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European Cluster Observatory

Methodology report

Cluster-specific framework conditions for world-class clusters in emerging industries

December 2012

Enterprise and Industry

The views expressed in this report, as well as the information included in it, do not necessarily reflect the

opinion or position of the European Commission and in no way commit the institution.

Extension of the European Cluster Observatory,

Promoting better policies to develop world-class clusters in Europe

Contract N° 71/PP/ENT/CIP/11/N04C031

Methodology report

Cluster-specific framework conditions for

world-class clusters in emerging industries

Authors: Kristina Dervojeda, Fabian Nagtegaal, Diederik Verzijl & Mark Lengton, PwC Netherlands.

Contacts: Kristina Dervojeda, PwC Netherlands, and Erica Monfardini, PwC Luxembourg.

Coordination: Enterprise and Industry Directorate-General, Directorate D – “SMEs and

Entrepreneurship”, Unit D5 – “SMEs: Clusters & Emerging Industries”.

European Union, December 2012.

This work is part of a service contract for the Enterprise and Industry Directorate-General of the European Commission. This report is financed under the Competitiveness and Innovation Framework Programme (CIP) which aims to encourage the competitiveness of European enterprises.

Methodology report Framework conditions for world-class clusters in emerging industries

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Table of contents

Executive Summary 6

1. Introduction 15

1.1. Rationale, objectives and expected outputs of WP2 15

1.2. Definitions 16

1.2.1. Framework conditions 16

1.2.2. Clusters 17

1.2.3. World-class clusters 20

1.2.4. Emerging industries 21

1.3. Scope: seven emerging industries 22

1.3.1. Creative industries 22

1.3.2. Eco industries 24

1.3.3. Experience industries 26

1.3.4. Maritime industries 27

1.3.5. Mobile services industries 29

1.3.6. Mobility industries 30

1.3.7. Personalised medicine 32

1.4. Structure of the report 33

2. Methodology 34

2.1. Analytical framework: life cycle of regional industrial emergence 34

2.2. Linking framework conditions with the life cycle of regional industrial emergence 36

2.3. Step 1: Extensive desk-research 37

2.4. Step 2: Compiling and structuring framework conditions 39

3. Preliminary results for creative industries 41

3.1. Introduction 41

3.2. Precursor Stage 44

3.3. Embryonic Stage 45

3.4. Nurture Stage 48

3.5. Growth Stage 50

3.6. Consolidated overview of identified framework conditions 51

4. Preliminary results for eco industries 53




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5. Preliminary results for experience industries 63







6. Preliminary results for maritime industries 74







7. Preliminary results for mobile services industries 85







8. Preliminary results for mobility industries 93







9. Preliminary results for personalised medicine 104




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10. Next steps 116

10.1. Objective 1: methodology for the identification and benchmarking of framework conditions 116

10.2. Objective 2: Empirical surveys on framework conditions 116


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Executive Summary

The current report represents the methodology report for Work Package 2 of the “Extension of the European

Cluster Observatory: Promoting better policies to develop world-class clusters in Europe” carried out by PwC

for Enterprise and Industry Directorate General of the European Commission. The report contains the results

of the activities that took place in the period between June 2012 and September 2012.

The key tasks of WP2 include developing a methodology for the identification and benchmarking of framework

conditions relevant for the emergence of world-class clusters with emerging industries, and launching empirical

surveys on region-specific framework conditions. WP2 aims to collect, analyse and present the data in a way

that would maximise policy relevance and facilitate ease of interpretation for policy-makers. The outputs of

WP2 aim to form an innovative and valuable policy making tool for regional policy makers and other

stakeholders. Besides detailed case study reports on selected emerging industries, policy makers and other

stakeholders will be able to access a series of key variables and indicators that capture the framework conditions

and performance of their clusters in comparison with others.

The analysis within WP2 focuses on the following seven emerging industries: (1) creative industries; (2) eco

industries; (3) experience industries; (4) maritime industries; (5) mobile service industries; (6) mobility

industries, and (7) personalised medicine. At a later stage of the study, detailed case study descriptions will be

developed for the following three industries: creative, eco- and mobile services industries

The current report presents a detailed methodology for WP2, as well as the preliminary results of the analysis

for each of the seven emerging industries based on a comprehensive desk-research. The report also elaborates

on the next steps of WP2, and specifically on the validation round by experts and empirical surveys on region-

specific framework conditions for newly emerging industries.

In order to obtain a realistic picture of the framework conditions relevant for the emergence and development

of the industries in question, the notion of their dynamic nature was put in the centre of the analysis. The

employed analytical framework illustrates the growth/decline of an industry while it goes through the six main

stages of its life cycle ((1) precursor, (2) embryonic; (3) nurture; (4) growth; (5) mature; and (6)

decline/renewal), including three transition periods. We have performed an extensive desk-research for

identifying the relevant general and specific framework conditions for all seven industries during each of the

industry development stages up to maturity. The report also contains consolidated tables presenting the key

identified framework conditions mapped along the abovementioned industry lifecycle stages.

This methodology report is part of a number of reports prepared in the framework of the extension of the European Cluster Observatory. The definitions of emerging industries are detailed in the methodology report for the classification of the most active, significant and relevant new emerging industrial sectors. Emerging industries can be defined as the establishment of an entirely new industrial value chain, or the radical reconfiguration of an existing one, driven by a disruptive idea (or convergence of ideas), leading to turning these ideas/opportunities into new products/services with higher added value. The European Cluster Excellence Scoreboard Pilot Version measures regional strength in emerging industries and presents results in the fields of creative industries, eco industries and mobile services. The methodology applied by this scoreboard is described in more detail in a separate methodology report. The scoreboard results are complemented by three case studies on industry-specific framework conditions for the development of world-class clusters in creative industries, eco industries and mobile services. This report describes the methodology for these case studies. Furthermore, a policy roadmap prepared by the European Forum for Clusters in Emerging Industries (EFCEI) introduces recommendations for actions for new linkages to promote the development of emerging industries through clusters in Europe. All reports – together with further maps by country, industry and indicators – can be found at http://www.clusterobservatory.eu/index.html#!view=aboutobservatory;url=/about-observatory /emerging-industries/ and http://www.emergingindustries.eu/.


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While the abovementioned approach is highly suitable for detailed industry analysis, the key requirement of

empirical surveys refers to the comparability of collected regional data within and between the emerging

industries in question. For that purpose, we use a static but comprehensive typology of framework conditions

consisting of seven categories: (1) financial; (2) industrial; (3) market; (4) cultural; (5) knowledge; (6)

regulatory and policy; and (7) support framework conditions. After operationalisation of identified framework

conditions into measurable statements and collecting data, we will be able to perform benchmarking between

regions within one industry category, and between different industries.

The report also presents a model survey for one of the industries – creative industries.

Below we include the consolidated tables of the key identified framework conditions for each of the seven

industries.

TABLE 0-1: Consolidated overview of the identified framework conditions for creative industries (the acronyms in the table refer to the specific stages of the industry lifecycle: P = Precursor Stage; E = Embryonic Stage; N = Nurture Stage; G = Growth Stage; M = Maturity Stage).

Framework conditions Relevant stages

1. Financial framework conditions P E N G M 1.1. Guarantee systems and other financial engineering mechanisms (e.g., availability of innovative financial instruments such as guarantees and other risk sharing instruments that are delivered through market players (e.g., crowdfunding – crowdfunding sites help gathering small-scale investors, for example, for independent film financing, indiegogo.com)

1.2. Availability of seed and venture capital for creative industries companies

2. Industrial framework conditions P E N G M 2.1. Critical mass of publishers and content creators 2.2. Critical mass of physical retailers (e.g., video game stores and rental outlets)

2.3. Critical mass of providers of intermediate inputs and tools (e.g., software products)

3. Market framework conditions P E N G M 3.1. Customer proximity (i.e., critical mass of consumers of creative industries which is especially relevant for e.g. artists, fashion designers, photographers)

4. Cultural framework conditions P E N G M 4.1. Presence of historical, cultural and artistic heritage (e.g., tangible cultural heritage such as buildings, monuments, landscapes, books, works of art, and artifacts; intangible cultural heritage such as folklore, traditions, language, and knowledge; natural heritage including culturally-significant landscapes, and biodiversity)

4.2. Critical mass of creative and entrepreneurial people in the region (e.g., availability of people from different creative industries; availability of people from different complementary industries, e.g., telecom industries etc.)

5. Knowledge framework conditions P E N G M 5.1. Broad educational and research landscape focusing on both creative and technical disciplines (proximity of universities, research centres, schools)

5.2. Measures supporting creativity through education (e.g., targeted training; extra-curricular education; vocational education related to creative industries)

6. Regulatory and policy framework conditions P E N G M 6.1. Clearly defined copyright system that assigns an equivalent of property to new creative products

6.2. Neighboring rights that protect performers, recording producers and broadcasting organisations (the holders of neighbouring rights enjoy the exclusive right of reproduction, distribution and public communication of their performances/CDs/DVDs/broadcasts)


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6.3. Policy measures supporting interdisciplinary cooperation (e.g., measures promoting interdisciplinary cooperation between sectors of the creative industries; measures promoting interdisciplinary cooperation between creative industries and other industries)

6.4. Policy measures supporting creative start-up companies 6.5. Policy measures to stimulate innovation in creative industries (e.g., innovation programmes; innovation vouchers; creative broker facilities; creative business incubators)

6.6. Policy measures promoting the mobility of artists and cultural practitioners

6.7. Policy measures supporting flexible labour markets 6.8. Policy measures supporting internationalisation (e.g., funding creative cross-border events; industry-to-industry dialogue; scouting missions; market intelligence; collective representation in international fairs)

7. Support framework conditions P E N G M 7.1. Presence of physical and social creative environment (e.g., arts galleries, coffee shops, nightlife, work-live spaces at affordable prices)

7.2. Strategy documents and roadmaps for the development of creative industries in the region

7.3. Dedicated cluster organisation (cluster manager or similar) to coordinate the development of creative industries in the region

TABLE 0-2: Consolidated overview of the identified framework conditions for eco industries (the acronyms

in the table refer to the specific stages of the industry lifecycle: P = Precursor Stage; E = Embryonic Stage; N =

Nurture Stage; G = Growth Stage; M = Maturity Stage).


1. Financial framework conditions P E N G M 1.1. Availability of environment-related R&D subsidies 1.2. Availability of ‘green’ lending through banks (lower interest rate on environmentally-friendly investments)

1.3. Availability of seed and venture capital for eco-innovative companies

2. Industrial framework conditions P E N G M 2.1 Critical mass of eco-companies (e.g., companies in air pollution control, cleaner technologies and processes (CTP), energy management, monitoring and instrumentation, landscape services, marine pollution control, noise and vibration control, recovery and recycling, renewable energy, transport pollution control, waste management, water and wastewater treatment etc.)

2.2. Critical mass of supply chain actors: presence of eco-innovation consultancy services, presence of research centres for eco-innovation, presence of equipment suppliers, presence of utility companies

3. Market framework conditions P E N G M 3.1. Proximity of companies in traditional industries in transition towards environmentally friendly solutions -> Critical mass of business consumers of eco-industries

3.2. Critical mass of private consumers of eco-industries 3.3. Green public procurement (i.e., public authorities use their purchasing power to support goods and services with lower impact on the environment)

4. Cultural framework conditions P E N G M 4.1. Social attitude supporting eco-innovation (e.g., attitude of citizens towards environment, public awareness of environmental problems, perception of green brands by consumers, perception of eco-innovation by business)

5. Knowledge framework conditions P E N G M 5.1. Environmental focus of university research programmes 5.2. Presence of environmental education in the school curricula and vocational training


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6. Regulatory and policy framework conditions P E N G M 6.1. Availability of environment-related R&D and other tax measures1

6.2. Existence of eco-regulation (i.e., rules and regulations prescribing eco-efficient standards such as green procurement2)

6.3. Supporting IP conditions related to green technologies (e.g., accelerated examination process for patent applications relating to green technologies; green patent database and other green patent tools)

6.4. Policy measures supporting the internationalisation of eco-innovative clusters (e.g., regional support in representing the cluster abroad; regional support for inward investment activities; removal of custom duties on green products)

7. Support framework conditions P E N G M 7.1. Availability of eco-innovative infrastructure (e.g., new fuelling systems, sophisticated traffic control, diffused energy distribution systems)

7.2. Strategy documents and roadmaps for the development of eco-industries in the region

7.3. Dedicated cluster organisation (cluster manager or similar) to coordinate the development of eco-industries in the region

7.4. Well-functioning technology transfer offices within academic institutes facilitating the adoption of eco-industries solutions

TABLE 0-3: Consolidated overview of the identified framework conditions for experience industries (the

acronyms in the table refer to the specific stages of the industry lifecycle: P = Precursor Stage; E = Embryonic

Stage; N = Nurture Stage; G = Growth Stage; M = Maturity Stage).


1. Financial framework conditions P E N G M

1.1. Availability of public funding for developing and/or maintaining physical amenities where experiences can be offered

1.2. Availability of seed and venture capital for experience industries companies

1.3. Investments in the improvements of the infrastructure for visitors

2. Industrial framework conditions P E N G M 2.1. Critical mass of specialised suppliers with established heritage/USPs in their niche of experience industries

3. Market framework conditions P E N G M 3.1. Critical mass of consumers of experience industries 4. Cultural framework conditions P E N G M 4.1. Creativity of local people (i.e., ability to come up with new ideas, concepts or solutions or to forge new links between old ideas, solutions and concepts present ‘in the genes’ of local people; ability of local people to take an interdisciplinary approach; ability of local people to think out of the box)

4.2. Tradition for local companies of collaborating closely with consumers in developing new products and services

4.3. Collaboration between experience industry companies (i.e., cooperative associations)

5. Knowledge framework conditions P E N G M 5.1. Companies with good understanding of consumer needs (e.g., a unique offered experience such as bungee jumping, surfing, skydiving, music festivals, wine-tasting); a unique natural heritage experience including culturally-significant landscapes, monuments, biodiversity, works of art, artifacts etc.)

6. Regulatory and policy framework conditions P E N G M

1 E.g., CO2 carbon tax; severance taxes on the extraction of mineral, energy, and forestry products; specific taxes on technologies and products which are associated with substantial negative externalities; waste disposal taxes and refundable fees; taxes on effluents, pollution and other hazardous wastes etc. 2 Green procurement requires a company or organisation to carry out an assessment of the environmental consequences of a product at all the various stages of its lifecycle. This means considering the costs of securing raw materials, and manufacturing, transporting, storing, handling, using and disposing of the product. For more information, see http://www.iisd.org/business/tools/bt_green_pro.aspx

http://en.wikipedia.org/wiki/Pollution


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6.1. Placing experience production at the centre of region’s economic and cultural strategies

7. Support framework conditions P E N G M 7.1. Established infrastructure for visitors (e.g., offering visitors good links to airports, attractions and offering good accommodation facilities for both domestic and foreign tourists)

7.2. Strategy documents and roadmaps for the development of experience industries in the region

7.3. Dedicated cluster organisation (cluster manager or similar) to coordinate the development of experience industries in the region

TABLE 0-4: Consolidated overview of the identified framework conditions for maritime industries (the acronyms in the table refer to the specific stages of the industry lifecycle: P = Precursor Stage; E = Embryonic Stage; N = Nurture Stage; G = Growth Stage; M = Maturity Stage).


1. Financial framework conditions P E N G M 1.1. Availability of public funding for research on Key Enabling Technologies (e.g., nanotechnology for marine coatings, solar powered vessels etc.)

1.2. Availability of seed and venture capital for new maritime industries companies

2. Industrial framework conditions P E N G M 2.1. Critical mass of companies working in the field of new maritime industries

2.2. Critical mass of suppliers of relevant materials and services 3. Market framework conditions P E N G M 3.1. Proximity to raw materials (location in or near the harbor) 3.2. Proximity to customers (traditional maritime industry) 3.3. Critical mass of customers (traditional maritime industry) 4. Cultural framework conditions P E N G M 4.1. Collaboration with the traditional maritime industries (it may further improve the new technology, or create a market for it by showcasing it in an early stage)

5. Knowledge framework conditions P E N G M 5.1. Critical mass of engineers working in the field of new materials and other fields relevant for the development of new maritime products

5.2. Presence of universities and research centres focusing on Key Enabling Technologies (e.g., nanotechnology for marine coatings, solar powered vessels etc.)

6. Regulatory and policy framework conditions P E N G M 6.1. Open trade policy encouraging trade with foreign companies within and beyond the maritime industries

6.2. Regulation restricting carbon dioxide emissions (it forces the maritime industry to change and switch to new technological solutions)

6.3. Policy measures supporting internationalization of maritime industries (e.g., funding creative cross-border events; industry-to-industry dialogue; scouting missions; market intelligence; collective representation in international fairs)

7. Support framework conditions P E N G M 7.1. Presence of navigable water (navigable water allows for, among others, the transportation of goods)

7.2. Presence of formal industry networks (e.g., new maritime industries trade associations)

7.3. Strategy documents and roadmaps for the development of maritime industries in the region

7.4. Dedicated cluster organisation (cluster manager or similar) to coordinate the development of maritime industries in the region

7.5. Well-functioning technology transfer offices within academic institutes facilitating the adoption of new maritime industries solutions


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TABLE 0-5: Consolidated overview of the identified framework conditions for maritime industries (the acronyms in the table refer to the specific stages of the industry lifecycle: P = Precursor Stage; E = Embryonic Stage; N = Nurture Stage; G = Growth Stage; M = Maturity Stage).


1. Financial framework conditions P E N G M 1.1 Availability of government funding for large-scale demonstration projects with active user involvement (international R&D cooperation projects; user-heavy demonstration projects)

1.2 Investments in next generation technology and networks (e.g., Internet penetration; ISDN networks; next generation mobile networks (2G, 3G, 4G))

1.3. Availability of seed and venture capital for mobile services companies

2. Industrial framework conditions P E N G M

2.1. Existing prominent ICT equipment industry (ICT equipment manufacturers and distributors have established in the area; these companies make up a significant share of the regional economy)

2.2. Critical mass of mobile services companies 3. Market framework conditions P E N G M 3.1. Multi-operator market structure 3.2. Critical mass of consumers with demand for high end devices with wide application areas

3.3. Agreements on interface standards (meetings of stakeholders to agree on interface standards; documents detailing interface standards)

3.4. Vertical integration of cluster actors (i.e., mergers and acquisitions concerning content providers, packagers, distributors and service provides; mergers and acquisitions concerning business consultants, IT integrators and new media)

3.5. Exploitation of new distribution channels (e.g., app store) 4. Cultural framework conditions P E N G M 4.1. Collaboration between regulators and operators (i.e., regulations that encourage development and market adoption; meetings or joint sessions between regulators and operators)

4.2. Collaboration between mobile service companies and mobile device manufacturers (stakeholder meetings or joint sessions on interoperability of devices and components)

4.3. Collaboration and strategic alignment between network operators and mobile device dealers (e.g., networks that handle assigned mobile traffic without abundant spare capacity; meetings between operators and dealers or joint sessions to increase strategic alignment)

5. Knowledge framework conditions P E N G M 5.1. Critical mass of Science and Technology Researchers 5.2. Critical mass of talented and qualified ICT engineers 6. Regulatory and policy framework conditions P E N G M 6.1. Mobile market liberalisation (i.e., limited regulation on market entry and expansion; limited to no protection for existing market actors)

6.2. Policy measures promoting entrepreneurship in mobile services industries

6.3. Policy measures supporting internationalisation in mobile services industries (e.g., funding creative cross-border events; industry-to-industry dialogue; scouting missions; market intelligence; collective representation in international fairs)

7. Support framework conditions P E N G M 7.1. Presence of a platform to promote service innovation in the area (e.g., by means of conferences and seminars on service innovation)

7.2. Strategy documents and roadmaps for the development of mobile services industries in the region

7.3. Dedicated cluster organisation (cluster manager or similar) to coordinate the development of mobile services industries in the region


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TABLE 0-6: Consolidated overview of the identified framework conditions for mobile services industries (the acronyms in the table refer to the specific stages of the industry lifecycle: P = Precursor Stage; E = Embryonic Stage; N = Nurture Stage; G = Growth Stage; M = Maturity Stage).




















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TABLE 0-7: Consolidated overview of the identified framework conditions for mobility industries (the acronyms in the table refer to the specific stages of the industry lifecycle: P = Precursor Stage; E = Embryonic Stage; N = Nurture Stage; G = Growth Stage; M = Maturity Stage).


1. Financial framework conditions P E N G M 1.1 Availability of government funding for large-scale infrastructure projects

1.2 Investments in next generation mobility technology and networks

1.3. Availability of seed and venture capital for mobility companies 1.4. Availability of mobility-related R&D subsidies 2. Industrial framework conditions P E N G M 2.1. Critical mass of companies offering mobility solutions and providing mobility services

2.2. Critical mass of supply chain actors: presence of mobility consultancy services, presence of research centers for mobility issues, presence of equipment suppliers etc.

3. Market framework conditions P E N G M 3.1. Proximity of companies in traditional industries in transition towards new mobility solutions -> Critical mass of business consumers of mobility industries

3.2. Proximity to private customers who need new mobility solutions (e.g., with regard to public transport, congestion, road usage)

3.3. Widespread availability of (smart) technology (dedicated navigation devices and other relevant technologies in current end-user products)

3.4. Presence of Greenovators (green mobility users) 4. Cultural framework conditions P E N G M 4.1. Social attitude supporting mobility (e.g., attitude of citizens towards mobility issues, public awareness of environmental problems related to mobility, perception of mobility by private consumers, perception of mobility by business)

5. Knowledge framework conditions P E N G M 5.1. Availability of people with skills relevant for mobility industries (e.g., software engineering, design skills, managerial skills, ICT skills, Geomatics skills etc.)

5.2. Presence of universities and research centres focusing on mobility technologies

6. Regulatory and policy framework conditions P E N G M 6.1. Policy measures promoting mobility industries (e.g., compatibility of mobility industries with green strategies following green regulations, requirements, policies etc.)

6.2. Integrated planning for infrastructure and development 6.3. Policy measures supporting the internationalisation of mobility clusters (e.g., regional support in representing the cluster abroad; regional support for inward investment activities)

6.4. Policy measures supporting interdisciplinary cooperation (e.g., measures promoting interdisciplinary cooperation between mobility industries and other industries)

7. Support framework conditions P E N G M 7.1. Established infrastructure offering integration possibilities for new mobility solutions (e.g., public transport system, highway system etc.)

7.2. Strategy documents and roadmaps for the development of mobility industries in the region

7.3. Dedicated cluster organisation (cluster manager or similar) to coordinate the development of mobility industries in the region

7.4. Well-functioning technology transfer offices within academic institutes facilitating the adoption of mobility industries solutions


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TABLE 0-8: Consolidated overview of the identified framework conditions for personalised medicine industries (the acronyms in the table refer to the specific stages of the industry lifecycle: P = Precursor Stage; E = Embryonic Stage; N = Nurture Stage; G = Growth Stage; M = Maturity Stage).


1. Financial framework conditions P E N G M 1.1. Availability of public funding for genomics projects 1.2. Availability of public funding for the support of companies willing to adopt personalised medicine solutions

1.3. Availability of seed and venture capital for personalised medicine companies

1.4. Clinical trials for personalised drugs and companion diagnostics funded under government grants and programs

1.5. Investments in personalised medicine-related R&D by private sector organisations in research institutes, universities and hospitals

2. Industrial framework conditions P E N G M 2.1. Critical mass of companies offering personalised medicine solutions

2.2. Critical mass of pharmaceutical companies in the region 2.3. Critical mass of supply chain actors: presence of personalised medicine consultancy services, presence of research centres for personalised medicine issues etc.

3. Market framework conditions P E N G M 3.1. Adoption of personalised medicine solutions by healthcare and insurance companies

3.2. Proximity to private customers who need personalised medicine solutions

3.3. Critical mass of clinical trial participants in the region 4. Cultural framework conditions P E N G M 4.1. Social attitude supporting personalised medicine (e.g., attitude of citizens towards personalised medicine issues, public awareness of personalised medicine, perception of personalised medicine by private consumers; insurance practices supporting patient participation in clinical trials etc.)

