustering to business managers. Netwin's fieldwork highlights the need for clusters to reflect local business needs, if investment is to be effective.
Evaluating business benefits
For a group of solar-heating manufacturers in Attika, for example, the benefits of working together were clear from the outset. They were able to improve their production methods by jointly purchasing new machinery that they could not have afforded individually. "These companies can now offer better-quality solar-heating systems at a lower price," Desrousseaux explains.
In addition to economies of scale, shared specialisations and joint promotional campaigns, clustering also facilitates innovation through the exchange of ideas. In Roscommon, in Ireland, discussions with other local crafts businesses led a local jam manufacturer to focus on being the best locally rather than expanding her business to London. "Information flow is essential for innovation, and proximity is important for the exchange of information," says Desrousseaux.
Netwin's findings were presented to Commission officials and to 150 potential users at a conference in Brussels in June. Feedback obtained there indicated that regions would need to employ a full-time co-ordinator to lead implementation of the Netwin methodology, identify and develop cluster opportunities and monitor their effectiveness. A non-profit association comprising Netwin partners and users will be established in September to exchange information on how the methodology can be further improved. "As the skill levels of local cluster managers increases, the methodology will be enhanced," says Desrousseaux.