Cluster policies can be seen as a recent stage of innovation policy in Germany which started in the 1990s (Fier and Harhoff 2002). Such policies are motivated and inspired by a literature which builds on the influential works of Allen (1983) on collective invention, Lundvall (e.g. 1988) on user-producer interaction and collective learning, Freeman (1991) on innovation networks, and Porter (e.g. 1998) on the benefits of co-location in industrial clusters. In the following, a lively discussion about the justification, means of implementation, benefits, and timing of cluster policies developed (e.g. Martin and Sunley 2003, Brenner and Schlump 2011). Among the main policy rationales are system failures, where potentials for positive externalities or technological spillovers are not fully exploited (Cantner and Graf 2003, Moodysson and Zukauskaite 2014).
Despite the convincing theoretical arguments in favour of cluster policies, there is a lack of empirical evidence that cluster policies in general exert a positive influence on cluster regions (Edler et al. 2013, Uyarra and Ramlogan 2012). These studies show the difficulty of evaluating cluster policies, due to their complexity, high dimensionality, and the time dimension of the policy effects (Rothgang et al. 2017). In this paper, we address these problems by looking at the effects of cluster policies from different perspectives and on different levels. Specifically, we contribute to our understanding of cluster policies by analyzing procedural aspects of policy implementation, network development, the geographical dimension, and the effects on R&D activities.
Along these dimensions, we summarize and discuss the main findings of the accompanying evaluation (2008 - 2014) of the German policy programme Leading-Edge Cluster Competition (LECC). The LECC was initiated in 2007 by the German Ministry of Research and Education, continued until 2017, and is up to now the largest federal cluster programme with an overall budget of 600 Mill. €.
The paper proceeds as follows: Section 2 provides a detailed account of the LECC, compares its main features with prominent other national and international cluster programmes, and introduces the scheme for our impact evaluation. Section 3 analyses the positioning of the 15 clusters in the international (European) context. Sections 4, 5 and 6 address different outcome dimensions of the LECC, networking, regional impact, and effect on R&D investment. Section 7 concludes with policy implications.
The Leading-Edge Cluster Competition
With its Leading-Edge Cluster Competition (in German: Spitzencluster-Wettbewerb; LECC), the Federal Ministry of Education and Research (Bundesministerium für Bildung und Forschung, BMBF) is supporting innovation clusters in a nationwide contest for the first time. In three waves, 15 cluster initiatives were selected and provided with funds to support them on their way to becoming international leaders in their field of technology, or, if they already held such a position, to maintain or expand their lead. Through a sustainable mobilisation of regional economic potential, supporting the subsequent strategic development of Leading-Edge Clusters has the goal of increasing growth, securing or creating jobs and enhancing the attractiveness of Germany as a location for innovation and business.
The LECC applied a two-step selection procedure supported by a jury. The design of the selection process reflects the goals of the competition and takes into account the requirements for strategic coordination in a multi-stakeholder programme. The selection process was transparent and well communicated. As the feedback by the candidates consistently shows, there was sufficient time to coordinate and prepare the proposals. The selection criteria of the jury are plausible and were implemented adequately using a holistic approach that required the consideration of different dimensions of the programme requirements. The jury was independent and had the opportunity to consult expert advice in decision-making. Figure 1 illustrates the distribution of LECC applicants over the course of the three waves of the LECC competition.
As can be seen, the LECC was successful in motivating new cluster initiatives for the second and third wave of the competition. Moreover, several initially unsuccessful cluster initiatives were able to advance their organisational and strategic development in a manner that they succeeded in a later wave. In the second wave of the competition, only contestants that had already participated in the first wave – some of them in different constellations – were selected. In the third wave, a number of new candidates succeeded.
The evaluation of the LECC selection process also involved a comparison with other, internationally visible technology development programmes of high nationwide importance: the Pôles de Compétitivité in France, the Competence Centers for Excellent Technologies in Austria (COMET), the Centre of Excellence programme (SHOK) in Finland, as well as (on the German state level) the “Cluster Offensive Bayern” (a Bavarian cluster programme).