4.2. Collaboration between academia and healthcare industry in the field of personalised medicine (R&D projects staffed by experts from both academia and industry; shared R&D infrastructure)

5. Knowledge framework conditions P E N G M 5.1. Availability of people with skills relevant for personalised medicine industries (i.e., critical mass of highly skilled graduates to work in the personalised medicine industries)

5.2. Presence of universities, research centres and hospitals focusing on personalised medicine

5.3. Genetics embedded in the curriculum of medical schools 6. Regulatory and policy framework conditions P E N G M 6.1. Clarified genetic research rules 6.2. Endorsement of pharmacogenomic methods for use in drug trials

6.3. Regulatory framework that encourages coordinated development of drugs and diagnostic tests through IP regulation

6.4. A defined path for regulatory approval of novel product combinations

7. Support framework conditions P E N G M 7.1. Strategy documents and roadmaps for the development of personalised medicine industries in the region

7.2. Dedicated cluster organisation (cluster manager or similar) to coordinate the development of personalised medicine industries in the region

7.3. Well-functioning technology transfer offices within academic institutes facilitating the adoption of personalised medicine solutions

7.4. Presence of IT systems that are capable of handling, sharing and analysing the genetic and outcome data needed to promote the continued development of personalised medicine


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1. Introduction

The current report represents a progress report for Work Package 2 (hereafter “WP2”) of the “Extension of the

European Cluster Observatory: Promoting better policies to develop world-class clusters in Europe” carried out

by PwC for Enterprise and Industry Directorate General of the European Commission (Contract N°

71/PP/ENT/CIP/11/N04C031). The report contains the results of the activities that took place in the period

between June 2012 and September 2012.

The objective of the current chapter is to set the scene by providing the background information on the

rationale, objectives and the expected outputs of WP2, definitions and scope, as well as by elaborating on the

specifics of framework conditions and emerging industries. In the end of this chapter, we also present the

structure of the current report.

1.1. Rationale, objectives and expected outputs of WP2

Figure 1-1 provides a concise overview of relationships between the rationale, objectives and expected outputs

of WP2. WP2 implies the development of a suitable, feasible and acceptable methodology for the identification

and analysis of favourable cluster-specific framework conditions that are considered to be conductive to the

development of world-class clusters in “emerging industries”. Based on this methodology, empirical results

need to be collected Europe-wide and benchmarked against the strongest international competitors in the

identified emerging industries.

FIGURE 1-1: Rationale, objectives and expected outputs of WP2

The key task of WP2 is thus to collect, analyse and present the data in a way that would maximise policy

relevance and facilitate ease of interpretation for policy-makers. The outputs of WP2 will be integrated into the

Observatory in order to provide an innovative and valuable policy making tool for regional policy makers and


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other stakeholders. Besides detailed case study reports on selected emerging industries, policy makers will be

able to access a series of key variables and composite indicators that capture the framework conditions and

performance of their clusters in comparison with others.

The first objective within the WP2 implied the development of a sound and robust methodology for the

identification and benchmarking of “ideal” cluster-specific framework conditions for the emergence of world-

class clusters in emerging industries in Europe. This methodology then needs to be applied to seven different

fields of emerging industries taking into account the results from WP3. The detailed methodology is presented

in Chapter 2 of this report.

1.2. Definitions

In this sub-section, we elaborate on the definitions and scope of framework conditions, clusters, world-class

clusters and emerging industries.

1.2.1. Framework conditions

Framework conditions in general refer to the basis, context, premises or environment for a phenomenon to

occur. Framework conditions may influence the level, effectiveness and efficiency of the phenomenon as well as

the actors’ behaviours. Certain types of framework conditions facilitate its occurrence. Thus it goes beyond the

mere comparison of performance indicators, as framework conditions allow one to systematically compare the

processes that lie behind performance differences. Policy-related framework conditions for industry-science

relations thus include public promotion programmes, intermediary infrastructures, legislation, regulation and

institutions which provide the setting for the ‘knowledge market’.

Some specific aspects that need to be taken into consideration when analysing framework conditions area as

follows:

There are “hidden” and “official” framework conditions;

The degree of influence of a framework condition varies at local, regional and national level;

The degree of influence of a framework condition varies across industries (general vs. specific

FWCs, but also within general);

Not all FWCs can be influenced by public policies (e.g., cultural attitudes and industry structure);

There is an endless list of framework conditions; trying to capture them all would be a utopian task;

therefore there is a clear need to focus on the key ones.

The importance of framework conditions for innovation and cluster development has been emphasised by

various key EU policy documents. For example, in the Commission’s Communication “Towards world-class

clusters in the European Union: Implementing the broad-based innovation strategy”3, the EU Heads of State

underlined the need to better coordinate the framework conditions for innovation through improved science-

industry linkages and world-class innovation clusters and the development of regional clusters and networks.

Policy makers at all levels have been encouraged to concentrate on providing the best framework conditions

nurturing innovation, excellence and cooperation across the EU. To support this approach, however, common

efforts are needed to achieve more synergies and complementarities between different policies, programmes

and initiatives. Similarly, in the Competitiveness Council Conclusions on “Creating an innovative Europe” of 17

May 2010, Member States and the Commission have been invited to foster better framework conditions for all

forms of innovation which means that the “think small first” principle should be a guiding rule in all innovation

support measures.

3 COM (2008) 652 of 17.10.2008, Commission's Communication "Towards world-class clusters in the European Union: Implementing the broad-based innovation strategy” at http://ec.europa.eu/enterprise/policies/innovation/policy/clusters/

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2008:0652:REV1:en:PDF

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2008:0652:REV1:en:PDF


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Existing research suggests that framework conditions represent one of the key enablers of the emergence of highly performing clusters4. The framework surrounding the cluster’s main actors is of importance for the cluster’s potential to reach the world-class level. Relevant elements in this aspect are R&D and educational institutions, as well as a dynamic business climate when it comes to innovation policy and general regulation for start-ups, which together create an attractive environment for cluster development.

Regulatory and taxation systems are reported to have a crucial impact on forming the framework conditions.

Thus, innovation policy is advised5 to address longer-term goals, related to resource productivity, fiscal,

regulatory and standard setting practices, supporting eco-efficient production cycle (e.g., integrating industrial

symbiosis with cluster policy). Additionally, standards can effect innovation through a variety of mechanisms.

They form an important part of the framework conditions for business and influence the possible routes to

market or legal validity of market offerings. Therefore, the role of governments is to provide the necessary

framework conditions for companies to invest and innovate, both in domestic and global markets.

1.2.2. Clusters

Existing research shows that there is no unambiguous definition of what a cluster is and where its boundaries

lie. The cluster concept generally comprises important dimensions as summarised below:

Clusters are seen as geographical concentrations of specialised firms, advanced skills and competences

in the labour forces, and supporting institutions which increase knowledge flows and spill-overs as a

result of their proximity;

Clusters serve a functional purpose to provide a range of specialised and customised services to a

specific group of firms such as the provision of advanced and specialised infrastructure, specific

business support services, training, and coaching. They facilitate “co-opetition” meaning intense

competition and close cooperation at the same time;

Clusters are characterised by a certain dynamic social and organisational element so-called

“institutional fix” that holds the different interlinked innovation actors such as universities, businesses

and public authorities together and facilitates intense interaction and cooperation amongst them.

Overtime, clusters tend to develop a set of institutions, personal networks and trust;

Clusters offer a natural environment for formal and informal contacts and exchange of business

information, know-how, and technical expertise leading to technological spill-overs6 and the

development of new ideas and creative designs, products, services, and business concepts that improve

the innovation of businesses.

Many definitions of clusters exist, some of which are of a highly abstract nature, while others offer a more

specific framework. The latter often refer to legal definitions implying stricter and more technical terms, such as

the definition by the “Community Framework for State Aid for Research and Development and Innovation”7:

Clusters are “groupings of independent undertakings — innovative start-ups, small, medium

and large undertakings as well as research organisations — operating in a particular sector

4 Europe InterCluster White paper on “The emerging of European world-class clusters” at http://www.intercluster.eu/images/stories/white_paper/white_paper_the_emerging_of_european_world_class_clusters.pdf 5 Sectoral Innovation Watch in Europe: Eco-innovation, final report, May 2008 6 Audretsch, D.B. and Feldman M.P. (1996) R&D Spillovers and the Geography of Innovation and Production American Economic Review, 86: 630-640. 7 “Community Framework for State Aid for Research and Development and Innovation”, published in the Official Journal of the European Union (2006/C 323/01) of 30.12.2006 and available at http://eur-lex.europa.eu/LexUriServ/ site/en/oj/2006/c_323/c_32320061230en00010026.pdf

http://translate.googleusercontent.com/translate_c?hl=en&sl=id&u=http://www.rotman.utoronto.ca/feldman/papers/Audretsch%2520%26%2520feldman%25201996%2520R%26%2520D%2520spillovers.pdf&prev=/search%3Fq%3DAudretsch%2Band%2BFeldman%2B1996%26hl%3Den%26sa%3DX%26rls%3Dcom.microsoft:*:IE-SearchBox%26prmd%3Divns&rurl=translate.google.com&usg=ALkJrhiXRpMVsjb8ruqqZDYWTKV9DgrB7g


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and region and designed to stimulate innovative activity by promoting intensive interactions,

sharing of facilities and exchange of knowledge and expertise and by contributing effectively

to technology transfer, networking and information dissemination among the undertakings in

the cluster.”

Cluster is thus a network of production of strongly interdependent firms (including specialised suppliers),

knowledge producing agents (universities, research institutes, engineering companies), bridging institutions

(brokers, consultants) and customers, linked to each other in a value-adding production chain.

In adopting a definition of a cluster for this study we have chosen a theoretical framework that would satisfy the

following two criteria:

It would address in full the functional structure of a cluster;

It has already been proven functional in other studies on clusters.

The cluster concept focuses on the linkages and interdependencies among actors in the value chain in

producing products and services, and innovating. Clusters differ from other forms of cooperation and networks

in that the actors involved in a cluster are linked in a value chain. The cluster concept goes beyond “simple”

horizontal networks in which firms operating on the same end-product market and belonging to the same

industry group, cooperate on aspects such as R&D, demonstration programmes, collective marketing or

purchasing policy.

Clusters are often cross-sectoral (vertical and/or lateral) networks made up of dissimilar and complementary

firms specialising around a specific link or knowledge base in the value chain. Clusters thus can be seen as

reduced-scale innovation systems. This implies that dynamics, system characteristics and interdependencies

similar to those described for regional and national innovation systems can be said to exist for individual

clusters8. Cluster policies, in turn, comprise a set of policy activities that aim to stimulate and support the

emergence of networks, strengthen the inter-linkages between the different parts of the networks, and increase

the value added of their actions.

A crucial element of clusters is inter-firm networks, where companies cooperate directly with each other. This

cooperation can be formal, i.e., with an explicit contract (e.g., a supplier contract, a joint venture), or informal.

In case of the latter, cooperation may take form of informal knowledge transfer, as well as relations with

“related” industries (i.e., industries which have no direct supplier relationships, but which may share some

economies of scope, e.g., similar technologies and similar markets).

Additionally, strategic alliances between large multinational companies are now common practice in

international business. These alliances do not always represent clusters, but mostly project-related bilateral

arrangements between companies and R&D laboratories. These changes in cooperation patterns can be

explained by increasing global competition and rising R&D costs. Small and medium-sized enterprises feel the

challenges of global competition to the same extent as the large companies operating internationally. For

example, a change in subcontractor relationships can be observed: contractors require higher quality, greater

flexibility and more complex products from their suppliers. SMEs find it increasingly difficult to face these

challenges in isolation, and cooperation with other firms and the creation of network offers joint solutions9.

The genesis of clusters and their further development are complex processes and are often dependent on a

number of players including governmental agencies, public organisations, academic, educational and research

institutions, different types of cooperating companies, suppliers, providers, and financial structures.

8 “Boosting innovation: the cluster approach” (1999), OECD proceedings 9 Boekholt P. (1997) “The Public Sector at Arm’s Length or in Change? Towards a Typology of Cluster Policies”, paper presented at the OECD Cluster Focus Group Workshop in Amsterdam, 9-10 October 1997


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Spatial clustering and regional innovation theories are reflected upon in a number of approaches from different

schools of thought: endogenous growth theory, new economic geography, regional innovation systems studies,

innovative milieus concept, etc.10. A common opinion from all of these theories is that geographical proximity

provides a platform for strong cooperation and the flow of knowledge and expertise. Particularly important for

the transfer of tacit knowledge is the personal (direct) interaction had between research institutions, companies

and policy makers. This makes regions possessing innovation clusters strategically advantageous in competition

for mobile factors of production. It is, however, discussible under which conditions such cluster-based

industries are capable of enhancing economic growth, and there is a variety of opinions on this subject among

different researchers.

Different dimensions of a cluster have been described by different authors 11, 12, 13, 14 (reviewed in 15):

Spatially (predominantly regionally) concentrated economic activities in related economic areas,

usually interconnected with the local scientific system (research institutions, universities, etc.);

Vertical production chains: narrowly defined industries with the neighbouring activities of production

process forming the core of the cluster. This also includes various groups around core enterprises;

Highly aggregated groups of industries or high level agglomerations of sectors.

In addition, one should differentiate between:

Clusters as an economic phenomenon that was defined above;

Cluster policies that can be defined as specific governmental efforts to support clusters. Cluster

policies may take different forms and follow different objectives, for example, industrial and SME

policy or research and innovation policy. Cluster policies are in most cases supported and implemented

by specific cluster programmes of governments or initiatives16.

Cluster initiatives that can be understood as “organised efforts to increase growth and

competitiveness of clusters within a region, involving cluster firms, government and/or the research

community”17.

Cluster organisations that can be defined as “the legal entity engineering, steering and managing

the clusters, including usually the participation and access to the cluster’s premises, facilities and

activities”18.

10 Adapted from Bergman, E. (2001) In Pursuit of Innovation Clusters: Main Findings from the OECD Cluster Focus Group. Part A. Proceedings of the NIS Conference on Network- and Cluster-oriented Policies, Vienna, October 15-16. 11 Enright, M. J. (1996) Regional Clusters and Economic Development: A Reasearch Agenda. In: Staber, U.H., Schaefer, N.V., Sharma, B. (eds) Business Networks. Prospects for Regional Development. de Gruyter, Berlin, New York. 12 Jacobs, D. (1997) Wissenintensive Innovation: Das Potential des Cluster-Ansatzes. Institute for Prospective Technological Studies, IPTS Report 16, Sevilla. 13 Markusen, A.R. (1996) Sticky Places in Slippery Space: A Typology of Industrial Districts. Economic Geography 72, 293-313. 14 Porter, M. (1998) On Competition. Harvard Business School Publishing, Boston. 15 Sternberg R. (2003) New Firms, Regional Development and the Cluster Approach – What Can Technology Policies Achieve? Broecker J., Dohse D., Soltwedel R. (eds.) Innovation Clusters and Interregional Competition. Berlin Heidelberg, Springer-Verlag.

16 Commission Staff Working Document SEC (2008) 2637 “THE CONCEPT OF CLUSTERS AND CLUSTER POLICIES AND THEIR ROLE FOR COMPETITIVENESS AND INNOVATION: MAIN STATISTICAL RESULTS AND LESSONS LEARNED; Annex to the Communication from the Commission "Towards world-class clusters in the European Union: Implementing the broad-based innovation strategy", COM(2008)652 final of 17.10.2008 17 Sölvell, Ö., Lindqvist, G. & Ketels, C. (2003) The Cluster Initiative Greenbook, August 2003 (1st ed.), Stockholm: Ivory Tower. 18 This definition follows the description concerning aid for innovation clusters that features in the “Community Framework for State Aid for Research and Development and Innovation”. See section 5.8 on ‘Aid for innovation clusters’ of the text of the Community Framework that was published in the Official Journal of the European Union in December 2006 (2006/C 323/01) and that is available at


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1.2.3. World-class clusters

Currently there is no commonly accepted definition of World-Class Clusters or WCCs. In general, WCC can be

defined as a fertile eco-system for firms to thrive and to drive innovation, regional development and

competitiveness at world-class level, where competitiveness refers to the cluster’s ability to sell and supply

goods and/or services in a global market19. World-class clusters rely on excellence rather than just size. World-

class clusters can be found in both mature industries, as well as emerging industries.

Within the scope of White Paper20, rather than agreeing on a harmonised definition, it has been preferred to

define the specific criteria and requirements for reaching to the world-class excellence level.

The three different dimensions summarise the critical success factors for the “world-class clusters” as:

The existence of favourable cluster-specific framework conditions;

The strength and dynamics of cluster firms and related actors; and

The quality of cluster management.

Below we present an adjusted version of the elements within the abovementioned categories:

1. Framework Conditions

Quality of cluster-relevant R&D and service innovation;

Quality of cluster-relevant infrastructure (added by the authors);

Quality of the education in relevant fields;

Dynamics of creating new and innovative companies in the region;

Attractiveness of the region (e.g. to world-class researchers, foreign investment, etc.);

Existence of regulations and public sector demand stimulating the innovation.

2. Cluster Actors

Critical mass of market and technology leaders;

International visibility & the reputation of the cluster and its actors;

Commitment and active involvement of industry, academia and public actors;

Involvement of competitors;

International co-operation.

3. Cluster Organisation/Management

Cluster strategy and its implementation;

Professionalisation of cluster management services;

Financial sustainability and staff excellence of the cluster organisation;

Coherence between educational actors, innovation institutions and cluster actors;

Added value;

Cluster internationalisation (added by the authors)

http://eur-lex.europa.eu/LexUriServ/site/en/oj/2006/c_323/c_32320061230en00010026.pdf 19 Gerd Meier zu Köcker, Klas Svensson, and Nicholas Szechenyi (2010) World Class Clusters “An Attempt to Formulate the Main Criteria of World Class Clusters”. Discussion paper, http://www.clustercollaboration.eu/documents/10147/18505/World+Class+Clusters.pdf 20 White Paper on “The Emerging of European World-Class Clusters”, 2010 http://www.intercluster.eu/index.php?option=com_content&view=article&id=169%3Athe-white-paper-on-the-emerging-of-european-world-class-clusters-&catid=2&lang=en


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We complemented the definition of a cluster organisation for WCC by adding one extra element:

internationalisation. Cluster internationalisation implies cross-border cooperation with other clusters, and

often specifically refers to the following activities:

Developing strategies and competencies for working internationally;

Identifying partners and developing cooperative (and commercially valuable) relations internationally;

Financing international activities (particularly for SMEs);

Agreeing on functional governance/decision-making structures in transnational settings.

The generic benefits of internationalisation are21:

Benefits to the businesses in the cluster:

o Access to knowledge;

o Access to new markets;

o Access to key infrastructure, e.g., pilot plants, living labs etc.;

o Access to new international partners for collaboration;

o Raised profile.

Benefits to other organisations in the cluster:

o Access to knowledge;

o Access to new markets;

o Access to a wider customer base;


o Raised profile;

Benefits to the Cluster Organisation:

o Raised profile;


Benefits that the Cluster Organisation can deliver to the region/member state:

o Increased competitiveness and export performance by key businesses;

o Increased access to potential inward investors;

o Increased level of external funding utilised by the region/member state.

Consequently, when consolidating the abovementioned definitions, the framework conditions the current study

needs to focus on are the ones that lead to (1) geographical concentration of actors in vertical and horizontal

relationships; (2) strong cooperation and sharing; and (3) internationalisation.

1.2.4. Emerging industries

“Emerging industries” are either new industrial sectors or existing industrial sectors that are evolving or

merging into new industries. They are most often driven by key enabling technologies, new business models

such as innovative service concepts, and by societal challenges that industry must address as a matter of

survival. Such challenges include, for example, climate change and the aging society that call for the unlocking

of Europe’s creative and entrepreneurial potential. Many “emerging industries” have in common that they grow

out of already existing industries and hence cut across different traditionally defined sectors. As they are often

characterised by high-growth rates and significant market potential, they hold the key to future competitiveness

and prosperity.

The emergence of new industries and the transformation of existing industries is often, from the very

beginning, supported by clusters that offer a favourable business environment for both competition and

cooperation between firms with different industrial background and technological or business expertise.

Clusters represent a microcosm providing an ideal ground for experimenting with new business solutions and

21 Draft Handbook Internationalisation Guidelines, version draft 2, last updated 11 March 2011


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bringing them successfully to the market. In this way, clusters play an important role as catalysts for structural

change. They bring together a critical mass of innovative firms, related innovation actors and cluster

organisations which provide specialised business and innovation support services.

The following aspects need to be taken into account when analysing emerging industries:

Emerging industries are difficult to study until after they have matured; the main reasons for

such difficulties refer to a challenge of capturing such industries per se, lack of social acceptance,

limited availability of information, difficulties with establishing causal effects etc.

The time of development of an emerging industry can vary across sectors (from about 2 to

50 or more years).

Emerging industries are complex and varied phenomena that are embedded in a longer and

broader cross-sectoral and multi-industry processes.

The distinction need to be made between national/international industry emergence (“new to the

world”) and regional industry emergence (“new to the region”). The current study focuses on

emerging industries that belong to “new to the region” category.

The abovementioned aspects signal that the policies to be generated in support of emerging industries will be

different than the ones that apply to traditional industries.

1.3. Scope: seven emerging industries

The analysis within WP2 focuses on the following seven emerging industries (as identified within WP3 due to

the cross-sectoral characteristics and growth potential of those industries): (1) creative industries; (2) eco

industries; (3) experience industries; (4) maritime industries; (5) mobile service industries; (6) mobility

industries, and (7) personalised medicine. The methodology for the identification of framework conditions will

be applied to all seven industries, while detailed case study descriptions will be prepared for three emerging

industries: creative, eco- and mobile services. The final selection of those three industries was made in close

consultation with the Commission Below we provide definitions for all seven industries.

The challenge is not only to define emerging industries as such, but also to demonstrate their dynamics as well

as their relevance for clustering activities. By definition, emerging industries change over time. Each

definition is therefore only a snapshot that has to be revised regularly. Cluster analysis may

provide us with better insights into the dynamics of industries by showing new co-location patterns and

indicating the direction industrial change takes. The definitions of specific emerging industries offered below

should therefore be considered as the starting point for the analysis, not as binding definitions.

1.3.1. Creative industries

Creative industries comprise activities related to the creation, production and/or distribution of creative goods

and services as well as with the integration of creative elements into wider processes and other sectors. Creative

industries are sometimes referred to as the cultural industries, but the two terms are neither synonymous nor

interchangeable. According to the United Nations Educational, Scientific and Cultural Organisation (UNESCO),

“cultural industries refer to industries which combine the creation, production and commercialisation of

creative contents which are intangible and cultural in nature. The contents are typically protected by copyright

and can take the form of a good or a service. Cultural industries generally include printing, publishing and

multimedia, audiovisual, phonographic and cinematographic productions as well as crafts and design. The term

creative industries encompasses a broader range of activities which include the cultural industries as well as all

cultural or artistic production, whether live or produced as an individual unit. These industries are those in

which the product or service contains a substantial element of artistic or creative endeavour and include


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activities such as architecture and advertising22. The Priority Sector Report on Creative and Cultural

Industries23 by the European Cluster Observatory argued for a common term for creative and cultural

industries as it views both terms as conceptually linked, similar and to a certain level interchangeable. The final

report24 of the ESS-net on Culture also has adopted a wider definition that includes, for instance, video games,

although it maintains a perspective from the viewpoint of professions rather than industries.”Creative

industries thus consist of activities drawing on “advertising, architecture, art, crafts, design, fashion, film,

music, performing arts, publishing, R&D, software, toys and games, TV and radio, and video games”25.

