Chair for Cluster and Value-Chain Management Ass.-Prof. Dr. Alexander Bode

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1 Chair for Cluster and Value-Chain Management Ass.-Prof. Dr. Alexander Bode

2 Cluster development and cluster life cycle Prof. Dr. Alexander Bode Dipl.-Wirtsch.-Ing. Simon Alig Competitive advantage through cooperation We combine practice and theory, to examine the basis for competitive advantage due to clusters and cooperation. Chair for Cluster and Value-Chain Management Ass.-Prof. Dr. Alexander Bode

3 The Department at a Glance The department was established in 2006 at the University of Technology Darmstadt The department is endowed by HESSENMETALL (Employers Association of Metal and Electrical Industry in Hessen) We are based in the Rhine-Main region near Frankfurt London Darmstadt Paris EUROPA Brüssel Köln Bern Hamburg Berlin Leipzig Dresden Frankfurt Darmstadt Stuttgart München Prag Wien Warschau Bratislava Budapest We research and teach in the subjects of clusters, networks and international business We serve a cluster initiative with four clusters in Hessen (sectors: automotive, aerospace, plastics, mechatronics) In addition, we offer high quality service for existing clusters and support the specific initiation of new clusters Cluster Development Model TCI Global Conference Simon Alig 3

4 Agenda 1 Cluster Development 2 Case Study 3 Next Steps Cluster Development Model TCI Global Conference Simon Alig 4

5 Theoretical background Our model is based on the Relational View (Dyer/Singh 1998) (1) An effective control is one of the central starting-points to reduce transaction costs. Accordingly a device to increase the readiness of the co-operation partners to get involved with corporate added value. This negotiates either on casual self-monitoring based on confidence and social anchoring or with the help of an external cluster management with respective reputation. (2) Complementarity of the resources and skills is on hand when the resources of the co-operation partners create higher bonds than the profit they can accomplish on their own. (3) Measures for exchange of knowledge include periodical processes of company-wide interaction, which advance transfer, recombination and the generation of specialized knowledge. Network partners are the most important source for information and new ideas. (4) Interplant assets as well as specific relation ones are the basic requirements of the network ensure competitive advantage in the long term and to commute company success. Therefore one source for competitive advantage is the investment or rather the formation of specific cooperation assets. The assets have to be specifically concerted. Specificity includes three dimensions: (1) specificity of location, (2) specificity of physical values as well as (3) specificity of human resources. Cluster Development Model TCI Global Conference Simon Alig 5

6 Cluster with network characteristics Region Characteristics of Clusters Regional agglomeration of companies and related institutions in an industry Regional Development in foucs Relevanz Cluster-Init. Cluster Initiative Characteristics of Networks Regional as well as larger extension Competition Open access Cooperation and competition ( Coopetition ) Loose coupling Based on trust and regional specifities Limited access ( Club ) Focus on cooperation; no direct competition Intense collaboration Trust is important Involvement of Companies Companies as Stakeholder Low Sunk Cost Companies as Shareholder Sunk Cost Cooperation in complexe projects (e.g. R&D) Vision Contract Common Cluster-Vision No large contractual agreements Common goals and strategy Contractucal agreements Very relevant Not relevant at all Sources: Rosenfeld, S.A. (1997): Bringing Business Clusters into the Mainstream of Economic Development. In: European Planning Studies 5 (1997) Nr. 1, S Maskell, P./Lorenzen, M. (2004): The Cluster as Market Organisation. In: UrbanStudies 41 (2004) Nr. 5+6, S Porter, M.E. (1998): On competition. Boston, Vieregge, P. (2007): Cluster und Kompetenzstandorte: Wie identifiziert man Potenziale für regionale Kooperationen und Netzwerke?. Berlin u.a.: 2007, S Cluster Development Model TCI Global Conference Simon Alig 6

7 Our Understanding of Clusters Our approach combines the features of a cluster with key aspects of networks global Network No direct competitors Regional proximity of the companies Expansion Succesful Cluster-Management Cluster with network characteristics Cluster Trustful handling Common goals and strategies Often based on contractual agreements regional cooperative competitive Relation Cluster Development Model TCI Global Conference Simon Alig 7

8 Cluster Development We have developed the development model of the cluster Cluster Development Model TCI Global Conference Simon Alig 8

9 Cluster-Development Our model is based on Relational View Mechanisms of RV Action Configura ation Active Cluster-Management Trust Effective Governance Complementary Resources Knowledge exchange Cluster-Organization Cluster-Vision Knowledge Exchange Common projects Bilaterale cooperation Link to external partners Regional development Interplant assets Cluster Development Model TCI Global Conference Simon Alig 9

