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Government support for cluster development important


Themes: Entrepreneurship

Dr Christos PitelisSupply-side and industrial policies being employed by government, if combined with related policies, could strengthen both clusters and the eco-system and bring advantage to the whole economic zone

East London’s ‘Tech City Cluster’ will benefit from government intervention and support following its initial organic development, says Dr Christos Pitelis, Reader in International Business & Competitiveness, Cambridge Judge Business School.

An acclaimed expert in International Business & Competitiveness, Dr Pitelis thinks government help with funding and improving the regulatory framework to make development easier are good steps in the right direction.

Tech City is the community of creative and digital businesses in the area around Old Street and Shoreditch in East London which is getting £1 million support from the Technology Strategy Board.

Dr Pitelis has been researching the conceptual framework around the creation of clusters and supporting eco-systems for his research entitled ‘New Entrepreneurial Ecosystem Co-creation and Appropriability’.

It looks at existing literature, which he says underplays the role of ‘purposive’ human action, especially that of entrepreneurs with the ability to capture profits generated by an innovation and entrepreneurial management, in building a strategy to create and co-create organisations, markets and support networks.

Among his conclusions: clusters can involve advantages, and entrepreneurial managers, faced with choice, will help to co-create them and stay with them as long as they appropriate more value.

Dr Pitelis is an advocate of the British government’s intervention like that taken to support the Tech City Cluster.

He says that if that policy is combined with related policies like that of the recently announced economic zones, clusters in these zones could exploit and leverage local knowledge.

“It’s bottom up but at the same time at the margins. If co-located with clusters or near clusters, then it could strengthen both the clusters and the eco-system and the advantages of the economic zone. All these supply-side and industrial policies now being employed by government could be more effective and could help both the cluster and the economy as a whole.”

Dr Pitelis adds that if a cluster has advantages in terms of value appropriation by drawing in entrepreneurs and appropriate human resources and other similar benefits, then large companies have an incentive to co-locate there.

“Another important consideration for government is to ensure that the advantages of big companies are being leveraged but at the same time they are not taking over, in one sense, and that a degree of healthy competition remains in place.

“It is always an important role of government to have a competition policy regulatory framework that allows healthy competition and a level playing field.”

Dr Christos Pitelis is Director of the Centre for International Business and Management (CIBAM) at Cambridge Judge Business School, a Reader in International Business & Competitiveness, and Fellow in Economics and Director of Studies in Management Studies at Queens’ College.