TABLE 1-1: Scoping of creative industries (based on the outputs of WP3; additional codes not included in the

Priority Sector Report on Creative and Cultural Industries26 are highlighted in Italic)

NACE code Level 4 NACE description

1811 Printing of daily newspapers 1812 Other printing 1813 Pre-press and pre-media services 1814 Bookbinding industry 1820 Reproduction of recorded media 2012 Manufacture of dyes and pigments 2229 Manufacture of other plastic products 2630 Manufacture of communication equipment 2640 Manufacture of consumer electronics 2670 Manufacture of optical instruments and photographic equipment 2680 Manufacture of magnetic and optical media 2732 Manufacture of other electronic and electric wires and cables 2829 Manufacture of other general-purpose machinery n.e.c. 2899 Manufacture of other special-purpose machinery n.e.c. 3220 Industry of musical instruments 4618 Agents specialised in the sale of other particular products 4666 Wholesale of other office machinery and equipment 4761 Retail sale of books in specialised stores 4762 Retail sale of newspapers and stationery in specialised stores 4763 Retail sale of music and video recordings in specialised stores 4791 Retail sale via mail order houses or via Internet 5811 Book publishing 5812 Publishing of directories and mailing lists 5813 Publishing of newspapers 5814 Publishing of journals and periodicals 5819 Other publishing activities 5821 Publisher of computer games 5829 Other software publishing 5911 Motion picture, video and television programme production activities 5912 Motion picture, video and television programme post-production activities 5913 Motion picture, video and television programme distribution activities 5914 Motion picture projection activities 5920 Sound recording and music publishing activities 6010 Radio broadcasting 6020 Television programming and broadcasting activities 6110 Wired telecommunications activities 6120 Wireless telecommunications activities

22 Understanding Creative Industries: Cultural statistics for public-policy making, UNESCO, 2006 23 Power, D., 2011, Priority Sector Report: Creative and Cultural Industries, Europe Innova Paper No 16, The European Cluster Observatory, European Commission Directorate General Enterprise and Industry, http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=7070 24 http://ec.europa.eu/culture/our-policy-development/eurostat-essnet-culture_en.htm 25 The Creative Economy: How People Make Money From Ideas, John Howkins, 2001 26 Power, D., 2011, Priority Sector Report: Creative and Cultural Industries, Europe Innova Paper No 16, The European Cluster Observatory, European Commission Directorate General Enterprise and Industry, http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=7070


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6190 Other telecommunications activities 6201 Computer programming activities 6202 Computer consultancy activities 6209 Other information technology and computer service activities 6311 Data processing, hosting and related activities 6312 Web portals 6391 News agency activities 6910 Legal activities 7021 Public relations and communication activities 7022 Business and other management consultancy activities 7111 Architect's office 7112 Engineering activities and related technical consultancy 7311 Advertising agencies 7312 Media representation 7410 Specialised design activities 7420 Photographic activities 7430 Translation and interpretation activities 7722 Renting of video tapes and disks 7810 Activities of employment placement agencies 8230 Organisation of conventions and trade shows 8299 Other business support service activities n.e.c. 8552 Cultural education 8559 Other education n.e.c. 9001 Performing artists and producers of artistics and literary work 9002 Support activities to performing arts 9003 Artists, writers, journalists and others 9004 Theatre and concert hall companies etc. 9101 Libraries and archives 9102 Museums 9103 Institutions for the preservation of historical sites and buildings and similar visitor

attractions

The NACE codes listed in Table 1-1 stem from both the Priority Sector Report on Creative and Cultural

Industries and the definition of creative industries in the classification methodology of WP3 of this study. The

additional codes identified for the creative industries relate to: the manufacturing of products and instruments

used in the creative industries; the sale, distribution and promotion of creative goods (particularly online);

information and communications technologies which play an increasingly important role in the creative sector;

legal activities (e.g., related to Intellectual Property); and event management.

1.3.2. Eco industries

Eco industries comprise those industries that provide innovative products and services intending to positively

influence the natural environment. It is commonly understood that eco industries correspond to what the

Organisation for Economic Cooperation and Development (OECD) and the EU’s statistical office EUROSTAT

call the “environmental goods and services industry”, consisting of “activities which produce goods and services

to measure, prevent, limit, minimise or correct environmental damage to water, air and soil, as well as

problems related to waste, noise and eco-systems. This includes cleaner technologies, products and services

that reduce environmental risk and minimise pollution and resource use”27. Among these are activities related

to pollution control, collection and treatment of waste and sewage, renewable energy, recycling/recycled

materials, sustainable water management, and eco-construction.

27 The Environmental Goods and Services industry, Manual for Data Collection and Analysis, OECD and EUROSTAT, 1999


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TABLE 1-2: Scoping of eco industries (based on the outputs of WP3; additional codes not included in the Eco-

Innovation Report28 of the European Cluster Observatory are highlighted in Italic)


0620 Extraction of natural gas 0910 Support activities for petroleum and natural gas extraction 1621 Manufacture of veneer sheets and wood-based panels 1629 Manufacture of other products of wood; manufacture of articles of cork, straw and

plaiting materials 1722 Manufacture of household and sanitary goods and of toilet requisites 2014 Manufacture of other organic basic chemicals 2015 Manufacture of fertilisers and nitrogen compounds 2016 Manufacture of plastics in primary forms 2059 Manufacture of other chemical products n.e.c. 2229 Manufacture of other plastic products 2349 Manufacture of other ceramic products 2351 Manufacture of cement 2410 Manufacture of basic iron and steel and of ferro-alloys 2521 Manufacture of central heating radiators and boilers 2530 Manufacture of steam generators, except central heating hot water boilers 2599 Manufacture of other fabricated metal products n.e.c. 2651 Manufacture of instruments and appliances for measuring, testing and navigation 2811 Manufacture of engines and turbines, except aircraft, vehicle and cycle engines 2829 Manufacture of other general-purpose machinery n.e.c. 2899 Manufacture of other special-purpose machinery n.e.c. 3511 Production of electricity 3513 Distribution of electricity 3514 Trade of electricity 3521 Manufacture of gas 3522 Distribution of gaseous fuels through mains 3600 Water collection, treatment and supply 3700 Sewerage 3811 Collection of non-hazardous waste 3812 Collection of hazardous waste 3821 Treatment and disposal of non-hazardous waste 3822 Treatment and disposal of hazardous waste 3832 Recovery of sorted materials 3900 Remediation activities and other waste management services 4312 Site preparation 4621 Wholesale of grain, unmanufactured tobacco, seeds and animal feeds 4622 Wholesale of flowers and plants 4677 Wholesale of waste and scrap 4776 Retail sale of flowers, plants, seeds, fertilisers, pet animals and pet food in

specialised stores 4950 Transport via pipeline 5222 Service activities incidental to water transportation 5229 Other transportation support activities 7112 Engineering activities and related technical consultancy 7211 Research and experimental development on biotechnology 7219 Other research and experimental development on natural sciences and engineering 8122 Other building and industrial cleaning activities

The NACE codes listed in Table 1-2 stem from both the Eco-Innovation Report29 and the definition of eco

industries in the classification methodology of WP3 of this study. The additional codes identified for the eco

28 Barsoumian, S., Severin, A. & Van der Spek, T., 2011, Eco-innovation and national cluster policies in Europe: a qualitative review, The European Cluster Observatory, http://www.europe-innova.eu/c/document_library/ get_file?folderId=148901&name=DLFE-12846.pdf


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industries relate to: extraction, production and distribution of natural gas; the manufacturing of materials,

components and products which can have a positive impact on the natural environment (either directly or

through improvements in the manufacturing process itself); the production and distribution of electricity;

transportation; and technical consultancy and research and development.

1.3.3. Experience industries

Experience industries comprise companies whose activities supply innovative products and services to provide

customers with “experiences” that stimulate emotions and senses, move, entertain and surprise, thrill, enthuse

and involve. Experience industries include activities traditionally associated with the sectors of tourism, culture,

or leisure, in particular related to "the creation and operation of visitor attractions such as museums, galleries,

science centres, heritage sites, zoos and aquaria, and theme parks", building on capabilities in “feasibility,

architecture, construction, exhibit design, interpretation, equipment supply or management consultancy”30.

Experience industries operate in the area where art, culture, technology and business converge. They comprise

the entire cycle of idea, creation, production and distribution of goods and services, and they usually use

creativity and intellectual capital as their primary input. Experience industries involve high-tech sectors (e.g.

digital animation and computer games), service-intensive sectors (e.g. tourism and advertising) and a number

of traditional cultural sectors31.

TABLE 1-3: Scoping of experience industries (based on the outputs of WP3; additional codes not included in the

Experience Industries Report32 of the European Cluster Observatory are highlighted in Italic)


4618 Agents specialised in the sale of other particular products 4642 Wholesale of clothing and footwear 4649 Wholesale of other household goods 4719 Other retail sale in non-specialised stores 4764 Retail sale of sporting equipment in specialised stores 4765 Retail sale of games and toys in specialised stores 4771 Retail sale of clothing in specialised stores 4772 Retail sale of footwear and leather goods in specialised stores 4778 Other retail sale of new goods in specialised stores 4791 Retail sale via mail order houses or via Internet 4799 Other retail sale not in stores, stalls or markets 4939 Other passenger land transport n.e.c. 5222 Service activities incidental to water transportation 5223 Service activities incidental to air transportation 5510 Hotels and similar accommodation 5520 Holiday and other short-stay accommodation 5530 Camping grounds, recreational vehicle parks and trailer parks 5590 Other accommodation 5610 Restaurants and mobile food service activities 5621 Event catering activities 5630 Beverage serving activities 5829 Other software publishing 6020 Television programming and broadcasting activities 6110 Wired telecommunications activities

29 Barsoumian, S., Severin, A. & Van der Spek, T., 2011, Eco-innovation and national cluster policies in Europe: a qualitative review, The European Cluster Observatory, http://www.europe-innova.eu/c/document_library/ get_file?folderId=148901&name=DLFE-12846.pdf 30 EXPERIENCE UK, A guide to the UK’s creative excellence in visitor attractions, UK Trade & Investment, 2010 31 http://www.ebst.dk/publikationer/innovation/Growth_through_Experiences/html/chapter03.htm 32 Lindqvist, G. & Protsiv, S., 2011, Priority Sector Report: Experience Industries, The European Cluster Observatory, European Commission Directorate General Enterprise and Industry, http://www.europe-innova.eu/c/document_library/ get_file?folderId=261559&name=DLFE-12808.pdf


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6201 Computer programming activities 6209 Other information technology and computer service activities 6312 Web portals 7021 Public relations and communication activities 7022 Business and other management consultancy activities 7911 Travel agency activities 7912 Tour operator activities 7990 Other reservation service and related activities 8020 Security systems service activities 8230 Organisation of conventions and trade shows 8299 Other business support service activities n.e.c. 9004 Operation of arts facilities 9102 Museums activities 9103 Operation of historical sites and buildings and similar visitor attractions 9104 Botanical and zoological gardens and nature reserves activities 9200 Gambling and betting activities 9311 Operation of sports facilities 9312 Activities of sports clubs 9313 Fitness Facilities 9319 Other sports activities 9321 Activities of amusement parks and theme parks 9329 Other amusement and recreation activities 9499 Activities of other membership organisations n.e.c. 9602 Hairdressing and other beauty treatment 9604 Physical well-being activities 9609 Other personal service activities n.e.c. 5030 Inland passenger water transport 5040 Inland freight water transport 9001 Performing arts 9002 Support activities to performing arts 9003 Artistic creation

The NACE codes listed in Table 1-3 stem from both the Priority Sector Report on Experience Industries33 and

the definition of experience industries in the classification methodology of WP3 of this study. The additional

codes identified for the experience industries relate to: wholesale and retail sale of goods (including online);

event organisation; media and entertainment (including gaming); and service activities.

1.3.4. Maritime industries

Maritime industries comprise companies whose activities supply innovative products and services related to the

traditional maritime sector. In general, maritime industries include all enterprises engaged in the business of

designing, constructing, manufacturing, acquiring, operating, supplying, repairing and/or maintaining vessels,

or component parts thereof: of managing and/or operating shipping lines, and customs brokerage services,

shipyards, dry docks, marine railways, marine repair shops, shipping and freight forwarding services and

similar enterprises34. This emerging industry also includes a significant component of traditional oil and gas

and renewable energy (particularly wind, but also marine turbines).

The growth of maritime industries can be explained by higher global demand in traded goods and components,

coupled with trade in maritime services growing worldwide. Thanks to the advances in the transport of goods,

as well as improvements in telecommunications and trade itself becoming liberalised and standardised, the

increased effectiveness of port and shipping services has made the purchase of goods, raw materials and

33 Lindqvist, G. & Protsiv, S., 2011, Priority Sector Report: Experience Industries, The European Cluster Observatory, European Commission Directorate General Enterprise and Industry, http://www.europe-innova.eu/c/document_library/ get_file?folderId=261559&name=DLFE-12808.pdf 34 Oxford Economics. (2009). The economic contribution of the UK shipping industry in 2007. London: Oxford Economics.


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components possible from almost anywhere in the world. International standards and homogenous products

have led to increased competition, while trade liberalisation has meant an international allocation of resources.

At the same time, maritime business could be considered as one of the world’s most globalised industries. These

factors have opened the door for companies with novel products that can solve some of the problems faced by

maritime industries during this expansion35.

TABLE 1-4: Scoping of maritime industries (based on the outputs of WP3)


1020 Processing and preserving of fish, crustaceans and molluscs 2219 Manufacture of other rubber products 2599 Manufacture of other fabricated metal products n.e.c. 2811 Manufacture of engines and turbines, except aircraft, vehicle and cycle engines 2822 Manufacture of lifting and handling equipment 3011 Building of ships and floating structures 3012 Building of pleasure and sporting boats 3320 Installation of industrial machinery and equipment 3511 Production of electricity 3600 Water collection, treatment and supply 4120 Construction of residential and non-residential buildings 4213 Construction of bridges and tunnels 4221 Construction of utility projects for fluids 4291 Construction of water projects 4299 Construction of other civil engineering projects n.e.c. 4313 Test drilling and boring 4399 Other specialised construction activities n.e.c. 4519 Sale of other motor vehicles 4614 Agents involved in the sale of machinery, industrial equipment, ships and aircraft 4931 Urban and suburban passenger land transport 4941 Freight transport by road 5210 Warehousing and storage 5222 Service activities incidental to water transportation 5223 Service activities incidental to air transportation 5224 Cargo handling 5229 Other transportation support activities 7112 Engineering activities and related technical consultancy 7120 Technical testing and analysis 7219 Other research and experimental development on natural sciences and engineering 7311 Advertising agencies 7732 Rental and leasing of construction and civil engineering machinery and equipment 7734 Rental and leasing of water transport equipment 7911 Travel agency activities 0311 Marine fishing 0312 Freshwater fishing 0321 Marine aquaculture 0322 Freshwater aquaculture 0910 Support activities for petroleum and natural gas extraction 5010 Sea and coastal passenger water transport 5020 Sea and coastal freight water transport 5030 Inland passenger water transport 5040 Inland freight water transport

35 Kumar, S., & Hoffman, J. (2002). Globalisation: The Maritime Nexus. In C. Grammenos, The Handbook of Maritime Economics and Business (pp. 35-62). Jersey: Informa Publishing.


29

1.3.5. Mobile services industries

Mobile services industries comprise companies whose activities enable the provision of telecommunication,

information, and entertainment services, including voice, internet, SMS, text, and other data services. They

include conversation services (mobile voice and person-to-person messaging), data access services (GSM,

GRPS, CDMA, EDGE, UMTS, WLAN/Wi-Fi and other methods), and content services (SMS-based, MMS-

based, browser-based, downloadable applications and others)36, targeting both consumers (messaging services,

transaction-based services, news/information services, entertainment services, mobile marketing services,

consumer portal offers) and corporations (messaging services, Wi-Fi wireless access services, mobile office

solutions, task-based applications, sector-based applications, corporate and professional portals). Due to the

ubiquity of mobile phones and the rapid development of other connected mobile devices (tablets, e-books, etc.),

mobile services industries constitute one of the fastest growing economic sectors worldwide37.

TABLE 1-5: Scoping of mobile services industries (based on the outputs of WP3)


2221 Manufacture of plastic plates, sheets, tubes and profiles 2222 Manufacture of plastic packing goods 2223 Manufacture of builders/-E ware of plastic 2229 Manufacture of other plastic products 2611 Manufacture of electronic components 2630 Manufacture of communication equipment 2651 Manufacture of instruments and appliances for measuring, testing and navigation 3900 Remediation activities and other waste management services 4120 Construction of residential and non-residential buildings 4321 Electrical installation 4651 Wholesale of computers, computer peripheral equipment and software 4690 Non-specialised wholesale trade 4754 Retail sale of electrical household appliances in specialised stores 4778 Other retail sale of new goods in specialised stores 4779 Retail sale of second-hand goods in stores 4791 Retail sale via mail order houses or via Internet 5819 Other publishing activities 5829 Other software publishing 5914 Motion picture projection activities 6020 Television programming and broadcasting activities 6120 Wireless telecommunications activities 6130 Satellite telecommunications activities 6190 Other telecommunications activities 6201 Computer programming activities 6202 Computer consultancy activities 6203 Computer facilities management activities 6209 Other information technology and computer service activities 6312 Web portals 6499 Other financial service activities, except insurance and pension funding n.e.c. 7022 Business and other management consultancy activities 7219 Other research and experimental development on natural sciences and engineering 7311 Advertising agencies 7320 Market research and public opinion polling 7810 Activities of employment placement agencies 8299 Other business support service activities n.e.c. 9200 Gambling and betting activities 9512 Repair of communication equipment

36 Mobile services in the networked economy, Jarkko Vesa, 2005 37 Sustainability Assessment of the Mobile Services Industry, by Rudi Anthony, Justin Bean, Jenn Coyle, Giles Hayward, & Kelly James, May 2011


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9529 Repair of other personal and household goods

1.3.6. Mobility industries

Mobility industries comprise those businesses which provide products and services that aim at optimising the

intermodal mobility of goods and people by combining or connecting different means and modes of transport

(notably by car/road, train/rail, airplane/air and ship/water). They build upon competences in transport and

logistics on the one side and/or IT and mobile services on the other, but may also cut into other sectors such as

mobile navigation services, tourism, retail and financial services. The activities of this emerging industry add

value by providing, for instance, integrated, smart, clean, service-oriented and/or user-focused mobility

services and related products38. They provide new services to the particular needs of both businesses (b2b) and

customers (b2c). This includes the provision of different forms of facilitation and mediation services such as

tracking and management services and related products as well as the organisation of specific service offers,

such as deliveries or car-sharing in relation to other forms of transport.

TABLE 1-6: Scoping of mobility industries (based on the outputs of WP3; additional codes not included in the

Priority Sector Report on Mobility Industries39 are highlighted in Italic)


2229 Manufacture of other plastic products 2453 Casting of light metals 2521 Manufacture of central heating radiators and boilers 2594 Manufacture of fasteners and screw machine products 2599 Manufacture of other fabricated metal products n.e.c. 2611 Manufacture of electronic components 2612 manufacture of loaded electronic boards 2620 Manufacture of computers and peripheral equipment 2630 Manufacture of communication equipment 2651 Manufacture of instruments and appliances for measuring, testing and navigation 2731 Manufacture of fibre optic cables 2732 Manufacture of other electronic and electric wires and cables 2790 Manufacture of other electrical equipment 2811 Manufacture of engines and turbines, except aircraft, vehicle and cycle engines 2813 Manufacture of other pumps and compressors 2814 Manufacture of other taps and valves 2823 Manufacture of office machinery and equipment (except computers and peripheral

equipment) 2825 Manufacture of non-domestic cooling and ventilation equipment 2829 Manufacture of other general-purpose machinery n.e.c. 2910 Manufacture of motor vehicles 2920 Manufacture of bodies (coachwork) for motor vehicles; manufacture of trailers and

semi-trailers 2932 Manufacture of other parts and accessories for motor vehicles 3020 Manufacture of railway locomotives and rolling stock 3030 Manufacture of air and spacecraft and related machinery 3040 Manufacture of military fighting vehicles 3091 Manufacture of motorcycles 3099 Manufacture of other transport equipment n.e.c. 3316 Repair and maintenance of aircraft and spacecraft 3511 Production of electricity

38 See pages 9-10 of the study “Building a New Mobility Industry Cluster in the Toronto Region” by ICF Consulting & Moving the Economy, available at http://www.direccionproyectos.com/documentos/FUNDACION/MTENewMobilityStudy.pdf 39 Andersson, N. & Annerstedt, J., 2010, Priority Sector Report: Clusters in the Mobility Industry: Automotive and Tourism Sectors, The European Cluster Observatory, European Commission Directorate General Enterprise and Industry, http://www.clusterobservatory.eu/common/galleries/downloads/mobility_report.pdf


31

4120 Construction of residential and non-residential buildings 4299 Construction of other civil engineering projects n.e.c. 4329 Other construction installation 4511 Sale of cars and light motor vehicles 4519 Sale of other motor vehicles 4520 Maintenance and repair of motor vehicles 4719 Other retail sale in non-specialised stores 4910 Passenger rail transport, interurban 4920 Freight rail transport 4931 Urban and suburban passenger land transport 4932 Taxi operation 4939 Other passenger land transport n.e.c. 4941 Freight transport by road 5110 Passenger air transport 5121 Freight air transport 5210 Warehousing and storage 5221 Service activities incidental to land transportation 5223 Service activities incidental to air transportation 5224 Cargo handling 5229 Other transportation support activities 5320 Other postal and courier activities 5510 Hotels and similar accommodation 5520 Holiday and other short-stay accommodation 5530 Camping grounds, recreational vehicle parks and trailer parks 5590 Other accommodation 5821 Publishing of computer games 5829 Other software publishing 6110 Wired telecommunications activities 6120 Wireless telecommunications activities 6130 Satellite telecommunications activities 6190 Other telecommunications activities 6201 Computer programming activities 6202 Computer consultancy activities 6209 Other information technology and computer service activities 6311 Data processing, hosting and related activities 7022 Business and other management consultancy activities 7112 Engineering activities and related technical consultancy 7120 Technical testing and analysis 7219 Other research and experimental development on natural sciences and engineering 7711 Rental and leasing of cars and light motor vehicles 7712 Rental and leasing of trucks 7735 Rental and leasing of air transport equipment 7739 Rental and leasing of other machinery, equipment and tangible goods n.e.c. 7810 Activities of employment placement agencies 7911 Travel agency activities 8299 Other business support service activities n.e.c. 9200 Gambling and betting activities 9321 Activities of amusement parks and theme parks

The NACE codes listed in Table 1-6 stem from both the Priority Sector Report on Mobility Industries40 and the

definition of mobility industries in the classification methodology of WP3 of this study. The additional codes

identified for the mobility industries relate to: the manufacturing of components for different types of vehicles;

construction of infrastructure related to mobility; and the sale of vehicles.

40 Andersson, N. & Annerstedt, J., 2010, Priority Sector Report: Clusters in the Mobility Industry: Automotive and Tourism Sectors, The European Cluster Observatory, European Commission Directorate General Enterprise and Industry, http://www.clusterobservatory.eu/common/galleries/downloads/mobility_report.pdf


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1.3.7. Personalised medicine

Personalised Medicine industries comprise those activities that are designed to supply innovative medical

products and services in a number of fields in a customised form. These fields include medical technology,

medical and surgical equipment and devices, Personalised Medicine information technology, Personalised

Medicine infrastructure and services, clinical trials, as well as preventative Personalised Medicine care and

general well-being (natural Personalised Medicine care, sport and recreation, community services, Personalised

Medicine information, Personalised Medicine homes)41. These industries combine the fields of science,

engineering and technologies to facilitate new innovations in the biomedical sphere and an increasing

convergence of physical and biological technology platforms. They are key to supporting breakthroughs in

medical knowledge and technologies, addressing major Personalised Medicine and societal challenges (such as

the threat of new diseases, pandemics or ageing), enabling greater choice and the customisation of Personalised

Medicine care (personalised medicine) and a move towards new Personalised Medicine lifestyles.