Like the Pôles de Compétitivité and COMET, the LECC used an application-based approach to select funded initiatives. The regional (political) level also played a certain role during the pre-selection period in these programmes. This regional focus was less pronounced in the Pôles de Compétitivité. The SHOK programme and the Bavarian Cluster Offensive used a top-down approach that was initiated by a comprehensive analysis during the preparatory stage. The evaluation results show that the application procedure is a key factor for the cluster initiatives to focus and constitute their activities. In addition, the results show that the design of the LECC was suitable for achieving the programme’s objectives. Like the LECC, the other selected programmes are implemented since several years.
In respect to targets, all these cluster programmes – except for the Bavarian “Cluster Offensive” – focus primarily on research and innovation. A difference between the programmes is that the Pôles de Compétitivité and the LECC do not involve any funding of the underlying cluster management (CM) structures. However, there was no indication that the decision not to allocate funding to CM structures resulted in any disadvantages for either programme. After all, the cluster initiatives in both programmes showed a positive development. Another difference is the funding of infrastructures, which is possible within the Pôles de Compétitivité and SHOK and not in other programmes. All programmes, including the LECC, explicitly support applications for complementary funding on the national or EU level. The funding periods are of similar length and appear to be suitable for achieving the goals of supporting cluster development.
It is too early to quantify the extent to which the LECC has contributed to strengthening the clusters. However, it is possible to estimate whether the conditions are suitable for the competition to exert a noticeably positive influence in future. To answer this question, the role of Leading-Edge Clusters in their innovation environment was investigated in order to assess their regional and sectoral positioning.
Figure 2 shows the geographic distribution of the 15 Leading-Edge Clusters and roughly 640 cluster initiatives that were identified in Germany at the national or Länder level by the end of 2013. The sheer number of cluster initiatives, which in almost all cases receive funding, primarily by the states, shows the importance that promoting clusters has gained for innovation policy in Germany. While all the German Länder support clusters, the number of funded clusters and the intensity of support vary considerably. The Leading-Edge Clusters are integrated into existing network and cluster structures that are also supported by the Länder.
The financial support for Länder clusters is usually for a limited term only, sometimes using financial support from the European Fund for Regional Development (EFRE). Besides other factors, the regional distribution of cluster initiatives results from the regional industrial structure: The more a region is industrialised, the greater the number of clusters initiatives and networks (e.g. in North Rhine-Westphalia and Baden-Württemberg). There is a north-south divide in the distribution of the 15 Leading-Edge Clusters: Nine are located in southern Germany. In addition to the industrial structure, the observed regional differences also reflect the research intensity of the local economy. Finally, the observed differences also depend on the degree to which firms, science and government succeed at joining forces to pursue a common strategy.
The LECC had no restrictions in respect to sectors or technology fields, which is why the Leading-Edge Clusters are rooted in different sectoral innovation environments that exhibit diverse patterns of research and innovation. Figure 3 compares the sectoral distribution of the Leading-Edge Clusters with the distribution of all the participants in the LECC, as well as the entirety of comparable innovation clusters in Germany that were identifiable at the national and Länder levels. The number of innovation cluster initiatives (370) is significantly lower than the total number of cluster initiatives. The latter also includes cluster initiatives that cannot be categorised as innovation clusters due to the industries in which they are active or other characteristics.
The effective dimensions of the LECC are reflected in the funding guidelines for the competition in the form of short-term, midterm and long-term objectives (Fig. 4). The general timeline of the effects outlined here was confirmed by the analysis.
The effects that correspond to these goals range from activities that were initiated (expenditure of additional funds by the stakeholders, networking, knowledge exchange, changes in the CM processes) to direct and indirect results of the cluster activities (innovation, technology development) to long-term economic effects (increased competitiveness, value-added, employment and wealth). To be certain that the results described here are actually caused by the LECC, it would be ideal to make a comparison with the development of the Leading-Edge Clusters without the LECC. This so-called counterfactual situation is not observable. However, the methods of econometric group comparison analysis make it possible to scrutinize whether an observed effect has actually been caused by the LECC. These methods were used wherever the available data permitted. In many cases where this was not possible, the question whether observed results were caused by the LECC was addressed based on well-founded assessments.