10 Agenda 1 Cluster Development 2 Case Study 3 Next Steps Cluster Development Model TCI Global Conference Simon Alig 10

11 Cluster Portfolio In addition to our research efforts in the areas of "clusters" and "networks", we serve four clusters as the cluster management We combine know-how and commitment of companies and establish central Hessen as an internationally recognized location for automotive suppliers We want to establish south Hessen as a mechatronic-location for companies and research institutions. We use the cluster as an indicator of quality and competence and thereby gain more influence on our industry environment Together we get new technologies to track and plan an innovative application center for plastics processing. Cluster Development Model TCI Global Conference Simon Alig 11

12 Companies of the Automotive- Cluster Automotive-Cluster Founded in the year SMEs of automotive suppliers in central Hesse No direct competitors competitors are not allowed, highly trustful environment An employee of the chair Cluster and Value chain management at the TU Darmstadt serves for the cluster management Close collaboration in four working groups R&D Sales and Distribution Purchasing Quality management Cluster Development Model TCI Global Conference Simon Alig 12

13 At present the Automotive-Cluster is in the period of growth The advantages for each company grow with increasing activities of the cluster. Hessenmetall Automotive-Cluster Cluster-Activity & Competitive Advantage for Membe er-companies Identification An active cluster management raises the advantages First contacts Exchange of experiences News of industry and technology Deepening of bilateral relations Development of new technologies Realization of synergies and savings (for example in the fields of purchasing) Growth of the awareness level (for example in the fields of marketing) Long term effects Initiation Growth Sustainability time The advantages for each company is all the more, if the cluster has characteristics of a network. Cluster Development Model TCI Global Conference Simon Alig 13

14 The Automotive-Cluster has four working groups Hessenmetall Automotive-Cluster R&D Sales & Distribution Purchasing Quality management Extraction: Extraction: Extraction: Extraction: Exchange of experiences about future requirements for automotive suppliers Software for innovation management Cost break down strategies New strategies for sales and distribution Customer relationship management Risk management Bundling of purchasing volumes Exchange of experiences about international sourcing Exchange of experiences about implementation of a quality management system KPIs for quality assurance 2 times in the year the managing directors of the companies are briefed of clusteractivities and decide about innovations in the cluster. Cluster Development Model TCI Global Conference Simon Alig 14

15 Standardized procedures in the working groups Structure of the working groups 4-8 meetings of each working group each year Standardized agenda 1. General news in the branch of automotive 2. News of the companies in the cluster 3. Focussed exchange of experiences 4. Project work 5. Organizational topics 6. Informal exchange of experiences Topics concerning only few companies take place in separate meetings The working groups are organized in standardized procedures. Cluster Development Model TCI Global Conference Simon Alig 15

16 Hessenmetall Cluster-Initiative We have experience with cluster management in various life cycle phases Identification Activation Development Sustainability External initiator / external support Network financed Cluster Management Cluster Development Model TCI Global Conference Simon Alig 16

17 Results We have experience with cluster management in various life cycle phases Cluster Foundation Knowledge Sharing Routines Vision / Strategy Trust Project Bilaterale Cooperation External Partner Cluster- Organisation Regional Developmen t Automotive Cluster Spritzguss Cluster Aviation Cluster Mechatronik Cluster Explanation O + + O 2010 O + O O O + O O +++ = high level of activity ++ = medium level of activity + = low level of activity 0 = not applicable Cluster Development Model TCI Global Conference Simon Alig 17

18 Agenda 1 Cluster Development 2 Case Study 3 Next Steps Cluster Development Model TCI Global Conference Simon Alig 18

19 Cluster-Development Model European Investigation How Cluster-Management can impact the Cluster-Development: Investigation into Performance of European Clusters Target of the project is to test the cluster-development model Data source are 140 expert interviews with european clustermanagers In cooperation with Cluster Development Model TCI Global Conference Simon Alig 19

20 Success Factors in Cluster Development We measure how Cluster activities become successful H1: The Cluster-development over time is driven by increasing activities. The Development includes four phases Identification, Activation, Accretion and Sustainability H2: The cluster-configuration has a positive impact on actions and on cluster-performance, measured by benefit for Cluster-members, internationalization, visibility and sustainability of the activities. Cluster Development Model TCI Global Conference Simon Alig 20

21 Success Factors in Cluster Development We measure the success depending on types of funding H3: Funding has an impact on benefit of the cluster-members. As higher the benefit is, as higher is the private funding over time. Cluster Development Model TCI Global Conference Simon Alig 21

22 Summary Cluster with network characteristics offer certain mechanisms and routines for creating competitive advantage Tasks of cluster-managers vary according to stage of cluster development Clusters base on a common vision and strategy With increasing share of private funding companies can pursue industry specific goals Continuous evaluation is key to success Cluster Development Model TCI Global Conference Simon Alig 22

23 Contact I would like to discuss your experiences related to the provided model Simon Alig Dipl.-Wirtsch.-Ing. Phone: alig@bwl.tu-darmstadt.de Technische Universität Darmstadt Management Studies: Cluster- & Value Chain Management Hochschulstrasse Darmstadt Germany Cluster Development Model TCI Global Conference Simon Alig 23