TABLE 1-7: Scoping of personalised medicine industries (based on the outputs of WP3)


1041 Manufacture of oils and fats 1089 Manufacture of other food products n.e.c. 2042 Manufacture of perfumes and toilet preparations 2059 Manufacture of other chemical products n.e.c. 2120 Manufacture of pharmaceutical preparations 2611 Manufacture of electronic components 2630 Manufacture of communication equipment 2651 Manufacture of instruments and appliances for measuring, testing and navigation 2670 Manufacture of optical instruments and photographic equipment 2790 Manufacture of other electrical equipment 2813 Manufacture of other pumps and compressors 2822 Manufacture of lifting and handling equipment 2899 Manufacture of other special-purpose machinery n.e.c. 3250 Manufacture of medical and dental instruments and supplies 4646 Wholesale of pharmaceutical goods 4773 Dispensing chemist in specialised stores 4791 Retail sale via mail order houses or via Internet 6201 Computer programming activities 6209 Other information technology and computer service activities 6511 Life insurance 6512 Non-life insurance 7022 Business and other management consultancy activities 7112 Engineering activities and related technical consultancy 7120 Technical testing and analysis 7211 Research and experimental development on biotechnology 7219 Other research and experimental development on natural sciences and engineering 7311 Advertising agencies 8559 Other education n.e.c. 8610 Hospital activities 8621 General medical practice activities 8622 Specialist medical practice activities 8623 Dental practice activities 8690 Other human health activities 8730 Residential care activities for the elderly and disabled 8790 Other residential care activities 8810 Social work activities without accommodation for the elderly and disabled

41 Personalised Medicine and Wellbeing Industries: Exploring the Potential, Final Report, Prepared by Adroit Economics and GH Regeneration for and on behalf of Our Life, DH Northwest, the Strategic Personalised Medicine Authority and NWDA, 2010


33

8899 Other social work activities without accommodation n.e.c. 9602 Hairdressing and other beauty treatment 9604 Physical well-being activities 0321 Marine aquaculture

1.4. Structure of the report

The remainder of the report is organised as follows. Chapter 2 presents a detailed methodology for the

identification and benchmarking of the framework conditions relevant for the emergence of world-class

clusters/regions with emerging industries. Chapters 3-9 of the report contain the preliminary results of the

analysis for each of the seven emerging industries (i.e., (1) creative industries; (2) eco industries; (3) experience

industries; (4) maritime industries; (5) mobile service industries; (6) mobility industries, and (7) personalised

medicine) based on a comprehensive desk-research. Chapter 10 elaborates on the next steps of WP2, and

specifically on the validation round by experts and empirical surveys on region-specific framework conditions

for newly emerging industries.


34

2. Methodology

The current chapter presents a detailed methodology for the identification and benchmarking of the framework

conditions relevant for the emergence of world-class clusters/regions with emerging industries. We begin by

presenting the employed analytical framework and then move on to the description of the key steps of how the

framework conditions were identified.

2.1. Analytical framework: life cycle of regional industrial emergence

Over the last few years, a broad range of studies have been carried out on framework conditions for

competitiveness, on both national and regional level. However, limitations on factors such as scope, focus,

target group, data collection and source, are present in most of these studies, which therefore resulted in

important weaknesses in the analyses. These studies are either too broad and high-level, and hence cannot

guarantee uniformed quality of their data sources, or only focus on a limited set of factors that are available,

and thus do not take all aspects into account42.

As mentioned in the previous chapter, when studying emerging industries, their dynamic nature should not be

ignored. The dynamic nature here refers to a continuous evolution of an industry and its periodical transitions

from one stage to another. Therefore, in order to obtain a realistic picture of the framework conditions relevant

for the emergence and development of the industries in question, the notion of their dynamic nature should be

put in the centre of the analysis, since the role and importance of the relevant framework conditions is likely to

change with every new stage of the industry’s life cycle. To be effective, supporting measures thus need to be

tailored to the various stages of the life cycle. Furthermore, policies that aim to foster the development of

clusters in emerging industries should differ from policies that aim to strengthen clusters in mature industries.

The study focuses on the development of emerging industries that comprises either the emergence of new

industries or the transformation and renewal of existing mature industries. Figure 2-1 presents

the employed analytical framework for characterising different stages of the development of emerging

industries. The framework illustrates the growth/decline of an industry while it goes through the six main

stages of its life cycle ((1) precursor, (2) embryonic; (3) nurture; (4) growth; (5) mature; and (6)

decline/renewal), including three transition periods (Science -> Technology; Technology -> Application, and

Application -> Market). The framework was adapted from Phaal et al. (2011) because of its comprehensive

structure and high relevance to the scope of the current study. As can be seen from the Figure, sometimes an

emerging industry’s first stage builds on the last stage of a mature industry.

Below we elaborate on each of the stages and transition periods.

Stage 1 Precursor implies activities that support the development of a certain scientific

phenomenon, business concept and/or underpinning service/technology platform in

the region, which stimulate industrial interest and investment in particular market-directed

feasibility studies.

Science - Technology Transition includes activities that support the demonstration of the

feasibility of a scientific phenomenon, business concept and/or underpinning

service/technology platform, helping the technology or service to be integrated into an

application-oriented system.

42 Aranguren M.J. et al. (2010) “Benchmarking regional competitiveness in the European Cluster Observatory”, June 2010.


35

Stage 2 Embryonic refers to activities that support the improvement of the reliability and

performance of technology and services to a point where it can be demonstrated in a market

environment.

Technology – Application Transition implies activities that help to demonstrate the commercial

potential of technology and services in the region through revenue generation.

FIGURE 2-1: Life cycle of regional industrial emergence

Source: adapted from Phaal R., O’Sullivan E., Routley M., Ford S., Probert D. (2011) A framework for mapping industrial emergence, Technological Forecasting and Social Change, Volume 78, Issue 2, February pp. 217-230

Stage 3 Nurture includes activities that help to improve the price and performance of

applications to a point where sustainable business potential can be demonstrated.

Application – Market Transition refers to activities that help to develop a market with mass

growth potential.

Stage 4 Growth implies activities that support marketing, commercial and business

development leading to sustainable industrial growth in the region.

Stage 5 Mature includes activities that help to refine established applications, production

processes and business models.

Stage 6 Renewal refers to activities that help to renew the industry trough the

development/adoption of new technologies that repeat the above phases.

For the analysis, the focus has been placed on the first stages and transition periods up to the first half of the

Maturity stage (Stage 5), since the study aims to analyse the framework conditions helping to foster the

development of exclusively emerging industries. Once the maturity stage has been reached, the industry per

definition cannot be considered ‘emerging’ anymore, and becomes a mature one, which, in turn, is beyond the

scope of the current study.


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2.2. Linking framework conditions with the life cycle of regional industrial emergence

As mentioned in Chapter 1, in order to obtain a comprehensive understanding of the development of emerging

industries, there is a need to capture both general and industry-specific framework conditions. The degree

of influence of a framework condition on a cluster varies across industries. Some framework conditions are of

general nature, but have specific implications for certain industries (e.g., tax framework is an influential

framework condition for all industries in general, but taxes on effluents, pollution and other hazardous wastes

are specifically relevant to eco innovation regions). Therefore the key question the current phase of WP2 aims

to answer for all seven industries is as follows: “Which FWCs (both general and specific) need to be present in

the region to ensure a sustainable development of an emerging industry?”. While the Scoreboard methodology

of WP3 aims to capture and analyse general framework conditions, WP2 exclusively focuses on the specific

ones.

Figure 2-2 presents the approach towards the identification and structuring of the framework conditions. Based

on extensive desk-research and in-depth interviews with experts and industry representatives, the approach

implies developing a pool of relevant general and industry-specific framework conditions, and assigning them

to specific stages and transition periods of the regional industrial emergence.

FIGURE 2-2: Approach towards the identification and structuring of the framework conditions (combined

efforts of WP2 and WP3)

The abovementioned activities were carried out in two steps (all these activities are completed except the first

validation round by external experts which is scheduled for October – November 2012):

(1) Step 1: developing a comprehensive overview of the relevant framework conditions from available

sources (desk-research): this sub-task included an in-depth analysis of information on cluster

framework conditions from existing sources such as EC publications (including ECO reports), business

publications, academic articles and other relevant sources. The existing literature sources will later be

complemented by expert opinions (see below). This sub-task led to an extensive list of relevant cluster

framework conditions. This list includes industry-specific cluster framework conditions.

(2) Step 2: compiling and structuring framework conditions: this sub-task implies the grouping of

identified framework conditions into categories based on commonality patterns among those

framework conditions thereby creating a nomological net of factors. The commonality patterns here

refer to specific stages and transition periods of the life cycle. Furthermore, potential causal

relationships between various groups of framework conditions will be extracted from the desk-research

analysis. The identified framework conditions, as well as their categorisation and causal relations will


37

be subject of the first validation round by external experts. The first validation round may lead

to adjustments in the selection of framework conditions, including the addition/removal of the relevant

framework conditions.

2.3. Step 1: Extensive desk-research

In order to identify the framework conditions necessary to encourage the regional industrial emergence,

extensive desk-research was carried out. This sub-task included an in-depth analysis of information on cluster

framework conditions from existing sources such as EC publications (including ECO reports), business

publications and academic articles. Desk-research was conducted at the level of industry-specific framework

conditions. Furthermore, a user-friendly and effective data storage system was developed at this stage allowing

for efficient and easy use of obtained data at later stages of the project. The box on the following page provides a

limited selection of consulted sources (for illustrative purposes only).

In order to develop a comprehensive pool of framework conditions, we addressed various types of framework

conditions:

1. Financial framework conditions referring to a system of actors providing funds to support cluster

activities (availability of seed capital, venture capital, grants from foundations, loans/borrowing etc.);

2. Industrial framework conditions referring to a system of large companies and SMEs, their

specialisation and focus, sectoral composition and other factors characterising the industrial base of a

cluster;

3. Market framework conditions referring to factors influencing the exchange of goods and services,

interaction of supply and demand, and the presence of competition.

4. Cultural framework conditions referring to a set of shared attitudes, values, goals and practices that

characterises the cluster (risk-taking vs. risk-aversion, entrepreneurial orientation, openness to work

with intern. part.);

5. Knowledge framework conditions referring to a system of higher-education and research

organisations (universities, research centers, industry-specific training institutions etc.), their

reputation and ability to generate scientific and other knowledge and deliver a skilled workforce;;

6. Regulatory and policy framework conditions, i.e., regulations and the means to enforce them, usually

established by a government to regulate a specific activity (incl. tax incentives); and

7. Support framework conditions referring to supporting structures that facilitate cluster activities by

providing trainings, business and legal advice, supporting knowledge transfer activities etc.

Specific emphasis was put on the identification of framework conditions relevant for supporting innovation.

The literature suggests that such framework conditions are a result of public knowledge creation; co-operation

on innovation between knowledge institutions and the private sector; the financing of the innovation; and the

effect of market conditions on the innovation.

The policy areas relevant for building favourable framework conditions for the development of emerging

industries include, for example, public investment in R&D, general and industry-specific infrastructure and

institutional support structures, quality of research, relevance of research, cooperation in innovation,

commercialisation of research, highly educated workers, subsidies and tax incentives, customers and suppliers,

competition policy, access to innovation knowledge, competences and partners.


38

Abadie et al. (2008) The Future Evolution of the Creative Content Industries, JRC Scientific and Technical Reports Andersen (2006) Eco-innovation indicators, Report prepared for the European Environment Agency Andersen (2008) Eco-innovation: towards a taxonomy and a theory, paper presented at the 25th Celebration Conference 2008 held at

Copenhagen from June 17-20 2008 Australian Department of Communications Information Technology and the Arts (2002) Creative Industries Cluster Study – stage one,

http://portal.unesco.org/culture/en/files/40768/12705461905Creative_Industries_Cluster_Study_Report_Stage_1.pdf/Creative_Industries_Cluster_Study_Report_Stage_1.pdf

Bleischwitz e.a. (2009) Eco-innovation – putting the EU on the path to a resource and energy efficient economy, study conducted for the European Parliament

Boix e.a. (2010) The future of the cohesion policy, a working paper submitted to the International Meeting on Regional Sciences held at from 17-19 November 2011

Boix et al. (2011) Creative clusters in Europe: a microdata approach, a working paper submitted to the 51th European Congress of the Regional Science Association International held from 30th August to 3rd of September

Brévignon-Dodin L. (2009) Regulation as an enabler for emerging industries, presentation at OECD Connect Research 2009 (http://www.oecd.org/dataoecd/35/39/44282657.pdf)

Cunningham (2004) The creative industries after cultural policy: A genealogy and some possible preferred futures, International Journal of Cultural Studies, Vol. 7, No. 1, pp 105-115

EIM & Oxford Research (2011) Financing Eco-Innovation, Final Report for the European Commission DG Environment ETAP (2006) Short Report on the first ETAP Forum ‘Financing eco-innovation’, report prepared after Eco-Innovation Forum at

Poznan in November 2006 EURADA (2009) Eco-Innovation at the Heart of Regional Development Green for Growth, EURADA News No. 304, pp. 1-39 European Commission (2010) Communication from the to the European Parliament, the Council, the European Economic and Social

Committee and the Committee of the Regions, research report COM (2010) 614 European Commission (2010) Unlocking the potential of cultural and creative industries, Green Paper COM (2010) 183 European Commission (2011) Innovation Union Competitiveness report 2011 – executive summary Fesel, Bernd and Söndermann, Michael (2007) Culture and Creative Industries in Germany, Gebrüder Kopp GmbH & Co Foord (2008) Strategies for creative industries: an international review, Creative Industries Journal, Vol. 1, No. 2, pp 91-113 Foxon and Andersen (2009) The greening of innovation systems for eco-innovation, Paper to be presented at the Summer Conference

2009 held at the Copenhagen Business School from 17-19 June 2009 Handke (2010) Surveying innovation in the creative industries, presented at the 5th International EMAEE Conference on Innovation

(Globalisation, Services and Innovation: The Changing Dynamics of the Knowledge Economy) at the Manchester Metropolitan University, 17-19 May 2007

Haselbach e.a. (2009) How to support creative industries, portfolio report by Creative Metropoles Hesmondhalgh, David and Pratt, Andy C (2005) Cultural industries and cultural policy, International journal of cultural policy, 11 (1).

pp. 1-140 Garnham (2005) From Cultural to Creative Industries: an analysis of the implications of the creative industries approach to arts and

media policy making in the United Kingdom, International Journal of Cultural Studies, Vol. 7, No. 1, pp 105-115 De Jong e.a. (2007) Creative industries - heterogeneity and connection with regional firm entry, published under the SCALES-initiative

(Scientific Analysis of Entrepreneurship and SMEs), as part of the 'SMEs and Entrepreneurship programme' financed by the Netherlands Ministry of Economic Affairs

KEA European Affairs (2010) Business Innovation Support Services for Creative Industries, short study prepared for the European Commission (DG Enterprise and Industry)

Kemp and Horbach (2008) Measurement of competitiveness of eco-innovation, Report prepared for the European Commission DG Research

OECD (2011) Better Policies to Support Eco-innovation, OECD Publishing Kesting e.a. (2010) Identifying Emerging Industries, research report by AUT University to the Ministry of Women’s Affairs Lazzeretti e.a. (2009) Why do creative industries cluster? An analysis of the determinants of clustering of creative industries, Paper

presented at the Summer Conference 2009 on Copenhagen Business School, June 17 - 19, 2009 Leimbach (2011) The dynamics of Europe’s industrial structure and the growth of innovative firms, Contributed paper to be presented

at the 3rd European Conference on Corporate R&D and Innovation Marcus, Carmen (2005) Future of Creative Industries, working document for the European Commission DG Research Montalvo and Ten Brink (2007) Policy pathways to promote eco-innovation, Policy Brief 1/12 summary findings OECD (2009) Eco-Innovation in Industry: Enabling Green Growth , OECD Publishing OECD (2009) Sustainable Manufacturing and Eco-Innovation, synthesis report prepared by OECD OECD (2011) Better Policies to Support Eco-innovation, OECD Studies on Environmental Innovation, OECD Publishing Van der Pol (2007) Key role of cultural and creative industries in the economy, http://www.oecd.org/dataoecd/11/47/38703999.pdf Polt e.a. (2001) Benchmarking Industry-Science relations – The Role of Framework Conditions, research project report commissioned

by the European Commission and Federal Ministry of Economy and Labour, Austria Power D. (2010) Mapping of creative and cultural industries: results from a study of the European Cluster Observatory,

http://www.europe-innova.eu/c/document_library/get_file?p_l_id=16246&folderId=122731&name=DLFE-7112.pdf Reid and Miedzinski (2008) Eco-innovation, final report for sectoral innovation watch Rosted et al. (2010) New Cluster Concepts Activities in Creative Industries, working paper for the European Commission DG

Enterprise & Industry Söndermann (2007) Europäische Kultur- und Kreativwirtschaft im globalen Kontext, http://www.european-creative-

industries.eu/Portals/0/6soendermann-070503.ppt Svob-Dokic (2005) The Emerging Creative Industries in Southeastern Europe, Zagreb: Institute for International Relations UNESCO (2006) Understanding Creative Industries,

http://portal.unesco.org/culture/en/files/30297/11942616973cultural_stat_EN.pdf/cultural_stat_EN.pdf Ye (2007) China’s Creative Industries: Clusters and Performances, a working paper submitted to the Annual Conference of the Chinese

Economist Association held at Cambridge University from 1st to 2nd April 2008 De Voldere e.a. (2009) Study on the Competitiveness of the EU tourism industry, research report commissioned by the European

Commission DG Enterprise & Industry Zaboura N. (2009) Creative Regions: Future Trends for Digital Creative Industries in Europe, Report prepared for EU-Project CReATE



http://www.oecd.org/dataoecd/35/39/44282657.pdf

http://www.oecd.org/dataoecd/11/47/38703999.pdf

http://www.europe-innova.eu/c/document_library/get_file?p_l_id=16246&folderId=122731&name=DLFE-7112.pdf

http://www.european-creative-industries.eu/Portals/0/6soendermann-070503.ppt

http://www.european-creative-industries.eu/Portals/0/6soendermann-070503.ppt

http://portal.unesco.org/culture/en/files/30297/11942616973cultural_stat_EN.pdf/cultural_stat_EN.pdf


39

2.4. Step 2: Compiling and structuring framework conditions

As mentioned above, once a broad pool of framework conditions was identified, those framework conditions

were then mapped using the analytical framework. An example of the result of such mapping exercise is

presented below using a case of Örnsköldsvik, Sweden where a new regional eco industry (bio refineries) has

emerged.

FIGURE 2-3: Chronological mapping of events related to emergence of eco industry in Örnsköldsvik, Sweden

Source: based on a case description of Arbuthnott A., Eriksson J., Wincent J. (2010) “When a new industry meets

traditional and declining ones: An integrative approach towards dialectics and social movement theory in a model of

regional industry emergence processes”, Scandinavian Journal of Management, Volume 26, Issue 3, September 2010, pp.

290 – 308

Figure 2-4 illustrates the distinction between general and industry-specific framework conditions. Such approach allows to identify which framework conditions are relevant for which stages of the life cycle, and which supporting measures are needed at each of those stages. It also allows to distinguish between framework conditions that are of continuous nature, and the ones that play an important role only for a limited period of time. The next chapter presents the results of this exercise for each of the seven industries.


40

FIGURE 2-4: Mapping of framework conditions according to the analytical framework


41

3. Preliminary results for creative industries

The current chapter presents the preliminary results of the analysis for creative industries. We first provide

some background information on the industry itself, and then move on to describing general and specific

framework conditions relevant to each of the stages of the industry’s life cycle up to the maturity stage.

3.1. Introduction

Creative industries are becoming increasingly important components of modern post-industrial knowledge-

based economies. They are thought to account for higher than average growth and job creation, they are also

vehicles of cultural identity that play an important role in fostering cultural diversity. During the last decade, a

number of governments around the world have recognised this fact and started to develop specific policies to

promote these industries. This mainstreaming of the sector has led to a growing body of analysis, statistics and

mapping exercises on the relationship between culture, creative industries and economic development to give

officials in these countries the raw data they need to make policy. However, the sector is still poorly understood

and many governments need to be convinced of its potential, while trying to accurately measure economic

activity in the sector poses considerable obstacles43.

As specified in Chapter 1, creative industries comprise activities related to the creation, production and/or

distribution of creative goods and services as well as with the integration of creative elements into wider

processes and other sectors. Creative industries are sometimes referred to as the cultural industries, but the two

terms are neither synonymous nor interchangeable. According to the United Nations Educational, Scientific

and Cultural Organisation (UNESCO), “cultural industries refer to industries which combine the creation,

production and commercialisation of creative contents which are intangible and cultural in nature. The

contents are typically protected by copyright and can take the form of a good or a service. Cultural industries

generally include printing, publishing and multimedia, audiovisual, phonographic and cinematographic

productions as well as crafts and design. The term creative industries encompasses a broader range of activities

which include the cultural industries as well as all cultural or artistic production, whether live or produced as an

individual unit. The creative industries are those in which the product or service contains a substantial element

of artistic or creative endeavour and include activities such as architecture and advertising44. The Priority Sector

Report on Creative and Cultural Industries45 by the European Cluster Observatory argued for a common term

for creative and cultural industries as it views both terms as conceptually linked, similar and to a certain level

interchangeable. The final report46 of the ESS-net on Culture also has adopted a wider definition that includes,

for instance, video games, although it maintains a perspective from the viewpoint of professions rather than

industries. ”Creative industries thus consist of activities drawing on “advertising, architecture, art, crafts,

design, fashion, film, music, performing arts, publishing, R&D, software, toys and games, TV and radio, and

video games”47.

43 UNESCO (2006) Understanding Creative Industries, http://portal.unesco.org/culture/en/files/30297/11942616973cultural_stat_EN.pdf/cultural_stat_EN.pdf 44 Understanding Creative Industries: Cultural statistics for public-policy making, UNESCO, 2006 45 Power, D., 2011, Priority Sector Report: Creative and Cultural Industries, Europe Innova Paper No 16, The European Cluster Observatory, European Commission Directorate General Enterprise and Industry, http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=7070 46 http://ec.europa.eu/culture/our-policy-development/eurostat-essnet-culture_en.htm 47 The Creative Economy: How People Make Money From Ideas, John Howkins, 2001



42

FIGURE 3-1: Framework for cultural activities

Source: ESSnet-Culture Final Report (2012)48

Key actors of the value chain

In order to grasp the interplay of industry emergence, it is essential to distinguish between the different value

chain actors. Abadie et al. (2008)49 identify the following groups of actors within the creative industries.

Publishers and content creators

Publishers and content creators need to finance the initial content creation and marketing, a requirement that

places publishers in a central position in the industry. Processes of consolidation in the sector have reduced the

48 ESSnet-Culture Final Report (2012), http://ec.europa.eu/culture/our-policy-development/documents/ess-net-report-oct2012.pdf 49 Abadie et al. (2008) The Future Evolution of the Creative Content Industries, JRC Scientific and Technical Reports


43

number of entry points into the market for content creators (e.g., independent authors, video game

development and film studios etc.), creating a classic demand oligopoly situation. The dominant business model

is based on publishers’ advancement of funding to content creators in exchange for the property rights over

content (in some cases, it even includes future works). Once the advance is recouped from sales of the product,

content creators start receiving royalties, usually a share of the revenue per unit of content sold.

Publishers and distributors

The nature of the interaction between publishers and distributors depends on the physical nature of the good

being produced. Generally, the growing trend towards content digitisation and online distribution reduces the

importance and power of distributors and wholesalers, who are in some cases being vertically integrated by

publishers.

New players in the area of online distribution

Although the move towards digital distribution has not reduced the role of publishers who carry out essential

funding and marketing functions (essential to increase a product’s visibility in a fiercely competitive

environment), it creates new opportunities for actors with key capabilities and resources for online content

aggregation, distribution and branding, such as Internet Service Providers and Internet Portals. In some cases,

online distribution chains have been ‘captured’ by players who have been able to leverage their power in one

step in order to attain dominance over the rest.

Retail

Physical retailers continue maintaining an important function in the distribution and promotion of creative

content goods (e.g., by placing goods in visible displays in their stores). Consolidation of particular retail outlets

areas (e.g., video game stores and rental outlets) has increased their bargaining power and made publishers

reluctant to, for example, undercut them through online distribution of goods at prices which reflect the more

cost-efficient nature of these channels.

