Wednesday, July 18, 2007

Reflection on cross-border industrial cluster network

In an earlier post (Networking Industrial Clusters: Global Clusters) I explored some thoughts on developing global clusters. The idea was to share not just procurement advantage but also product, market, information, technicalities, competencies as well as tacit skills.

Luckily, I got a chance to test these proposition through a micro-project funding provided by Interreg3A wherein we (Dr. Keith Perks, Prof. Aidan Berry and I at Brighton Business School in UK) and (Dr. Roland Condor and Olivier Kavorski at the La Havre Business School in France) attempted to understand the possibility of developing an industrial cluster between Upper Normandy region of France and South East of the UK.

This blog post is a reflection on the experience.

The 'cross-border small business network opportunity study', as it was named, aimed at examining the opportunity of jointly developing a cross-border small business network by exploring present and future needs of expertise, knowledge and know how of SMEs and potential entrepreneurs operating within East Sussex and Upper Normandy. Using a pilot sample of SMEs and looking at other existing attempts of assisting entrepreneurial activities within the region the purpose of this study was to examine if a joint cross-border small business network is a relevant way to improve entrepreneurial skills and expertise, encourage collaboration, foster mobility, educate and train the SMEs and potential entrepreneurs in such a way as to enhance the attractiveness of the regional investments and engender sustainability among small businesses.

The study used both secondary and primary research for the research. It focused on understanding the entrepreneurs’ viewpoint using the need identification approach. Qualitative research methodology was used for the primary study as the aim was to explore the mindset and readiness of entrepreneurs regarding a cross-border small business network. In-depth interviews were carried out in both East Sussex and Upper Normandy regions. This bottom up approach of building information helped in providing robustness to the study.

While undertaking the study we assumed that the entrepreneurs within both regions would be highly interested in exchange of ideas, leading to business opportunities leading to further collaboration and partnerships between both regions which in turn would generate higher economic growth for both regions. However, what we found is that entrepreneurs are largely concerned with bottomline and their individual/organizational interests first. Collaborations are seen as an important part of organizational strategy however they are not a priority for the entrepreneurs.

Not all entrepreneurs are open to the idea of networking however, not all entrepreneurs are denying getting involved in networking exercise. The barriers to entry as stated by entrepreneurs are of three types: (a) Geo-demographic barriers; (b) personal/organizational barriers; and (c) veiled barriers. The geo-demographic barriers such as physical distance and language can be overcome using the help of technological advancements in communications of a network however, the personal/organizational barriers and veiled barriers are hard to overcome as they represent an entrepreneur’s view of the world and it would require massive effort with regard to change in attitude, value and belief system as well as cultural and mindset.

It would be improbable to think of an industry (or industries) based network between the regions. However, the possible solution for the same would be to focus on developing a niche network of several companies and several entrepreneurs willing to network across regions. The network will have to focus on both sector specificity and customer specificity. A network focusing either of these elements would not have higher chances of success.

From entrepreneurs’ perspective possible improvements in the bottomline is one of the biggest hindrances with regard to networking. According to them the networking process does not always provide value and so it is not within their priority list. They believe that the network should provide a competitive edge to the participants and generate substantial value however, they are not ready to put in initial effort to build and generate that value for the network.

In terms of communication it is quite clear that the web and email platform can only be used as supplementary communication platforms. They could help facilitate communication though cannot take the role of primary communication channel. Face to face interactions are a must for the network to build. However, the entrepreneurs would not involve their own effort in financial or psychological terms to create, develop and sustain the network. It was also observed that word of mouth is a favourable way among the entrepreneurial community to build networks. The word of mouth channel can resolve the issues related to trust and benefits derived from relationships as these are the precursor to building relationships among entrepreneurs.

The entrepreneurs also reveal that there is need of an intermediary which specifically focuses on bringing entrepreneurs together using its own resources as academic institutions and government agencies have not been seen as the best catalysts for the process.

This has been a fascinating journey with regard to understanding both sides of the coin. While the common sense approach suggests that 'Networking works' somehow 'bottomline' sways many potential opportunities into ashtray. I would surely welcome suggestions on improving this experience or testing it in other contexts to measure its reliability and validity. Contribute...