Providers of intermediate inputs and tools

The growing complexity and costs of content creation brought forward by market and technological processes,

and the fierce competition in creative content markets has increased content creators’ reliance on developers of

creative and project management tools. The aim of such tools is to contain rising project costs and fulfil

schedules. Access to these tools takes place in a form of user licensing, with contractual forms in some cases

established using innovative revenue sharing models (e.g., tool providers who obtain royalties from the sales of

the final output of a project).

Communities of customers

The move towards online distribution models facilitates the creation of closer communication channels between

content owners and consumers, as well as the emergence of communities of consumers that in some cases

engage in content production themselves. This area is undergoing an important degree of experimentation in

terms of innovative business models and IPR arrangements. The dominant trend is based on the exchange of

user-generated content for merchandise and non-monetary rewards such as prestige and visibility inside the

consumer community, although other alternatives, such as the creation of markets for the exchange of such

complementary assets have started emerging.

Nowadays it has become more important for firms in the creative industries to have different competences, i.e.

to have creators, distributors and technological professionals (and not only different professionals with these

skills but increasingly professionals that have all these different skills). This is one of the reasons why creative


44

industries are an emerging industry because its subsectors are merging and being transformed as well because

creative industries as a whole are merging with other industries such as tourism, fashion etc.

Below we elaborate on the framework conditions relevant for each of the steps of the industry life cycle. While

the framework conditions are assigned to a particular stage here, they may and in many cases do apply also to

other stages of the life cycle. In the text below, each framework condition is assigned to the stage that is of the

highest relevance to this particular framework condition.

3.2. Precursor Stage

The precursor stage of the analytical framework pertains to activities that support the development of a certain

phenomenon and/or underpinning technology platform in the region, which stimulate industrial interest and

investment in particular market-directed feasibility studies. In other words, the precursor stage refers to the

framework conditions that were already in place to encourage early development of an emerging industry.

Presence of historical, cultural and artistic heritage

Creative industries tend to cluster in specific places and the reasons of this phenomenon can be due to a

multiplicity of elements linked to cultural and artistic heritage previously present in the region. The presence of

cultural and artistic heritage in the territory is a significant issue and one of the bases for the development of

cultural districts and clusters. As such this heritage offers a platform to build creative industries upon. The

study by Lazeretti e.a. (2009) confirmed that heritage spurred the clustering of creative industries. Cultural

heritage was operationalised as the number of local goods designated as protected by the Ministries of Culture

of Italy or Spain (i.e. the two countries where the study was conducted) relative to the size of the local market

measured in terms of population. The authors found a positive relationship in Italy whereas this relationship

could not be confirmed for Spain.

Critical mass of creative and entrepreneurial people in the region

A small and very alike group of creative people cannot be the basis for creative cluster. Critical mass and

diversity is important especially because “art and culture work as a unified whole” where different people and

different industries stimulate each other. Maybe this more individual perspective of creative industries is

important and a critical diverse mass of creative people is a prerequisite for the existence of a creative cluster. If

this is the case cluster initiatives for creative industries should consist of both initiatives to improve the

physically and social environment for creative workers as well as more traditional initiative to stimulate creative

companies. The externalities generated by the exchange of ideas not only depend on the concentration of

people in an area but also on the level of human capital. It is found that the access to human capital fosters

firms to cluster. Florida (2002 and 2005) associates human capital with talent and highlights that the economic

geography of talent is highly concentrated. Thus, human capital externalities contribute to explain the

concentration of activities in concrete points of the space and can explain creative clustering50.

Broad educational and research landscape

A broad education and research landscape is conducive to the emergence of creative industries. The

geographical proximity of educational facilities such as universities and vocational training facilitates this

emergence. University, vocational and technical training hubs, encompassing education and training facilities

and consumer education in taste and trends all play key roles in this development. Creative education and

training are considered key issues for long term growth in the creative industries, by the several governments of

50 Lazzeretti, L., Boix, R., y Capone F. (2008) “Do Creative industries cluster? Mapping creative local production systems in Italy and Spain”, Industry and Innovation, 15(5), pp.549-567


45

countries. Developing creative skills is an important issue at different educational levels: primary, secondary or

tertiary. Also business skills are increasingly necessary for the sector professionals51.

Presence of physical and social creative environment

It can be argued that “art and culture are at their most efficient within their social life”. This means creativity

flourish when creative people get together in the right environment being a small gallery and music venues or

other activities primarily happening after working hours. Both the physical and “social environment is a very

important backdrop to the creative production process”52. “Art and culture work best when they are most dense.

The neighborhoods that are most creatively dense are also those that have a diversity of galleries, nightlife,

coffee shops and plentifully mixed-use work-live spaces at affordable prices53

TABLE 3-1: Framework conditions for creative industries at Precursor stage

3.3. Embryonic Stage

Following from the Precursor stage where we considered factors that were already in place before the

establishment of the aforementioned industries, we now consider both the transition from Precursor to

Embryonic stage, as well as the Embryonic stage itself. While our original definitions of the stages focus on new

51 Zaboura N. (2009) Creative Regions: Future Trends for Digital Creative Industries in Europe, Report prepared for EU-Project CReATE 52 Currid, Elizabeth (2007): The Warhol Economy: How Fashion, Art, and Music Drive New York City. Princeton: Princeton

University Press, pp. 183 53 Rosted et al. (2010) New Cluster Concepts Activities in Creative Industries, working paper for the European Commission DG Enterprise & Industry

Nr Framework

condition Typology Indicators

1 Presence of historical, cultural and artistic heritage (Lazzeretti et al., 2009)

Cultural Estimated level of tangible cultural heritage (e.g., buildings, monuments, landscapes, books, works of art, and artefacts);

Estimated level of intangible cultural heritage (e.g., folklore, traditions, language, and knowledge);

Estimated level of natural heritage (including culturally-significant landscapes, and biodiversity)

2 Critical mass of creative and entrepreneurial people in the region(Rosted et al., 2010)

Cultural Availability of people from different Creative industries; Availability of people from different complementary industries (e.g., telecom

industries etc.)

Availability of people with entrepreneurial skills (KEA, 2010); Availability of people with ICT skills (people who understand new digital

environment) (Green Paper COM (2010) 183);

Availability of people with business competences (e.g., management, commercial skills etc., who understand and can mobilise financing opportunities) (Green Paper COM (2010) 183)

Peer coaching (i.e., the up-grading of skills and processes through the exchange between peers facing the same challenges, as a way to learn from others’ mistakes or successes, fine-tune one’s projects thanks to experienced tutors, explore new technologies or expand one’s contact base) (Green Paper COM (2010) 183)

3 Broad education and research landscape (Zaboura, 2009)

Knowledge Proximity of universities;

Proximity of research centres; Proximity of schools

4 Presence of physical and social creative environment (Rosted et al., 2010)

Support Presence of arts galleries; Presence of nightlife;

Presence of coffee shops;

Presence of work-live spaces at affordable prices (the key reason why creative clusters are typically concentrated in large cities; see e.g., Domenech et al., 2010)


46

technologies, creative industries generally do not involve a new technology but instead focus on a new business

offering. As a result, our definition of the Embryonic stage here changes slightly. Instead of, “Activities that

support the improvement of the reliability and performance of technology to a point where it can be

demonstrated in a market environment,” the definition becomes, “Activities that support the feasibility and

profit-making capabilities of the industry to a point where it can be demonstrated in a market environment”. In

other words, this stage of the framework concerns those activities that improve the viability of the creative

industries as an emerging industry.

At this stage, we look at the transition of creative industries from Precursor to Embryonic stage, and specifically

at what measures have been taken to make creative industries into a viable emerging industry and which

conditions have been conducive to the growth of regional industrial activities.

Customer proximity

User-producer interaction can be important for the emergence of creative industries. Suppliers are often at an

advantage if they interact closely with their target audience so that they can monitor trends and fads or initial

reactions by early consumers’ of their own products. Consumer-consumer interaction is also a significant

influence on demand for creative products. The literature often refers to ‘network effects’ in creative industries

because individuals make their consumption decisions on the basis on information on what others have

consumed and how they appear to have liked the experience – charts and reviews being illustrative examples.

Network effects are usually seen to lead to the emergence of a single standard (which is obviously not fully the

case in the case of creative products), that markets cannot always be relied upon to favour the best option and

that incumbents enjoy some protection from newcomers54.

Guarantee systems and other financial engineering mechanisms

Investors and banks need an improved awareness of the economic value and potential of creative industries.

Guarantee systems and other financial engineering mechanisms should be in place to encourage funding in

creative industries. The world of creation and the world of finance – which are often "worlds apart" – need help

to find a common language, through which creative industries can have fairer access to funding. Against this

background, innovative financial instruments, such as venture capital and guarantees and other risk sharing

instruments that are delivered through market players can play an important role in facilitating access to

finance by SMEs. Such instruments are being implemented in the context of market-oriented EU expenditure

programmes (such as the Competitiveness and Innovation Programme). They have proven to be effective in

helping SMEs to access finance, but have been targeting a wide range of SMEs with no specific focus on

companies from the creative industries.

Policy measures supporting interdisciplinary cooperation

Entrepreneurs in the creative industries combine a wide diversity of cultural and business skills in order to be

successful. Sometimes these skills are combined within one person or company. In other cases the skills of

many independent players are brought together. Promoting interdisciplinary cooperation through policy

measures e.g. between sectors of the creative industries, between creative industries and other industries, or

between creative industries and universities, is considered essential for the development of the creative

industries in early life cycle stages.

Policy measures for start-up companies

Creative industries are characterised by an extremely small-scale business structure. On average, enterprises

employ not more than 5 persons; the corresponding figures in traditional industrial sectors, e.g., the chemical

54 Handke C. (2010) Surveying innovation in the creative industries, presented at the 5th International EMAEE Conference on Innovation (Globalisation, Services and Innovation: The Changing Dynamics of the Knowledge Economy) at the Manchester Metropolitan University, 17-19 May 2007


47

or the automobile industries amount to an average of up to 128 persons55. However, the overall creative

complex has now reached a greater job potential than the traditional industrial sectors. Hence there is a need

for regional policy making that supports start-up companies in general and creative companies more

specifically.

Critical mass of publishers, content creators, physical retailers, and providers of intermediate inputs and

tools

As discussed above, these actors constitute the most important players in the value chain of creative industries.

Therefore a critical mass of each of these actors is a necessary condition for creative industries to grow in an

early stage of the emergence process. In order to create a lively and active industry a distinction can be made

between the presence of publishers and content creators as a framework condition, the presence of providers of

intermediate inputs and tools, and the presence of physical retailers. This distinction follows the general value

chain of creative industries.

One common pattern in the creative industries is that, as a rule, there tend to be central intermediaries such as

(book) publishers, and providers of intermediate inputs and tools that bring cultural products and an audience

together. Intermediaries exploit economies of scale and scope that apply in particular to capital intensive,

humdrum aspects of production and promotion rather than in the labour- and knowledge-intensive process of

creation56.

These value chain actors finance and organise the production, mass reproduction and dissemination of cultural

products and coordinate the various inputs. There tends to be a polarised industry structure with a minority of

large suppliers accounting for the bulk of the revenues and a multitude of smaller suppliers catering for niche

markets. This holds for creators where the situation of a minority of well-established “star”- creators that enjoy

some market power contrasts with the situation of fringe creators and newcomers. It also holds for humdrum

inputs, where there tend to be a handful of oligopolistic intermediaries that account for the bulk of the market

as well as a multitude of more specialised smaller intermediaries that supply niche markets57.

55 Fesel, Bernd and Söndermann, Michael (2007) Culture and Creative Industries in Germany, Gebrüder Kopp GmbH & Co 56 Handke C. (2010) Surveying innovation in the creative industries, presented at the 5th International EMAEE Conference on Innovation (Globalisation, Services and Innovation: The Changing Dynamics of the Knowledge Economy) at the Manchester Metropolitan University, 17-19 May 2007 57 Handke C. (2010) Surveying innovation in the creative industries, presented at the 5th International EMAEE Conference on Innovation (Globalisation, Services and Innovation: The Changing Dynamics of the Knowledge Economy) at the Manchester Metropolitan University, 17-19 May 2007


48

TABLE 3-2: Framework conditions for creative industries at Embryonic stage

3.4. Nurture Stage

Having considered the Embryonic stage, we now move on to the Nurture stage. The Nurture stage refers to

those activities which help to improve the price and performance of applications to a point where sustainable

business potential can be demonstrated. In other words, these activities are aimed at nurturing the business

potential of the emerging industry in order for it to transition to the Growth stage of the framework.

Having considered the framework conditions that have led to the development of a viable business framework,

we now look at ways to encourage the profit-making capabilities of these newly emerging industries.

Measures supporting creativity through education

Educational activities can be considered very important instruments for stimulating demand for creative

industries products and services. Enhancing demand for creative industries again supports the supply side: the

actors and activities within the CI sector. The spectrum of measures related to education is rather diverse. The

measures related to education may include: (a) different awareness building measures: e.g. providing

information on CI; (b) measures supporting creativity through education, e.g. targeted training in order to help

Nr Framework


5 Customer proximity Market Critical mass of consumers of Creative industries (especially relevant for e.g. artists, fashion designers, photographers)

6 Guarantee systems and other financial engineering mechanisms (Green Paper COM (2010) 183)

Financial Availability of innovative financial instruments such as guarantees and other risk sharing instruments that are delivered through market players (e.g., crowdfunding – crowdfunding sites help gathering small-scale investors, for example, for independent film financing, indiegogo.com)

7 Policy measures promoting interdisciplinary cooperation (Haselbach, 2009)

Regulatory and policy

Measures promoting interdisciplinary cooperation between sectors of the Creative industries;

Measures promoting interdisciplinary cooperation between Creative industries and other industries;

Measures promoting interdisciplinary cooperation between Creative industries and universities.

8 Policy measures for start-up companies (Fesel e.a. 2007)


Support measures for start-up companies

9 Critical mass of publishers and content creators

Industrial Availability of publishers and content creators;

Diversity of publishers and content creators

10 Critical mass of physical retailers (e.g. video game stores and rental outlets)

Industrial Availability of physical retailers;

Diversity physical retailers

11 Critical mass of providers of intermediate inputs and tools (e.g., software products)

Industrial Availability of providers of intermediate inputs;

Diversity of providers of intermediate inputs


49

people to value CI products and services; and (c) measures supporting the development of creativity in

education: e.g. extra-curricular and vocational education and other youth related issues58.

Clearly defined copyright system and neighbouring rights

The use and enforcement of copyrights, neighbouring rights, patents, trademarks and licensing are considered a

important for nurturing the growth of creative industries. Moreover, domestic companies need to be able to

access new patents quickly and cheaply59.

Policy measures to stimulate innovation in creative industries

Creative innovation calls for softer, more sophisticated measures which are able to reach out to creative

companies and creative individuals. Innovation policy designed to trigger creativity has to be simpler, more

flexible and adaptable than traditional innovation support that tends to be targeted at larger beneficiaries more

adapted to managing scientific innovation processes. The shift from technological to more creative services

innovation has already taken place through numerous public and private initiatives supporting the creative

industries at local, regional or national levels. Lessons can be learned from cities such as Nantes, Aachen,

Stuttgart or Eindhoven, regions such as Andalusia, Baden-Württemberg, Piemonte, Basque country, etc., and

countries such as Finland, Latvia, the Netherlands, United Kingdom, that have recently implemented

innovation support programmes for creative industries. Therefore, engaging with a number of lead regions and

cities in the framework of a new pan-European initiative would be beneficial not only because of the good

practices such cities or regions are able to promote, but also because they are keen to collaborate and network

with each other60.

Policy measures promoting the mobility of artists and cultural practitioners

Promoting the mobility of artists and cultural practitioners – who are essential for the flourishing of creative

industries – contributes significantly to their professional skills and/or artistic development, developing their

own research and exploration ambitions, opening up new market opportunities and enhancing their career

possibilities in particular through their participation in residencies, festivals, live touring performances,

international exhibitions or literary events. Mobility can also more directly impact positively on the

performance of creative industries by opening up new market opportunities through schemes which improve

industry export strategies, promote international job placement schemes or reinforce capacity building61

58 Zaboura N. (2009) Creative Regions: Future Trends for Digital Creative Industries in Europe, Report prepared for EU-Project CReATE 59 UNESCO (2006) Understanding Creative industries,

http://portal.unesco.org/culture/en/files/30297/11942616973cultural_stat_EN.pdf/cultural_stat_EN.pdf 60 KEA European Affairs (2010) Business Innovation Support Services for Creative industries, short study prepared for the European Commission (DG Enterprise and Industry) 61 See in particular the study carried out by Ericarts for the European Commission on "Mobility matters: Programmes and

schemes to support the mobility of artists and cultural professionals", 2008.



50

TABLE 3-3: Framework conditions for creative industries at Nurture stage

3.5. Growth Stage

The Growth stage refers to those activities that support marketing, commercial and business development

leading to sustainable industrial growth in the region. To paraphrase, this stage of industrial development

refers to the commercialisation of the industry, that is to say, we need to analyse how has the creative industries

capitalised on their commercial potential.

Earlier in this chapter, we have illustrated the stages of activity necessary for the creation of the creative

industries. Now, we consider some of the factors that are likely to lead to their growth.

Policy measures to support internationalisation

Nurturing and growing world-class creative industries and exporting their works, products and services

obviously entails developing links with third countries. SMEs in particular require (financial) support to

establish contacts and to have their activities promoted abroad. Industry–to–industry dialogue, scouting

missions and market intelligence, and collective representation in international fairs are among the specific

tools developed to support exports. Cooperation schemes offer both an opportunity for mutual learning and a

network of contacts abroad. Facilitating artistic exchanges with third countries is also important to stimulate

cultural diversity.

Europe has numerous agreements with third countries or regional associations of countries. Technical

assistance and cooperation schemes could include CCIs as priority areas for economic exchanges. Policy

dialogues with third countries or regional groupings could also in certain cases support industry-to-industry

dialogues and specific EU tools could be developed to facilitate exchanges and exports

Nr Framework


12 Measures supporting creativity through education (Zaboura, 2009)

Knowledge Targeted training in order to help people to value Creative industries products and services

Extra-curricular education;

Vocational education;

Partnerships between art and design schools or universities and businesses (Green Paper COM (2010) 183)

13 Clearly defined copyright system (Handke, 2010; Van der Pol, 2007)


Clearly defined copyright system that assigns an equivalent of property to new creative products (Handke, 2010);

14 Neighboring rights (Handke, 2010; Van der Pol, 2007)


Neighbouring rights that protect performers, recording producers and broadcasting organisations (the holders of neighbouring rights enjoy the exclusive right of reproduction, distribution and public communication of their performances/CDs/DVDs/broadcasts)

15 Policy measures to stimulate innovation in creative industries (KEA 2010)


Innovation programmes Innovation vouchers

Creative broker facilities

Creative business incubators

16 Policy measures promoting the mobility of artists and cultural practitioners (Green Paper COM (2010) 183)


Artists' international mobility programs


51

Policy measures supporting flexible labour markets

There is a substantive empirical evidence that creators are far more likely to hold non-conventional forms of

employment – part-time work, temporary contracts, self-employment – than the workforce in general. What is

more, on average creators accept below average pecuniary earnings. This is explained either by risk-seeking

behaviour or a preference for creative work over other types of work62.

TABLE 3-4: Framework conditions for creative industries at Growth stage

3.6. Consolidated overview of identified framework conditions

The Table below provides a consolidated overview of identified framework conditions grouped into seven

dimensions as specified in Chapter 1 and assigned to specific stages of the industry’s life cycle.

TABLE 3-5: Consolidated overview of the identified framework conditions for creative industries (P = Precursor Stage; E = Embryonic Stage; N = Nurture Stage; G = Growth Stage; M = Maturity Stage)


1. Financial framework conditions P E N G M 1.1. Guarantee systems and other financial engineering mechanisms (e.g., availability of innovative financial instruments such as guarantees and other risk sharing instruments that are delivered through market players (e.g., crowdfunding – crowdfunding sites help gathering small-scale investors, for example, for independent film financing, indiegogo.com)


2. Industrial framework conditions P E N G M 2.1. Critical mass of publishers and content creators 2.2. Critical mass of physical retailers (e.g., video game stores and rental outlets)


3. Market framework conditions P E N G M 3.1. Customer proximity (i.e., critical mass of consumers of creative industries which is especially relevant for e.g. artists, fashion designers, photographers)

62 Handke (2010) Surveying innovation in the Creative industries, presented at the 5th International EMAEE Conference on Innovation (Globalisation, Services and Innovation: The Changing Dynamics of the Knowledge Economy) at the Manchester Metropolitan University, 17-19 May 2007

Nr Framework


17 Policy support measures to support internationalisation (Green Paper COM (2010) 183)


Financial instruments helping emerging talents, less-known repertoires or collections to break through national and linguistic border;

Funding creative cross-border events

Industry-to-industry dialogue;

Scouting missions; Market intelligence;

Collective representation in international fairs

18 Policy measures supporting flexible labour markets


Policy support measures supporting flexible labour markets


52

4. Cultural framework conditions P E N G M 4.1. Presence of historical, cultural and artistic heritage (e.g., tangible cultural heritage such as buildings, monuments, landscapes, books, works of art, and artifacts; intangible cultural heritage such as folklore, traditions, language, and knowledge; natural heritage including culturally-significant landscapes, and biodiversity)


5. Knowledge framework conditions P E N G M 5.1. Broad educational and research landscape focusing on both creative and technical disciplines (proximity of universities, research centres, schools)

5.2. Measures supporting creativity through education (e.g., targeted training; extra-curricular education; vocational education related to creative industries)

6. Regulatory and policy framework conditions P E N G M 6.1. Clearly defined copyright system that assigns an equivalent of property to new creative products






7. Support framework conditions P E N G M 7.1. Presence of physical and social creative environment (e.g., arts galleries, coffee shops, nightlife, work-live spaces at affordable prices)




53

4. Preliminary results for eco industries

The current chapter presents the preliminary results of the analysis for eco industries. Similar to the previous

chapter, we first provide some background information on the industry itself, and then move on to describing

general and specific framework conditions relevant to each of the stages of the industry’s life cycle up to the

maturity stage.

4.1. Introduction

As specified in Chapter 1, eco industries comprise those industries that provide innovative products and

services intending to positively influence the natural environment. It is commonly understood that eco

industries correspond to what the Organisation for Economic Cooperation and Development (OECD) and the

EU’s statistical office EUROSTAT call the “environmental goods and services industry”, consisting of “activities

which produce goods and services to measure, prevent, limit, minimise or correct environmental damage to

water, air and soil, as well as problems related to waste, noise and eco-systems. This includes cleaner

technologies, products and services that reduce environmental risk and minimise pollution and resource use”.

Among these are activities related to pollution control, collection and treatment of waste and sewage, renewable

energy, recycling/recycled materials, sustainable water management, and eco-construction63.

Eco industries are often associated with eco-innovation. An important conceptual distinction needs to be made

between eco-innovation as innovation in eco industries and eco-innovation in traditional industries such as

manufacturing or the textiles sector. Eco-innovations refer to solutions that are novel to the company and to the

market, whereas eco industries aim to produce ‘green products and technologies’ and generate ‘green energy’,

eco-innovation also encompasses goods or processes that are produced without an explicit aim to improve the

state of the environment. In many cases, the motivation to invest in eco-innovation is driven by the objective of

reducing costs for materials and/or energy, and thus increasing competitiveness and economic success64.

63 The Environmental Goods and Services industry, Manual for Data Collection and Analysis, OECD and EUROSTAT, 1999 64 “Eco-innovation and national cluster policies in Europe”, 1 July 2011, the study performed by Greenovate! Europe EEIG for the European Cluster Observatory managed by the Center for Strategy and Competitiveness at the Stockholm School of Economics


54

FIGURE 4-1: The structure of eco-industries

Source: Hohmeyer and Koschel (1995) (quoted in Rennings, K. (2000, p.323)65






The precursor stage of the analytical framework refers to activities that support the development of a certain


investment in particular market-directed feasibility studies. In other words, the precursor stage refers to the

framework conditions that were already in place to encourage the development of the emerging industry.

In order to illustrate the relevance of some of identified framework conditions, we will make use of the above

mentioned example of Örnsköldsvik in Sweden developed by Arbuthnott et al. (2010)66. This region has

undergone a transition in the last decades in which the local economy has transformed from largely dominated

by local paper and pulp industries towards eco-industries through the emergence of a biorefinery industry. ,

The emergence of this new industry was triggered by a regional crisis and decline of the local paper and pulp

industries. Subsequently, an interplay of the following framework conditions within the precursor stage led to

the initial emergence of the biorefinery industry.

65 Rennings, K. (2000), ‘Redefining Innovation-Eco-innovation Research and the Contribution from Ecological Economics, Ecological Economics, 32, pp. 319-322 66 Arbuthnott A., Eriksson J., Wincent J. (2010) “When a new industry meets traditional and declining ones: An integrative approach towards dialectics and social movement theory in a model of regional industry emergence processes”, Scandinavian Journal of Management, Volume 26, Issue 3, September 2010, pp. 290 - 308


55

Proximity of companies in traditional industries (critical mass of business consumers in eco-industries)

This framework condition relates to companies in traditional industries which are in transition towards

environmentally friendly solutions, driven by trends such as tighter environmental regulation or consumer

awareness. This group of companies constitutes a large part of the business consumer base of eco industries.

The interdependence between eco-industries and traditional industries is apparent and in fact further

increasing at a more strategic level as is also illustrated by the Örnsköldsvik example. Traditional industries are

now looking more and more into sustainable solutions for their businesses, as they move more towards green

business strategies or greener manufacturing processes. Thus the interactions across the value chains of

multiple industries become evident, with integrated approaches being the ones that are being put forth the

most.

Critical mass of private consumers of eco-industries

Critical mass of private consumers, and more specifically local demand conditions are important for the growth

of eco industries. Demand conditions refer to the type of users and size of the market. Firms that face a

sophisticated domestic market are likely to sell superior products because the market demands high quality and

a close proximity to such consumers enables the firm to better understand the needs and desires of the

customers67. According to Reid & Miedzinski (2008) customer proximity and acceptance of eco-innovative

products are considered by over 40% of the surveyed eco-innovators as important for innovation activity68.

Social attitude supporting eco-innovation

Specific to eco industries is public awareness on the industry and its products. Positive public awareness spurs

demand for eco products and is important in the development of eco products. Efforts to develop awareness of

consumers (households, industries, local authorities) on the availability of technologies and services offered by

eco-industries, as well as on their costs and potential benefits, would be required to stimulate the demand and

regional emergence. Several existing instruments such as eco-labels have proven effective to raise awareness

and build consumer trust in the quality of the goods and services delivered.

67 Kemp & Horbach (2008) Measurement of competitiveness of eco-innovation, 68 Reid & Miedzinski (2008) Eco-innovation, final report for the sectoral innovation watch


56

TABLE 4-1: Framework conditions for eco industries at Precursor stage


Following from the Precursor stage where we considered factors that were already in place before the

establishment of the aforementioned industries, we now consider both the transition from Precursor to

Embryonic stage, as well as the Embryonic stage itself. The Embryonic stage entails industry activities that

support the improvement of the reliability and performance of technology to a point where it can be

demonstrated in a market environment. More broadly, this stage of the framework concerns those activities

that improve the viability of the Eco Industries as an emerging industry.

Availability of environment-related R&D subsidies

Government funding to support the emergence of eco-industries is often an important prerequisite. Eco-

products often are more expensive than traditional solutions and therefore the local market might not produce

eco-products without government support.

For several eco-industry sectors, the cost and availability of finance is a crucial barrier for their business

development. The specific needs of some projects, for example in the renewable energy sector, sometimes

include long pay-back periods and high risk or uncertainties on the market potential which make it difficult to

obtain adequate financing at limited costs.

Availability of green lending through banks; availability of seed and start-up venture capital for eco-innovative companies

Whereas governmental funding is an important prerequisite for the emergence of eco-industries, private

funding is increasingly important in the development of the industries in later phases of the industry life cycle.

Private funding in this context includes an array of solutions such as green lending by banks, availability of

venture capital and private equity.

Private funding is often hard to obtain in early stages and governmental support is required to stimulate private

sector financing. In Örnsköldsvik some ethanol-focused projects also joined forces with initiatives on a national

Nr Framework


1 Proximity of companies in traditional industries (Barsoumian et al. 2008)

Market Interactions between traditional industries and eco industries (Barsoumian e.a. 2008);

Critical mass of business consumers of eco-industries (Reid & Midzinski 2008)

2 Critical mass of private consumers of eco-industries (Reid & Midzinski 2008)

Market Number of citizens with favourable attitude towards eco-products

3 Social attitudes supporting eco-innovation (EURADA 2009)

Cultural Attitudes of citizens towards environment (EURADA 2009) Public awareness of environmental problems

Perception of green brands by consumers

Perception of eco-innvovation by business (EURADA 2009)


57

scale for lobbying and on a European scale to apply for public EU funding. Such support framing and funding

efforts appeared to prove the initiatives’ worthiness to local actors who had not been engaged nor interested in

the new industry efforts. In addition, the group sought funding from local companies, business angels, a private

funding agency, and regional municipalities. However, they found such local funding and support difficult to

obtain as many potential investors appeared reluctant to invest in what they perceived as vague business and

industrial development ideas.

Green public procurement

Green public procurement has been a major driver for eco-industries. A significant element of demand for 'eco-

innovative' products and services should be that exercised by public agencies through their purchasing

practices: so called green public procurement69. Moreover, certain categories of purchase are more suitable for

green procurement than others. A recent study has underlined the important that green procurement should

integrate a life cycle cost assessment and not only purchase cost and that a focus on the purchase price during

the tender process is not justified. It is crucial that public authorities start procuring ‘green’ products, in order

to help these products towards a wider placement on public and private market and to generally serve as a

'positive role model'. However, the effect of green public procurement on eco-innovation will depend on the

tendering criteria set and the market.

Environmental focus of university research programmes

This framework condition is an important factor for stimulating research and development early on in the

emergence of eco-industries. Moreover it may lay the foundation for university-industry interaction through

spin-offs and collaboration projects in later phases. In our case example the regional educational authorities

proactively developed new chemistry-based and industrial processing science programmes as to increase the

amount of scientifically skilled students graduating from their region’s educational institutions. Furthermore,

some new and established industry organisations joined forces and developed a 12-month joint-traineeship to

integrate recent university graduates into their newly combined regional biorefinery activities. Newly formed

actors also championed agreements with local universities. This resulted in two senior professors being

recruited to work alongside the regional biorefinery initiatives and to lead new research projects (on the

refinement of forestry resources and innovative industrial processing systems) that both new and traditional

firms in the region could reap benefit.

Availability of environment-related R&D and other tax measures

Local and national governments can use a lot of different measures to support the emergence, amongst others

subsidies, tax measures, removal of legal and institutional barriers and negotiation assistance. Whereas

subsidies pertain to more direct government support for eco-industries, tax measures relate to more indirect

incentives on negative externalities which spur the demand for eco-solutions. Examples are CO2 carbon tax

severance taxes on the extraction of mineral, energy, and forestry products; specific taxes on technologies and

products which are associated with substantial negative externalities; waste disposal taxes and refundable fees;

taxes on effluents, pollution and other hazardous wastes etc.

Existence of eco-regulation

The importance of regulations for eco-innovation is generally positive. Various empirical studies have

confirmed that complying with environmental regulation was one of the key motivations to innovate among

eco-innovation companies. Similarly, research data indicates that eco-innovative firms rank meeting regulation

requirements as a highly important effect of their innovation activities more often than any other sector.

69 Reid & Miedzinski (2008) Eco-innovation, final report for the sectoral innovation watch



58

Moreover standardisation is important in enabling the uptake of eco-innovation and environmental

technologies and facilitating their dissemination70.

TABLE 4-2: Framework conditions for eco industries at Embryonic stage

4.4. Nurture Stage

Having considered the Embryonic stage, we now consider the Nurture stage. The Nurture stage refers to those

activities which help to improve the price and performance of applications to a point where sustainable

business potential can be demonstrated. In other words, these activities are aimed nurturing the business

potential of the emerging industry in order for it to transition to the Growth stage of the framework.

Critical mass of eco-companies and supply chain actors

In order to nurture the emergence of eco-industries a critical mass of companies producing eco-products as well

as their supply chain actors are necessary in order to improve the price and performance of applications within

these industries.

The presence of a critical mass of eco-companies and supporting supply chain actors is beneficial for nurturing

and growth. The companies might be able to set-up a powerful lobby that would pave the way for political

70 Reid & Miedzinski (2008) Eco-innovation, final report for the sectoral innovation watch

Nr Framework


4 Availability of environment related R&D subsidies (EIO 2010)

Financial R&D subsidies (OECD 2011);

R&D tax measure (OECD 2011) Support to early demonstration through subsidies (OECD 2011);

Negotiation assistance (OECD 2011); Subsidies for purchase by customers (OECD 2011)

5 Availability of green lending through banks (EIO 2010)

Financial Availability of green lending products through banks (lower interest rate on environmentally-friendly investments) (EIO 2010)

6 Availability of seed and start-up venture capital for eco-innovative companies

Financial Availability of seed capital for eco-innovative companies;

Availability of green funds, venture capital, private equity, business angels

7 Green public procurement (Reid & Midzinski 2008)

Market Public tender procedures preferring environmentally beneficial goods and services (normal commitment procedure);

Public tender procedures with forward commitment procurement – market pull for innovation (OECD 2009)

8 Environmental focus of university research programmes

Knowledge Number of graduates and PhD’s dealing with environment and resource use (Foxon & Speirs)

The extent to which education programmes are tailored to industry needs (Reid & Midzinski 2008)

9 Availability of environment-related R&D and other tax measures


CO2 carbon tax; Severance taxes on the extraction of mineral, energy, and forestry products;

Specific taxes on technologies and products which are associated with substantial negative externalities;

Waste disposal taxes and refundable fees;

Taxes on effluents, pollution and other hazardous wastes

10 Existence of eco regulation (Reid & Miedzinski 2008)


Removal of legal and institutional barriers (OECD 2011)

Rules and regulations prescribing eco-efficient standards



59

decisions; demonstration and field testing is better possible through a critical mass, co-operations between

research institutes and industry can be setup and more effective, and public authorities have a stronger

incentive to propose generous public funding schemes that would largely benefit the entire supply chain, rather

than a few actors71.

Presence of environmental education in the school curricula and vocational training Education and training

programmes are essential for developing the human capital needed to deliver eco-innovative solutions and

create a potential labour force for “green jobs”. A number of European regions have taken measures to

mainstream environmental education in the school curricula or vocational training. A few regions have also

started to focus on creating specific skills and a knowledgeable workforce for emerging environmental

industries72.

Supporting IP conditions related to green technologies

Intellectual property rights play a relatively important role in protecting eco-innovation produced by eco-

industries. Eco- industries are often high-tech in nature and therefore depend more on codified and science

based knowledge and the formal protection of intellectual property rights while other sectors rely more on

experimentation, interactive learning with suppliers and customers and secrecy for their innovation

performance (Malerba, 2004).Therefore a protective environment might nurture the growth of eco-industries.

Policy measures supporting the internationalisation of eco-innovative clusters

As an regional eco industry matures, the strongest growth opportunities for most sectors are considered to be in

outside the regional or national market, in fast growing emerging economies. For this reason, EU and member

state initiatives to support eco-industries in understanding and accessing export markets should be pursued

and expanded to stimulate growth. In addition, EU and member state development aid can significantly

support the growth of demand for environmental goods and services by increasing focus on waste and water

management, renewable energy and energy efficiency and by developing technology transfers.

71 OECD (2011) Better Policies to Support Eco-innovation, OECD Publishing 72 OECD (2011) Better Policies to Support Eco-innovation, OECD Publishing


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TABLE 4-3: Framework conditions for eco industries at Nurture stage

4.5. Growth Stage

Finally, we analyse the Growth Stage of the eco industries as an emerging industry. The Growth stage refers to

those activities that support marketing, commercial and business development leading to sustainable industrial

growth in the region. This stage of industrial development refers to the ‘commercialisation of the industry’, that

is to say, how has the eco industries capitalised on its commercial potential.

Nr Framework


11 Critical mass of eco-companies

Industrial Critical mass of eco-companies: o Actors in air pollution control o Actors in cleaner technologies and processes (CTP) o Actors in energy management o Actors in environmental consultancy and services o Actors in environmental monitoring and instrumentation o Actors in landscape services o Actors in marine pollution control o Actors in noise and vibration control o Actors in recovery and recycling o Actors in renewable energy o Actors in transport pollution control o Actors in waste management

Actors in water and wastewater treatment

12 Critical mass of supply chain actors

Industrial Critical mass of supply chain actors: presence of eco-innovation consultancy services, presence of research centre for eco-innovation, presence of equipment suppliers, presence of utility companies (OECD 2011)

Specific supply chain actors (EURADA 2009): o Actors in air pollution control o Actors in cleaner technologies and processes (CTP) o Actors in energy management o Actors in environmental consultancy and services o Actors in environmental monitoring and instrumentation o Actors in landscape services o Actors in marine pollution control o Actors in noise and vibration control o Actors in recovery and recycling o Actors in renewable energy o Actors in transport pollution control o Actors in waste management

Actors in water and wastewater treatment

13 Supporting IP conditions for green technologies (Henry 2010)


IP conditions related to green technologies:

Accelerated examination process for patent application relating to green technologies (Henry 2010)

The availability of a green patent database (Henry 2010)

The availability of green patent pools (Henry 2010)

14 Presence of environmental education in the school curricula and vocational training (OECD 2009)

Knowledge Environmental education in the school curricula and vocational training (OECD 2009)

The extent to which education programmes are tailored to industry needs (Reid & Midzinski 2008)

15 Policy measures supporting the internationalisation of eco-innovative clusters (Barsoumian et al. 2008)


Regional support in representing the cluster abroad (EURADA 2009)

Regional support for inward investment activity (EURADA 2009)

Policy measures on regional and country level for stimulating joint R&D Policy measure on regional and country level for joint commercialization

The removal of custom duties on green products (Henry 2010)


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With regard to this stage it can be concluded that the most relevant industry-specific framework conditions are

present in earlier stages and continue to play a role in spurring the growth phase of the industry emergence.

The Örnsköldsvik case shows the importance of the interplay of the several framework conditions that were

already present in earlier stages.

Some framework conditions that were conducive to industry emergence during the Nurture stage, also played

an progressively important role at the growth stage. Most importantly, business resource sharing between

traditional and new industry played an important role during the growth stage. Following a shift towards more

productive and complementary activities between the region’s new and traditional industry actors, fruitful

industry developments appeared. Collaborations with the key organisations driving the emerging industry’s

projects resulted in an acceptance of the new regional biorefinery industry as traditional industry actors

realised that they too could gain. A number of combined inter-industry processing industrial sites and

operations were set up and began operating; these formal collaborations between the new and traditional

regional industries grew. Access to raw material remained a problematic issue, but the sharing of local

infrastructures and other resources became smoother; especially between newly formed and traditional

industry actors taking part in the formalised biorefinery industry cluster initiative. Moreover the acquisition of

a large national subsidy also spurred growth.




TABLE 4-5: Consolidated overview of the identified framework conditions for eco industries (P = Precursor Stage; E = Embryonic Stage; N = Nurture Stage; G = Growth Stage; M = Maturity Stage)


1. Financial framework conditions P E N G M 1.1. Availability of environment-related R&D subsidies 1.2. Availability of ‘green’ lending through banks (lower interest rate on environmentally-friendly investments)

1.3. Availability of seed and venture capital for eco-innovative companies


2.1 Critical mass of eco-companies (e.g., companies in air pollution control, cleaner technologies and processes (CTP), energy management, monitoring and instrumentation, landscape services, marine pollution control, noise and vibration control, recovery and recycling, renewable energy, transport pollution control, waste management, water and wastewater treatment etc.)

2.2. Critical mass of supply chain actors: presence of eco-innovation consultancy services, presence of research centres for eco-innovation, presence of equipment suppliers, presence of utility companies

3. Market framework conditions P E N G M 3.1. Proximity of companies in traditional industries in transition towards environmentally friendly solutions -> Critical mass of business consumers of eco-industries

3.2. Critical mass of private consumers of eco-industries 3.3. Green public procurement (i.e., public authorities use their purchasing power to support goods and services with lower impact on the environment)

4. Cultural framework conditions P E N G M 4.1. Social attitude supporting eco-innovation (e.g., attitude of citizens towards environment, public awareness of environmental problems, perception of green brands by consumers, perception of eco-innovation by business)

5. Knowledge framework conditions P E N G M 5.1. Environmental focus of university research programmes


62


5.2. Presence of environmental education in the school curricula and vocational training

6. Regulatory and policy framework conditions P E N G M 6.1. Availability of environment-related R&D and other tax measures73

6.2. Existence of eco-regulation (i.e., rules and regulations prescribing eco-efficient standards such as green procurement74)

6.3. Supporting IP conditions related to green technologies (e.g., accelerated examination process for patent applications relating to green technologies; green patent database and other green patent tools)

6.4. Policy measures supporting the internationalisation of eco-innovative clusters (e.g., regional support in representing the cluster abroad; regional support for inward investment activities; removal of custom duties on green products)

7. Support framework conditions P E N G M 7.1. Availability of eco-innovative infrastructure (e.g., new fuelling systems, sophisticated traffic control, diffused energy distribution systems)

7.2. Strategy documents and roadmaps for the development of eco-industries in the region

7.3. Dedicated cluster organisation (cluster manager or similar) to coordinate the development of eco-industries in the region

7.4. Well-functioning technology transfer offices within academic institutes facilitating the adoption of eco-industries solutions

73 E.g., CO2 carbon tax; severance taxes on the extraction of mineral, energy, and forestry products; specific taxes on technologies and products which are associated with substantial negative externalities; waste disposal taxes and refundable fees; taxes on effluents, pollution and other hazardous wastes etc. 74 Green procurement requires a company or organisation to carry out an assessment of the environmental consequences of a product at all the various stages of its lifecycle. This means considering the costs of securing raw materials, and manufacturing, transporting, storing, handling, using and disposing of the product. For more information, see http://www.iisd.org/business/tools/bt_green_pro.aspx



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5. Preliminary results for experience industries

The current chapter presents the preliminary results of the analysis for experience industries. Similar to the

previous chapters, we first provide some background information on the industry itself, and then move on to

describing general and specific framework conditions relevant to each of the stages of the industry’s life cycle up

to the maturity stage.

5.1. Introduction

As specified in Chapter 1, experience industries operate in the area where art, culture, technology and business

converge. They comprise the entire cycle of idea, creation, production and distribution of goods and services,

and they usually use creativity and intellectual capital as their primary input. Experience industries involve

high-tech sectors (e.g., digital animation and computer games), service-intensive sectors (e.g., tourism and

advertising) and a number of traditional cultural sectors75. Sundbo & Bærenholdt (2007) suggest to make a

distinction between two major sectors of the experience economy: a primary experience sector that is composed

of companies and institutions that have the production of experiences as the primary objective and a secondary

experience sector where experiences are add-ons to artefacts or services, for example, games in mobile phones,

coffee sold with a certain brand and a story attached to it (see also Lund, 2005)76.

Experience economy implies the creation of economic value where experiences constitute a large or small part

of the product’s value. The experience economy is driven by increased global prosperity and new business

opportunities created by ICT developments, as well as other factors. While it is still important to have products

of high quality and functionality, in terms of sales, the decisive aspect is increasingly whether the manufacturer

succeeds in engaging the user in an experience77. Modern consumers have changed their spending habits so

they spend more money on products that also include experiences. Experiences stimulate consumer emotions

and senses, they move, entertain and involve. In doing so, a unique value is attributed to the products/services

which increases their market value78.

Experience economy offers means to uphold region’s/country’s position in the global competition. While the

rest of the world gradually develops the ability to deliver the same products, the same technology and the same

high quality, often at a lower price, regions that want to stay/become successful, should not try to imitate their

competitors, but instead differentiate themselves from them. That can be done by, for example, developing

products that entail unique stories, aesthetic styles or identities to offer the consumer an experience.

The experience industries thus are industries where the experience is the primary function of their products. In

the experience industries, the production, dissemination and commercialisation of experiences are essential to

the added value. The experience industries are independent suppliers of experience products, such as films,

computer games, amusements etc. Additionally, the experience industries contribute to society in a more

general manner through their role as a bearer of and agent for culture, identity and creativity79.

75 “Growth through Experiences” (2009), The National Agency for Enterprise and Construction, Denmark 76 from Søren Smidt-Jensen, Christine Benna Skytt & Lars Winther (2009) “The Geography of the Experience Economy in Denmark: Employment Change and Location Dynamics in Attendance-based Experience Industries, European Planning Studies, 17:6, pp. 847-862 77 Pine & Gilmore (1999): “The Experience Economy: Work Is Theatre and Every Business a Stage” and Silverstein et al. (2003): “Trading Up: the New American Luxury” 78 “Growth through Experiences” (2009), The National Agency for Enterprise and Construction, Denmark 79 “Growth through Experiences” (2009), The National Agency for Enterprise and Construction, Denmark


64

Although the creation of experiences is often associated with the activities of the private sector, much of the

experience creation that is happening at present is driven by a desire of public authorities to develop the

productive resources of their regions, particularly when traditional sources of income start to decline.

Therefore, the creation of experiences has become central to regional development strategies in Europe80.

FIGURE 5-1: Regional specialisation in experience industries

Source: Priority Sector Report on Experience Industries81 of the European Cluster Observatory

TABLE 5-1: Overview of Economic Distinctions (Source: Pine & Gilmore, “Welcome to the Experience Economy,” Harvard Business Review, July-August 1998)

Economic Distinctions

Economic Offering

Commodities Goods Services Experiences

Economy Agrarian Industrial Service Experience

Function Extract/Grow Make Deliver Stage

Nature of offering

Fungible Tangible Intangible Memorable

Key Attribute Natural Standardised Customised Personal

Buyer Market User Client Guest

Demand Factor Characteristics Features Benefits Sensations





80 Richards G. (2001) “Cultural attractions and European tourism”, CABI Publishing, Wallingford 81 Lindqvist, G. & Protsiv, S., 2011, Priority Sector Report: Experience Industries, The European Cluster Observatory, European Commission Directorate General Enterprise and Industry, http://www.europe-innova.eu/c/document_library/ get_file?folderId=261559&name=DLFE-12808.pdf


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The Precursor stage of the Emerging Industries framework pertains to activities that support the development

of a certain phenomenon and/or underpinning technology platform in the region, which stimulate industrial

interest and investment in particular market-directed feasibility studies.

An established reputation and/or heritage of the region

Though the experience industries are an emerging industry in the sense that recent developments have geared

businesses towards offering ‘experiences’ to consumers, supplies of experiences need to offer authenticity. In

this regard, an established heritage in the industry of choice is required, as illustrated in the following two

examples.

In case of wine tourism industry, the American-based Wine Spectator notes: ‘‘As anybody who loves wines

knows, the regions where the finest wine is made are special places - even magical’’. Evidently, the reputation of

the prospective wine-tasting destination affects its attractiveness to consumers. Vineyards like Bordeaux and

Burgundy offer worldwide appeal. “Burgundy has famous gastronomy and history, Bordeaux its name-brand

chateaux”82.

In case of festival tourism in Scotland, the importance of the principal cities of Edinburgh is celebrated by

national tourism agencies. These are urban places seeking to present a contemporary cultural vibrancy. As a

result, the principal cities of Edinburgh, Glasgow, and Dundee have sought in the past decade to position

themselves as distinct from the overall overseas promotion of Scotland as a largely rural place. In the context of

their industrial decline, Glasgow and Dundee have also sought to emphasise innovation. By following these

steps, Glasgow, Dundee and Edinburgh offer an established infrastructure for cultural tourism to thrive.

Evidently, an established reputation or heritage in the ‘experience offering’ is necessary for the emergence of

the experience industries.

An established tourism industry and infrastructure

In 2010, France was the world’s most visited country with 78.95 million international arrivals83. According to

the Scottish government website, tourism is one of Scotland's largest business sectors, providing direct

employment for 200,000 people and generating visitor spending of more than 4 billion GBP a year. Having the

necessary infrastructure in place to deal with such a large number of tourists (i.e., hotels, airports, public

transport) gives European experience industries regions a head-start that other countries and industries around

the world might not naturally have.

Creativity of local people

Creativity is the ability to come up with new ideas, concepts or solutions or to forge new links between old ideas,

solutions and concepts84. This skill is crucial when businesses need to develop new experience products or

services and when they have to incorporate experiences into existing products and services. In other words,

creativity is a key driver for businesses in the experience economy. It almost literally has to be ‘in the genes’ of

local people.

82 Getz, D., & Brown, G. (2003). Critical Success Factors for Wine Tourism Regions. Calgary: University of Calgary. 83 AFP (2011). China world's third most visited country: UN. Paris: AFP 84 Florida (2002): “The Rise of the Creative Class …and how it’s transforming work, leisure, community and everyday life”; and Buhl (2007): “Kreativitet: Danmarks vigtigste råstof” [Creativity: Denmark’s most important resource] in “Growth through Experiences” (2009), The National Agency for Enterprise and Construction, Denmark


66

Other related skills refer to the ability to take an interdisciplinary approach, ability to think out of the box and

the tradition of collaborating closely with consumers in developing new products and services85.

Natural cluster concentration

Geographic concentration occurs because proximity serves to amplify many of the productivity and innovation

benefits of clustering86. For example, because of the natural restrictions of the wine industry (i.e., land

requirements, climactic conditions), vineyards and wineries have a natural inclination towards clustering as

grapevine farming has climatic condition requirements and there is an evident need for acres of open space in

order to (a) cultivate grapevines correctly, and (b) produce enough grapes for a high profit-margin.

Meanwhile, Edinburgh, with its established arts festivals, has a particularly creative artistic base asserting

continuity back to the Scottish Enlightenment of the 18th century. It thereby uses its historical ambience and

associations as a setting for festivals. It has sought worldwide to position itself as “the Festival City”, rather than

solely as Scotland’s capital, offering a unique selling point of creativity as well as heritage. Music, pageantry,

dance, and theatre are traditional forms of experiential mixes, as the hallmark of the Edinburgh festival. As

such, the city readily demonstrates this contemporary form of product design. In this case, the city of

Edinburgh itself promotes natural clustering by positioning itself as a cultural hub in Scotland.

Changing consumer tastes

Growing prosperity has changed spending patterns, consumers round the world have become more affluent.

Another trend refers to the fact that consumers have changed their preferences and spend a rising percentage of

their income on luxury items and experiences87.

Modern consumers increasingly want more than low prices, advanced technology and high quality. They have

become more individualised, critical and reflective. All these factors have a strong impact on consumption.

Consumer buying habits have become more unpredictable and to a large extent involve individual

preferences88.

New luxury, as mentioned above, is part of the experience economy. These products are generally characterised

by the fact that they establish an emotional relationship with the customer by expressing intangible values like

aesthetics or authenticity or by telling a story. Another common feature is that they can attract a higher price

than similar products whose functionality is their sole quality89.

Development of Information and Communication Technology (ICT) in the region

Information and communication technology (ICT) significantly influences the way how businesses across the

sectors can work with experiences and apply the business models generated by the experience economy90. ICT

developments have made it possible to offer brand-new experience approaches. One example is the

development of the media industry’s method of selling creative content, such as video-on-demand, music

podcasting, computer games, etc.

85 “Growth through Experiences” (2009), The National Agency for Enterprise and Construction, Denmark 86 Porter M.E. (1998) “The Adam Smith address: location, clusters, and the "new" microeconomics of competition”, Business Economics, Jan 98, Vol. 33 Issue 1, p7 87 Silverstein et al. (2003): “Trading Up – the New American Luxury” in “Growth through Experiences” (2009), The National Agency for Enterprise and Construction, Denmark 88 “Growth through Experiences” (2009), The National Agency for Enterprise and Construction, Denmark 89 “Growth through Experiences” (2009), The National Agency for Enterprise and Construction, Denmark 90 Lund et al. (2007): “Følelsesfabrikken – Oplevelsesøkonomi på dansk” [The Emotions Factory: Denmark’s Version of the Experience Economy], p. 60 ff. in “Growth through Experiences” (2009), The National Agency for Enterprise and Construction, Denmark


67

At the same time, ICT has facilitated the creation of far more marketing channels, and businesses have

increased their potential to tailor products to specific consumer needs91. Internet distribution makes it possible

for businesses all over the world to earn money on niche products and services. The online company

Amazon.com is a good example of a profitable business based on selling niche books published in limited

editions92.

TABLE 5-1: Framework conditions for the experience industries at Precursor stage

Nr Framework


1 Change in the social environment and economic environment (Morgan et al., 2008)

Support Higher Disposable Income of consumers;

Western Lifestyle geared more toward the individual;

The rise of ‘no-frills’ service (particularly airline, hotels etc.) (Dobruszkes, 2006)

2 The rapid adoption of the internet (Morgan et al., 2008)

Cultural Potential consumers able to compare on-line prices to find bargains in services such as transportation, accommodation, and entertainment;

Much greater choice of experiences affordable and accessible to visitors

3 Noticeable Trend towards “Recommoditisation” (Morgan et al., 2008)

Cultural Number of consumers relying on the recommendation of friends and previous consumers.

4 An established infrastructure for visitors

Cultural Offering visitors good links to airports, attractions and offering good accommodation facilities enables both domestic and foreign tourists to visit Experience Industry clusters such as wine-farms or cultural quarters.

5 Specialised suppliers with established heritage in their chosen industry

Market Though the Experience Industry itself is an emerging industry, supplies of experiences need to offer authenticity;

In this regard, an established heritage in the industry of choice is required, wine estates offering wine tourism events cannot merely appear, the wine estate would need to have an established reputation.

6 Customer demand Market Critical mass of consumers of experience industries

7 Natural cluster concentration

Market Critical mass of (potential) businesses ready to offer experience products and services

8 Creativity of local people

Cultural Ability to come up with new ideas, concepts or solutions or to forge new links between old ideas, solutions and concepts present ‘in the genes’ of local people (Florida, 2002);

Ability of local people to take an interdisciplinary approach (The National Agency for Enterprise and Construction, Denmark),

Ability of local people to think out of the box (The National Agency for Enterprise and Construction, Denmark)

Tradition of collaborating closely with consumers in developing new products and services (The National Agency for Enterprise and Construction, Denmark)


In this sub-section, we look at the transition of the experience industries from Precursor to Embryonic stage.

Developing amenities where experiences can be offered

The majority of the production of a certain experience is bound to a specific physical place, and the

consumption of the experience also requires attendance of a physical place. Usually, the consumer needs to

move outside his/her home to enjoy the product or service (e.g., to a restaurant, cinema, sports arena, etc.). In

some cases, the co-presence of the consumer and the producer/performer/creator in the same particular place

will be a precondition for the realisation of the experience (e.g., the guest and the chef in a restaurant, the fan

91 Bille et al. (2008): “Den danske oplevelsesøkonomi – afgrænsning, økonomisk betydning og vækstmuligheder” [Denmark’s Experience Economy: Delimitation, Financial Significance and Growth Potential], p. 152 ff. in “Growth through Experiences” (2009), The National Agency for Enterprise and Construction, Denmark 92 Anderson (2006): “The Long Tail: Why the Future of Business Is Selling Less of More” in “Growth through Experiences” (2009), The National Agency for Enterprise and Construction, Denmark


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and the rock band at a concert, etc.), while the creator in other instances is absent (e.g., a guest in an art

museum watching a painting by Van Gogh)93.

When building physical amenities for experience industries, small and medium-sized cities inside the city

regions have a different potential for economic success than cities outside the main city regions94. Many

European regions have built museums and heritage attractions as a means of attracting visitors to less favoured

locations. In the UK, for example, outposts of the Tate Gallery have been developed in Liverpool and in St Ives,

Cornwall. While some of these initiatives have been successful, others resulted into big failures95.

The exploration of new industrial avenues

Within the experience industries, there is a trend towards finding ways in which to differentiate the product.

For example, different ways of offering the wine-tourism industry to consumers such as wine festivals have

illustrated the potential of the wine-tourism market. Wine festivals offer the opportunity to socialise, possibly

with friends and family, whilst learning about and enjoying a natural, agricultural setting and product. Revenue

and recognition is generated for the participating wineries, awareness of the area and its resources is enhanced,

and the community at large and outside providers find a new source of customers96.

Governing bodies encouraging the expansion of the experience industries

Government policies have been seen to lead to economic diversification, employment creation, and increased

tourism and creativity in the cities when they have been implemented successfully. For example, cultural

tourism industries often involve high-skilled, high-wage workers97. This approach also helps contribute to ‘place

marketing’ by enhancing tourist image98. Finally, it encourages increased social interaction and an enhanced

quality of life99.

A change in focus towards maximising the ‘experience’ of potential tourists (the service attributes) and away from the product itself

Using an example from the wine-tourism industry, a 1999 New Zealand survey found that a the service

provided by the winery in question was found to be the most enjoyable aspect of a visit to a winery100. This

illustrates the changing consumer tastes with regards to wine-tourism which wineries and tour operators have

accounted for.

The creation of specific ‘products’ based on maximising the consumer ‘experience’

Again, using an example from the wine-tourism industry, Getz (2000)101 examined the progression of wine

destination development, made up of attractions, services, hospitality training, infrastructure, organisational

development and a marketing plan. Specific wine-tourism ‘‘products’’ were considered, including wine themed

93 from Søren Smidt-Jensen, Christine Benna Skytt & Lars Winther (2009) “The Geography of the Experience Economy in Denmark: Employment Change and Location Dynamics in Attendance-based Experience Industries, European Planning Studies, 17:6, pp. 847-862 94 from Søren Smidt-Jensen, Christine Benna Skytt & Lars Winther (2009) “The Geography of the Experience Economy in Denmark: Employment Change and Location Dynamics in Attendance-based Experience Industries, European Planning Studies, 17:6, pp. 847-862 95 Richards G. (2001) “Cultural attractions and European tourism”, CABI Publishing, Wallingford 96 Houghton, M. (2001). The Propensity of Wine Festivals to Encourage Subsequent Winery Visitation. International Journal of Wine Marketing, pp. 32-42. 97 Scott, A. (2004). Cultural-Products Industries and urban Economic Development: prospectsfor growth and market contestation in a global context. Urban Affairs Review , 461-490 98 Ashworth, G., & Voogd, H. (1990). Selling the City. London: Belhaven Press. 99 Matarasso, F. (1997). Use or Ornament? The Social Impact of Participation in the Arts. Stroud: Comedia. 100 Hall, C. M., & Mitchell, R. (2002). The touristic terroir of New Zealand wine: the importance of region in the wine tourism. In A. Montanari, Food and environment: geographies of taste (pp. 69-91). Rome: Societa Geografica. 101 Getz, D. (2000). Explore wine tourism: management, development, destinations. New York: Cognizant.


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visitor and interpretive centres, wine villages, wine routes, signs, and wine country tours. These ‘‘products’’ are

a result of specific developments related to wineries and public investment in wine-tourism, in addition to

programs aimed at changing the image and function of service centres to become ‘‘wine villages’’. These changes

accentuate the change in focus that wineries and wine tour operators have made towards creating a unique

experience for wine tourists.

TABLE 5-2: Framework conditions for the experience industries at Embryonic stage

Nr Framework


9 Developing physical amenities where experiences can be offered (Richards G., 2001)

Market Presence of physical amenities where experiences can be offered

10 Experience industry characterised by the provision of (semi) public goods (Bille, 2010).

Financial Substantial public funding for museums, heritage sites, theatres, etc. which, like most other cultural institutions, are characterised by being non-profit institutions that do not have profit maximization as their objective

Example of Scottish cultural tourism and the development of Cultural Quarters.

11 A unique and distinct experience offering in their locality (Morgan et al., 2008)

Market A unique offered experience (e.g., bungee jumping, surfing, skydiving, music festivals, wine-tasting) note that there can be cultural differences between experiences even if the product is the same thing (i.e. wine tasting in Italy a different experience from wine tasting in France);

A unique natural heritage experience (including culturally-significant landscapes, monuments, biodiversity, works of art, artefacts).

12 The harmonisation of regulations and standards have meant that businesses need new ways to distinguish their service offering. (Bolton et al, 2008)


The removal of barriers to the trade in services;

Consumers take quality and reliability for granted and so make their choice solely on price in the service sector.

13

The Promotion of the newly-established industry

Cultural Different ways to promote the industry are explore (consider wine festivals in the wine tourism industry).

5.4. Nurture Stage

Having considered the framework conditions that have led to the development of a viable business framework

for creative industries, we now look at ways to encourage the profit-making capabilities of these newly emerging

industries.

Clustering

Within the cultural tourism industry, cultural quarters have often been designated where culture-related

activity is seen as providing a basis in improving socio-economic conditions within major Scottish cities. In

Dundee, in particular, the establishment of a ‘formal’ cultural cluster was seen as necessary for its development,

in contrast to both Edinburgh and Glasgow that were already considered as cultural ‘hubs’ in Scotland and had

no need for a designated ‘cultural quarter’. Those two cities already had a tourist friendly ‘informal’ area

devoted to art and culture.

Furthermore, it is at this stage of the framework that clustering of wine-tourism (as opposed to wine making)

begins. Having already explained the idea behind a wine route and the effect it has on the industry, as well as

detailing the clustering that occurs in wineries naturally due to climactic and land space restrictions, we now

find that tour operators and ‘experience producers’ (such as wine farms offering wine and cheese events) begin

to cluster in order to take advantage of “The wine route concept”.


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The idea of a wine route defines an identity for its wine-producing members that proclaims unique attributes

for their wines. In order to stress their exclusive attributes, wine route associations emphasise the distinctive

character and the cultural heritage of their wine-estates (i.e., creating a unique experience for wine tourists)102.

As a defining framework characteristic, a wine route is essentially a tourist route that connects several wine

estates and wineries in a given area. According to Bruwer (2002)103, most if not all wine routes include a

bounded space in the form of an often officially demarcated wine region that has an identity in the form of a

(branded) descriptive name such as Champagne (France) or Stellenbosch (South Africa). Wine routes are

therefore the roadways to the core attractions in wine-tourism - the wines and the winery.

Establishment of networks

The cooperative associations formed between government, private enterprises and associations, the tourism

industry, experience industries ‘producers’ (in our examples, wineries and theatres) and the local council are

best described as networks. This ‘networking’ refers to a wide range of supportive links between competing

organisations and between organisations connected through similar economic and social conditions104.

Networks are explicit arrangements of inter-organisational partnership and collaboration. A basic

understanding of network relationships is that parties are mutually dependent upon resources (in this case

tourists), and that there are gains to be had by pooling resources105. Again, using wine-tourism as our example,

“formal and informal agreements between wine route estates, tour operators and the food industry highlight the

significance of horizontal and vertical linkages in the formed networks. Most often the commitment to wine

tourism is in part related to the age of the wine estate enterprise and the finances available.”106 While clustering

and networking offer similar benefits, the difference is an explicit understanding between companies in

networking as opposed to an informal one in clustering.

Creating widespread appeal

Image enhancement was an important principle in the concept of clustering, particularly in the cultural tourism

industry, and this creation of a critical mass of activity has generated a greater impact than dispersal of such

activity. For example, when one considers the growth of tourist numbers in Edinburgh in particular since

cultural clustering has occurred, we can see the success of cultural clustering upon the cultural tourism industry

in Scotland107.

Placing experience production at the centre of region’s economic and cultural strategies

A large number of European cities and regions have begun to place experience production at the centre of their

economic and cultural strategies. Initially, the objective was mainly to produce experiences in order to stimulate

consumption, but in recent years, experience production has been increasingly associated with measures to

stimulate cultural creativity which, in turn, makes the experience production system more sustainable. Cultural

events have been accompanied by Cultural Quarters and other areas in which small-scale production can be

encouraged. Attractions based purely on historic cultural production are complemented by creative activities

and new uses of urban space108.

102 Hall, C. M. (2000). Wine Tourism Around the World. Butterworth-Heinemann: Oxford. 103 Bruwer, J. (2002). South African wine routes: some perspectives on the wine tourism industry's structural dimensions and wine tourism product. Adelaide: University of Adelaide. 104 Hall, C. M., Cambourne, B., Macionis, N., & Johnson, G. (1997). Wine tourism and network development in Australia and New Zealand: Review, establishment and prospects. International Journal of Wine Marketing, pp. 5-31. 105 Hall, C. M. (2000). Wine Tourism Around the World. Butterworth-Heinemann: Oxford. 106 Telfer, D. (2000). Strategic Alliances Along the Niagara Wine Route. Tourism Management, pp. 21-30. 107 McCarthy J. (2006) “The application of policy for cultural clustering: Current practice in Scotland”, European Planning Studies, 14:3, pp. 397-408 108 Richards G. (2001) “Cultural attractions and European tourism”, CABI Publishing, Wallingford


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TABLE 5-3: Framework conditions for the experience industries at Nurture stage

Nr Framework


14 Coordination of institutions and networks (Haselbach, 2009)

Cultural The establishment of formal and explicit networks begin to occur (e.g. wine route cooperative associations);

Types of services provided by the cluster organisation (organisation of traditional meetings and conferences is reported to have little impact on sector development (see Rosted et al, 2010).

15 Natural Clustering begins to occur

Cultural It is at this stage of the emerging industry framework that natural clustering begins to occur;

In order to increase tourist appeal, businesses, tour operators and theatres tend to cluster in order to shorten tourist travel distances and maximise tourist benefits.

16 Placing experience production at the centre of region’s economic and cultural strategies (Richards, 2001)

Cultural Experience production is placed at the centre of region’s economic and cultural strategies

5.5. Growth Stage

In the previous sub-sections, we have illustrated the stages of activity necessary for the creation of the experience industries. Now, we consider the factors that have led to their growth.

Product differentiation (the uniqueness of the product) specification

The underlying factor in the growth of the experience industries is product differentiation; that is to say, the

uniqueness of the product is the major factor is attracting consumers.

In case of wine-tourism industry, research by Getz and Brown (2003)109 shed light on the definition of wine

tourism, from a consumer’s experiential perspective. Their conceptualisation of what consumers want from a

wine-related travel experience, combines a core wine product, essential destination features, and related

cultural experiences.

The wine lover turned wine tourist wants an environment in which not only preferred wines can be sampled

and knowledge increased, but in which romantic dreams and cultural yearnings can be fulfilled. The model is

also a clarion call for destination organisations, the wine industry, the community and cultural-heritage

institutions to collaborate in creating product and communicating appropriate benefits.

This ‘experience’ that wine-tourism offers consumers encapsulates both the product differentiation leading to

the growth of the industry and the experience industries themselves.

Change in advertising focus

In the wine-tourism industry, the changing nature of wine-region imagery used in advertisements, documented

by Williams (2001)110, shows that the industry has either responded to consumer wishes or is perhaps leading

demand through portrayal of an idyllic rural and cultural landscape. He concluded that imagery shifted through

the decade of the 1990s, from an emphasis on wine production and related facilities to more aesthetic and

experiential dimensions. The ‘‘experience’’ of wine country (the product) is suggested to be more important

than specific attractions.

109 Getz, D., & Brown, G. (2003). Critical Success Factors for Wine Tourism Regions. Calgary: University of Calgary. 110 Williams, P. (2001). Positioning Wine Tourism Destinations: An Image Analysis. International Journal of Wine Marketing, pp. 42-59.


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Change in targeted marketing

The existing research suggests there is an experiential appeal of the wine-tourism industry, especially among

affluent mature and senior couples (the market segment most likely to be wine-tourists). By shifting focus away

from wine ‘connoisseurs’, the wine-tourism industry has opened itself up to consumers that might otherwise

have been uninterested in the wine-industry111.

This lesson can be applied across the experience industries; once growth in the traditional market has been

sustained, companies can look further afield to increase profits.

Entering mainstream tourism and making the industry more accessible

A key area for growth in the experience industries is increasing the accessibility of the ‘experience’ for

consumers.

As mentioned previously, wineries and tour operators have become more adept at making the industry more

accessible; many wineries have shifted their marketing focus from wine ‘connoisseurs’ to a more generalised

market. It can be argued that this shift has seen visiting a wine-estate become a ‘must-see’ tourist attraction in

many areas, Bordeaux, Tuscany and Stellenbosch in South Africa in particular. This theory is backed by

research by Charters and Ali-Knight (2002)112, who found that most visitors labelled as ‘wine tourists’ would not

associate themselves with that description.

Within cultural tourism, not only has tourist perception of Scotland’s cultural tourism industry changed, but the

establishment of cultural quarters in Dundee, Glasgow and Edinburgh has led to a greater awareness of the Arts

in those cities among locals. By entering mainstream consciousness, the growth of the emerging industry

accelerates and its profit making capabilities and, subsequently, its long-term viability are increased.

Change in tourist perception

During the Growth stage of the experience industries, we see a change in the tourist perception of the industry.

For example, while 9/11 impacted upon the number of tourist arrivals into Scotland particularly at the

beginning of the 21st Century113, the perception of both foreign and domestic tourists of Scotland as an arts and

culture destination has drastically improved114. According to the Edinburgh Fringe Festival website, 1.8 million

tickets were sold making it the largest festival of its kind in the world.

TABLE 5-4: Framework conditions for the experience industries at Growth stage

Nr Framework


17 Marketing activities are renewed and increased

Cultural The uniqueness of the product is emphasised;

A target market has been identified, companies try to spread the scope of their product;

Shifting focus from niche marketing to generalised marketing occurs.

18 Change in global perception of the Industry begins to occur.

Financial As marketing activities increase, the industry begins to break through national and linguistic borders.

19 The product becomes mainstream and continues its pattern of growth.

Cultural General tourists begin to include experience industries offerings in their ‘must-see’ activities.

111 Getz, D., & Brown, G. (2003). Critical Success Factors for Wine Tourism Regions. Calgary: University of Calgary. 112 Charters, S., and Ali-Knight, J. (2002). Who is the Wine Tourist? Tourism Management, pp. 311-319. 113 Prentice, R., & Andersen, V. (2003). Festival as Creative Destination. Annals of Tourism Research , 7-30. 114 McCarthy, J. (2006). The application of policy for cultural clustering: Current practice in Scotland. Dundee: European Planning Studies.


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TABLE 5-5: Consolidated overview of the identified framework conditions for experience industries (P = Precursor Stage; E = Embryonic Stage; N = Nurture Stage; G = Growth Stage; M = Maturity Stage)


1. Financial framework conditions P E N G M

1.1. Availability of public funding for developing and/or maintaining physical amenities where experiences can be offered

1.2. Availability of seed and venture capital for experience industries companies

1.3. Investments in the improvements of the infrastructure for visitors


2.1. Critical mass of specialised suppliers with established heritage/USPs in their niche of experience industries

3. Market framework conditions P E N G M 3.1. Critical mass of consumers of experience industries 4. Cultural framework conditions P E N G M 4.1. Creativity of local people (i.e., ability to come up with new ideas, concepts or solutions or to forge new links between old ideas, solutions and concepts present ‘in the genes’ of local people; ability of local people to take an interdisciplinary approach; ability of local people to think out of the box)

4.2. Tradition for local companies of collaborating closely with consumers in developing new products and services

4.3. Collaboration between experience industry companies (i.e., cooperative associations)

5. Knowledge framework conditions P E N G M 5.1. Companies with good understanding of consumer needs (e.g., a unique offered experience such as bungee jumping, surfing, skydiving, music festivals, wine-tasting); a unique natural heritage experience including culturally-significant landscapes, monuments, biodiversity, works of art, artifacts etc.)

6. Regulatory and policy framework conditions P E N G M 6.1. Placing experience production at the centre of region’s economic and cultural strategies

7. Support framework conditions P E N G M 7.1. Established infrastructure for visitors (e.g., offering visitors good links to airports, attractions and offering good accommodation facilities for both domestic and foreign tourists)

7.2. Strategy documents and roadmaps for the development of experience industries in the region

7.3. Dedicated cluster organisation (cluster manager or similar) to coordinate the development of experience industries in the region


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6. Preliminary results for maritime industries

The current chapter presents the preliminary results of the analysis for maritime industries. Similar to the




6.1. Introduction

Shipping has been used as a mode of transportation and as a means to transport cargo throughout human

history. Europe’s economic prosperity during the Age of Discovery can be attributed to the strength of its fleet

allowing European countries to create colonies around the world and, subsequently, to transport slaves115. In

the modern age however, it has become central to the manufacturing boom in developing countries because of

the sheer amount of (and value of) cargo transported by ship.

As specified in Chapter 1, in the context of this study we consider that maritime industries comprise companies

whose activities supply innovative products and services related to the traditional maritime sector. In general,

maritime industries include all enterprises engaged in the business of designing, constructing, manufacturing,

acquiring, operating, supplying, repairing and/or maintaining vessels, or component parts thereof: of managing

and/or operating shipping lines, and customs brokerage services, shipyards, dry docks, marine railways, marine

repair shops, shipping and freight forwarding services and similar enterprises116. This emerging industry also

includes a significant component of traditional oil and gas and renewable energy (particularly wind, but also

marine turbines).

The growth of maritime industries can be explained by higher global demand in traded goods and components,

coupled with trade in maritime services growing worldwide. Thanks to the advances in the transport of goods,

as well as improvements in telecommunications and trade itself becoming liberalised and standardised, the

increased effectiveness of port and shipping services has made the purchase of goods, raw materials and

components possible from almost anywhere in the world. International standards and homogenous products

have led to increased competition, while trade liberalisation has meant an international allocation of resources.

At the same time, maritime business could be considered as one of the world’s most globalised industries. These

factors have opened the door for companies with novel products that can solve some of the problems faced by

maritime industries during this expansion117.

The emerging part of the maritime industries is comprised of companies whose activities supply innovative

products and services related to the traditional maritime sector.

Maritime activities are concentrated geographically in a number of maritime clusters. Due to ongoing

internationalisation in these industries, the concentration of maritime activities in clusters is likely to increase.

One of the examples of a maritime cluster is the Dutch Maritime Cluster with the city of Rotterdam as its core.

There are many businesses and services offered within this cluster that match our definition of emerging

maritime industries.

115 Kumar, S., & Hoffman, J. (2002). Globalisation: The Maritime Nexus. In C. Grammenos, The Handbook of Maritime Economics and Business (pp. 35-62). Jersey: Informa Publishing. 116 Oxford Economics. (2009). The economic contribution of the UK shipping industry in 2007. London: Oxford Economics. 117 Kumar, S., & Hoffman, J. (2002). Globalisation: The Maritime Nexus. In C. Grammenos, The Handbook of Maritime Economics and Business (pp. 35-62). Jersey: Informa Publishing.


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FIGURE 6-1 describes some of the businesses and industries that are included within the maritime industries.

FIGURE 6-1: The structure of the Dutch Maritime Cluster

Source: adopted from Peeters, C., Lefever, A., Van der Linden, J., Bruynseels, S., & Webers, H. (1999). De Nederlandse maritieme cluster: economische betekenis en structuur. Delft: Delft University Press

Below we elaborate on the framework conditions relevant for each of the steps of the industry life cycle. While the framework conditions are assigned to a particular stage here, they may and in many cases do apply also to other stages of the life cycle. In the text below, each framework condition is assigned to the stage that is of the highest relevance to this particular framework condition.


For illustrating the framework conditions relevant for the Precursor stage, we use an example of collaboration

between DCNS and OpenHydro at the Port of Cherbourg. We look at the factors already in place that have

encouraged developments in the maritime industries.

The old and economically depressed shipyard of Cherbourg, in the North of France, is being completely

reshaped and retransformed in response to a rising need for the construction of marine turbines. OpenHydro,

an Irish company, decided to install a new plant in the area. This plan was made possible by the naval

competences present in Cherbourg and which OpenHydro could leverage upon. OpenHydro intends to create

300 jobs over the course of the next two years118.

The presence of navigable water

Maritime industries need navigable water to emerge. It makes little sense for the industry to emerge if there is

no vicinity to navigable water. Although the presence of water does not guarantee the emergence of maritime

industries (i.e., there are waterways left unused), it is a necessary pre-requisite.

118 PwC (2012). “Emerging industries: report on the methodology for their classification and on the most active, significant and relevant new emerging industrial sectors”.


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In some cases, a combination of factors leads to the emergence of new maritime industries. In Bayern, for

example, the Green Chemistry Belt initiative aims to cluster green chemical industry along the Danube river.

One of the reasons for this is that the Danube river provides a natural waterway on which goods can be

transported efficiently and – compared to using lorries – in an environmentally friendly way119. The presence of

a navigable waterway here provides the opportunity for maritime industries to emerge, in turn, enabling local

companies to benefit from the transport capabilities.

If we consider the case of OpenHydro, Cherbourg is ideally located for maritime industries manufacturing

thanks to its proximity to the sea.

The presence of an already existing port (presence of established infrastructure)

Given that the Maritime Industry includes industries like ship-building and cargo transportation120, and is

heavily dependent on ease of access by lorry (for both cargo and raw materials), it is necessary for these

industries to be situated in the vicinity of ports. Moreover, ports allow for the transportation of goods over

navigable waterways, inducing a demand for the maritime industries.

An added caveat here is that ports are present around the world in both developing and developed countries.

While maritime industries clustering without a port is unlikely, it would be incorrect to assume that merely

having a port leads to such clustering; there are other factors involved.

The presence of traditional maritime industries

In order for the emerging maritime industries to develop, traditional maritime industries are first needed.

OpenHydro is a good example of a company that was able to apply their newly developed technology to the

traditional maritime industries. In doing so, they are turning around the maritime industries in Chesbourg, and

expect to create about 300 new jobs in the coming years.

Presence of companies working on Key Enabling Technologies

One of the fundamental factors driving innovation in the maritime industries, and subsequently the emergence

of new maritime industries, is related to the Key Enabling Technologies (KETs). KETs are a driving force

behind many recent and upcoming developments, and the new maritime industries are no exception to that.

Nanotechnology products revolutionise the industry, especially in conjunction with the coatings industry.

Nanotechnology enhanced coatings, for example, claim to reduce costs, to be environmentally friendly and to

offer unique qualities.

Advanced Marine Coatings, for example, is a company that developed a nanotechnology enhanced coating. By

applying carbon nanotubes to their coating formula, they are able to offer a coating for marine vessels that are

up to 500% more resistant to wear and tear121. Another company, the UK-based TripleO, also developed a

nanotechnology enhanced coating on the basis of carbon nanotubes. They claim that the benefits of applying

their TripleO Performance Solution to marine vessels include reduced fuel usage (by minimising drag through

the water), enhance longevity of the paint and improve the environmental impact of every vessel122.

Growing internationalisation of the Maritime Industry (globalisation)

The majority of maritime transport involves two or more countries, and due in part to the growing presence of

globalisation, it is no longer necessary for service providers to be nationals of the countries whose cargo they

move. In reality, people and properties from many different countries could be involved in a simple commercial

119 http://www.straubing-sand.de/biocampus/green_chemistry_belt/ 120 De Langen, P. W. (2002). Clustering and performance: the case of maritime clustering in The Netherlands. Rotterdam: Erasmus University Rotterdam 121 http://www.amcoat.no/en/products/offshore-industrial/cost-reduction.html 122 http://www.tripleops.com/application-marine.php


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transaction. Kumar and Hoffman (2002)123 write that a “[..] Greek owned vessel, built in Korea, may be

chartered to a Danish operator, who employs Philippine seafarers via a Cypriot crewing agent, is registered in

Panama, insured in the UK, and transports German made cargo in the name of a Swiss freight forwarder from a

Dutch port to Argentina, through terminals that are concessioned to port operators from Hong Kong and

Australia.”

Essentially, the growing internationalisation of modern business has changed the way that the maritime

industries conduct themselves. Coupled with the growing prevalence of clustering within the industry, this has

created a vastly different environment for businesses involved (or interested in becoming involved) in the

maritime industries. The case of OpenHydro is a case in point; an Irish company renovating a French shipyard

using manufacturing technology that was first tested in Scotland.

Figure 6-2 below illustrates the density of Maritime traffic around the world.

FIGURE 6-2: Shipping density (commercial): A Global Map of Human Impacts to Marine Ecosystems, showing relative density (in colour) against a black background

Source: Halpern, B. S. (2008). A Global Map of Human Impact on Marine Ecosystems. Oakland: University of California, National Center for Ecological Analysis and Synthesis)

Substantial technical and human resources available, particularly for manufacturing elements

Another important observation of the emerging maritime industries is its dependency on existing skills and

resources, similar to our findings on the experience industries. Because of the technical skill needed for many

projects, as well as location restrictions previously mentioned, companies wishing to enter the emerging

maritime industries need to either own or acquire the necessary resources to make their project a success.

Looking again at the example of OpenHydro and the port of Cherbourg, all the necessities needed to build a

successful project are in place; technical expertise and experience within the company, a viable location to begin

production, and local naval competences present in Cherbourg which OpenHydro could leverage upon, leading

to the creation of up to 300 jobs in the immediate area.

123 Kumar, S., & Hoffman, J. (2002). Globalisation: The Maritime Nexus. In C. Grammenos, The Handbook of Maritime

Economics and Business (pp. 35-62). Jersey: Informa Publishing.


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Customer demand

For an innovative technology to be successful, there needs to be market demand in the first place. Many

emerging technologies fail for this very reason; their technology simply is not viable or quickly becomes

outdated. In the case of OpenHydro, their turbine design offered significant advantages over previous

technologies124 leading to its success in the market, with DCNS and OpenHydro winning the Cleantech 2012

Award for the best investment in an innovative start-up by a major corporate group. This success has led to a

pilot project with four turbines that is underway off Paimpol-Bréhat in Brittany125.

The framework conditions described in this sub-section are summarised in Table 6-1 below. For each identified

framework condition, a general typology, expected effect, degree of specificity and indicators for that specific

condition are presented.

TABLE 6-1: Framework conditions for the maritime industries at Precursor stage

Nr Framework


1 Presence of navigable water

Support Navigable water is key for the Maritime Industry to emerge; Navigable water allows for e.g. the transportation of goods, spurring the Maritime

Industry.

2 Change in the social environment and economic environment (Globalisation)

Cultural Globalisation has changed the already globally dependent Maritime Industry;

Outsourcing of parts of a project and appealing to global customers are part of this process

3 Substantial technical and human resource potential in order to develop a new maritime product

Cultural For a highly technical industry, like the emerging Maritime Industry, there is a dependency on high-tech material and those that opiate and develop it;

This leads to clustering of the industry as companies make mutual use of one another’s experience.

4 The presence of traditional maritime industries

Market Traditional Maritime Industry is needed for emerging industries to provide their services to, or develop new products for

5 Presence of Key Enabling Technologies

Market Key Enabling Technologies allow for innovation in the Maritime Industry, which spurs the creation of new Maritime Industry;

An example can be found in the marine coatings industry

6 An established infrastructure for companies looking to expand

Cultural For companies looking to enter the emerging Maritime Industry, being located in or near a port is essential.

This is because of the ports’ proximity to both raw materials and customers most likely to utilise their goods or services.

7 Customer demand for maritime products and services

Market Needs to be a critical mass of consumers of Maritime Industries;

With the technology advances in the late 20th and early 21st century, companies can take advantage and target a viable business opportunity.


In this sub-section, we are looking at the conditions that have improved the market feasibility of a technology

within the emerging maritime industries.

124 OpenHydro. (2012). development: EMEC. Retrieved August 23, 2012, from OpenHydro: http://www.openhydro.com/devEMEC.html 125 PwC (2012). “Emerging industries: report on the methodology for their classification and on the most active, significant and relevant new emerging industrial sectors”.


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Product Testing

At this stage of the technology development, it is important to establish the feasibility of the technology as well

as finding potential customers willing to invest in the product. Testing is also required in order to iron out any

flaws that exist in the technology.

In terms of OpenHydro, this stage of development was undertaken in Orkney, Scotland, further demonstrating

the international aspect of the Maritime Industry. Their own account of the testing procedure is described as:

“During 2006, OpenHydro became the first company to install a tidal turbine at the EMEC facility. The turbine in Orkney has been installed between a twin-piled structure enabling the unit to be raised and lowered. This structure will allow OpenHydro to test future generations of the Open-Centre Turbine at minimal cost. [...] All OpenHydro's commercial deployments will be mounted on the seabed where no part of the structure will be visible from the surface and will be deep enough not to interfere with shipping traffic.” (OpenHydro, 2012)

Open trade policy

For companies wishing to engage in Maritime activities, it is essential to have a governmental open-trade policy

in place to encourage trade with foreign companies within the maritime industries. Moreover, trade itself is a

key factor that drives the maritime industries, as that may increase demand for ports or other maritime

services.

The continuing expansion of world trade offers future high growth potential for maritime traffic and other

branches of the maritime industries in Europe. The European Metalworker’s Federation noted in 2005 that “all

current forecasts predict above-average growth in the transport sector and especially in container traffic.

Passenger and ferry traffic will also continue to expand over the next decade”.126

For emerging maritime industries companies like OpenHydro, an open trade policy is essential, especially in

light of their production taking place in France.

Collaboration with traditional maritime industries

At this stage of the cycle, we often see that innovative companies seek collaboration with the traditional

maritime industries. This condition is related to product testing. The difference between the two, however, is

that product testing may take place without actual collaboration between the emerging maritime industries and

the traditional maritime industries. They may seek collaboration to further improve the new technology, or to

create a market for it by showcasing it in an early stage.

OpenHydro is again an example of how this works. The traditional port of Cherbourg sought for a way to create

new opportunities in the area. In response to that, OpenHydro was contacted and their turbines were tested

together with the port of Cherbourg, on location.

The coating manufacturers Advanced Marine Coatings and TripleO demonstrate similar activities. Especially in

their domain, the field of nanotechnology, it is often key to showcase the benefits of their new technologies127.

By collaborating with the traditional maritime industries, both manufacturers discovered the true potential of

their nanotechnology enhanced coatings. Even though both initially thought of their coatings as reducing the

wear and tear on applied vessels, through testing and collaboration they found out that it also reduces drag in

the water. This allowed the companies to position themselves differently, paving the way for this new coating

industry to emerge and supply their products to the maritime industries.

126 European Metalworker's Federation. (2005). “The Future of The Maritime Industry”. Luxembourg: European

Metalworker's Federation. 127 PwC, (2012). “Enabling technologies and open innovation: Analysis of conditions for transfer of knowledge”, study for the European Commission, Directorate General for Research & Innovation.


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Sustainability requirements

Shipping in various ways affects the environment. Vessels use fossil fuels as a primary source for propulsion,

and as a result produce carbon dioxide emissions. With increasing attention to carbon dioxide emissions

around the world, the maritime industries are also expected to reduce its carbon footprint. Although it may

sound as a restrictive condition, it actually forces the maritime industries to change, it helps the emerging

maritime industries to flourish.

To illustrate, we again refer to the earlier mentioned coating manufacturers. Both coatings reduce drag in the

water and as a result increase fuel efficiency. This results in less carbon dioxide being emitted, hence reducing

the carbon footprint of marine companies. Aside from the fact that these coatings save fuel, and subsequently

fuel costs, they become even more interesting in an environment where companies are expected to reduce their

carbon footprint.

Nanotechnology enhanced coatings are only an example of how sustainability helped the emergence of new

maritime industries. Another example can be found in solar powered vessels. Solar powered vessels reduce

carbon emissions, and offer a more sustainable energy resource for shipping128. Although this new application

area in the maritime industries is only just starting, it is clear that a need for sustainability can help push

emerging part of the maritime industries.

Table 6-2 presents a summary of the discussed framework conditions in this section.

TABLE 6-2: Framework conditions for the maritime industries at Embryonic stage

Nr Framework


8 Product Testing Market Necessary for companies in order to test the viability of their product; It is at this stage of the framework where the idea starts becoming a product.

9 An open trade policy is devised by public bodies


A governmental open-trade policy is essential in order to encourage trade with foreign companies within the Maritime Industry;

Open-trade policy also encourages world trade, which may in turn foster growth of maritime transportation, resulting in higher demand for maritime services.

10 Collaboration with traditional maritime industries

Market Collaboration with the traditional Maritime Industry may further improve the new technology, or create a market for it by showcasing it in an early stage;

11 Sustainability Regulatory and policy/

Market

With increasing attention on carbon dioxide emissions around the world, the Maritime Industry is also expected to reduce its carbon footprint;

Although it may sound as a restrictive condition, i.e. it forces the Marine Industry to change, it actually helps the emerging Marine Industry to flourish;

Nanotechnology enhanced coatings are an example of how sustainability helped the emergence of a new Maritime Industry. Another example can be found in solar powered vessels.

6.4. Nurture Stage

The Nurture stage refers to those activities which help to improve the price and performance of applications to a

point where sustainable business potential can be demonstrated. For the emerging maritime industries, we

begin to see clustering occurring in those ports that are currently undeveloped as well as major development in

the new technology’s market performance.

128 http://www.bbc.co.uk/news/business-16686260


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International standardisation

International standards and homogenous products foster global competition129. In terms of the effect it has on

the emerging maritime industries, international standardisation removes many barriers to entry, and, by doing

this, increases the affordability and reliability of the existing companies involved in the maritime industries by

introducing the element of competition. Furthermore, international standardisation legitimises an emerging

industry. It illustrates the progress that has been made by companies involved in the industry and showcases

the technological developments involved in the industry products and services.

Competition

The benefits of competition are well-known in that it brings “improving accessibility and reliability of the

technology and may reduce barriers to trade and deliver growth benefits” to those firms in direct competition

with one another130.

While not particularly pertinent to individual companies, competition is nevertheless an important factor in the

success of the emerging maritime industries. As companies are better able to compete against one another, the

affordability and reliability of the technology is improved as companies work to maintain their market share of

the industry. This is one of the key elements that nurtures an emerging industry, and is not unique to the

emerging maritime industries.

Natural clustering begins to occur

In light of the previous development of an effective cluster policy, at this stage of the technology’s development

we see other innovative companies begin to cluster alongside the new technology is order to benefit from the

advantages of clustering131.

To illustrate, we refer to the way in which the port of Cherbourg has been rejuvenated since the deal with

OpenHydro was struck. Previously highly dependent on the naval defence industry and the construction of

nuclear submarines, the port of Cherbourg entered a crisis after the end of the Cold War and1700 jobs were lost.

The reconversion of the port and the shipyard, while presenting an ongoing challenge, begun with the changes

that have started to take place in order to allow OpenHydro to begin manufacturing their wind turbines in

Cherbourg.

Effective cluster policy

Now that clustering has begun, it is at this stage that a cluster policy is developed in order to attract new

business to the area and create new jobs, encouraging the clustering that has begun to occur.

Cluster policy is not something that can be devised independently, but requires assistance from many policy

areas to be successful. Many departments are involved, including regional policy makers, education and the

finance department. Furthermore, national, regional and local incentives, SME policy and industrial policy

initiatives can all play important roles. Additionally, European Commission activities can support certain

programs directly or indirectly; for example, by encouraging the creation of networks, offering assistance in

research and development or facilitating the exchange of information and good practices through Euro Info

Centers and Innovation Relay Centers132.

129 Kumar, S., & Hoffman, J. (2002). Globalisation: The Maritime Nexus. In C. Grammenos, The Handbook of Maritime Economics and Business (pp. 35-62). Jersey: Informa Publishing. 130 Oxford Economics. (2009). The economic contribution of the UK shipping industry in 2007. London: Oxford Economics. 131 De Langen, P. W. (2002). Clustering and performance: the case of maritime clustering in The Netherlands. Rotterdam: Erasmus University Rotterdam. 132 Wijnolst, N. (2006). Dynamic European Maritime Cluster. Dutch Maritime Cluster: Rotterdam.


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In our example, the Port of Cherbourg was highly dependent on the naval defence industry and the construction

of nuclear submarines, which led to its stagnation in the 1990s after the end of the Cold War. However, thanks

to OpenHydro’s plans for a new manufacturing plant in Cherbourg, attempts have been made to identify new

opportunities for the port and to diversify the local economy. The local governing body takes advantage of the

clustering occurring in the wake of the OpenHydro deal.

TABLE 6-3: Framework conditions for the maritime industries at Nurture stage

Nr Framework


12 Effective Cluster Policy Cultural The establishment of formal and explicit networks begins to occur (e.g. trade associations);

In doing so, the clustering process that is also naturally occurring in this phase of the framework is encouraged.

13 Competition Cultural Improves accessibility and reliability of the technology and may reduce barriers to trade and deliver growth benefits.

14 International Standardisation


The removal of barriers to the trade in services;

Improves reliability and affordability for consumers; Legitimises an emerging industry by illustrating its progress.

15 Natural clustering Cultural It is at this stage of the emerging industry framework that natural clustering begins to occur;

In order to increase business potential, companies tend to cluster in order to shorten customer travel distances and maximise economic benefits.

6.5. Growth Stage

In this sub-section, we consider the Growth stage of the maritime industries as an emerging industry. The

Growth stage refers to those activities that support marketing, commercial and business development leading

to sustainable industrial growth in the region.

As the cluster’s reputation spreads, its scope of activities begin to grow (reputation effect)

With the natural clustering process occurring, encouraged by the development of an effective cluster policy by

local and national bodies, the growth of the companies within that cluster increases exponentially133. That, in

turn, attracts new companies to take advantage of the economies of scale that makes clustering so successful,

allowing the growth of the newly emerging industry, increasing the technological development and in doing so

making the industry ever more viable.

Using the example of OpenHydro and their plans to begin manufacturing in the port of Cherbourg; their

decision to use Cherbourg as their base of operations has seen the rejuvenation of a port that had struggled

since the end of the Cold War. In doing so, the cluster becomes attractive to other companies as they can

measure its value through the success (or failure) of the upcoming turbine project134.

Embeddedness into one geographical location

As the clustering process develops, the maritime industries becomes ‘embedded’ and associated with a specific

region, something demonstrated by the success of the Port of Rotterdam, currently the world’s third largest port

in terms of cargo volume and the world’s tenth largest port in terms of container traffic135.

133 De Langen, P. W. (2002). Clustering and performance: the case of maritime clustering in The Netherlands. Rotterdam: Erasmus University Rotterdam. 134 Kumar, S., & Hoffman, J. (2002). Globalisation: The Maritime Nexus. In C. Grammenos, The Handbook of Maritime Economics and Business (pp. 35-62). Jersey: Informa Publishing. 135 AAPA, (2010). “World Port Rankings - 2010”, available at http://www.aapa-ports.org.

http://www.aapa-ports.org/


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The ‘embeddedness’ of firms in a specific maritime cluster adds to the performance of these firms. The location

in the maritime cluster provides firms with a large supplier base, easy access to knowledge and information and

opportunities to reduce transaction costs136. As firms become more embedded within a cluster, the scope for

growth of both the cluster and the industry itself is much larger as firms begin to feed off the technological

advances of each other.

TABLE 6-4: Framework conditions for the maritime industries at Growth stage

Nr Framework


16 Maritime industries become embedded in their location

Cultural As the clustering process develops, the Maritime Industry becomes ‘embedded’ and associated with a specific region.

17 Reputation effect Market As the success of the business and/or cluster becomes apparent, its scope of activities begins to grow.

18 Presence of agglomeration economies (De Langen, 2002)

Market Agglomeration economies related to the presence of suppliers, labour market, existence of knowledge spillovers and low transaction costs are present.

19 Internal competition (De Langen, 2002)

Market The fierceness of internal competition differs substantially between firms in the cluster;

The vast majority of firms face strong international competition.

20 Entry and exit barriers (De Langen, 2002)

Market / Regulation

The entry and exit barriers to a particular industry are relevant because of their impact on the competition or lack thereof within a particular industry.

21 A heterogeneous population (De Langen, 2002)

Cultural The cluster population of the Dutch Maritime Cluster is rather heterogeneous with regard to the economic activities included in the cluster and includes a substantial number of large firms, internationally active firms and innovative firms.

22 Cluster governance (De Langen, 2002)

Support / Regulation

The value of cluster organisations is predominantly their role as intermediary between firms and governments;

An opportunity could be to expand the economic functions of associations (such as diffusion of innovations, marketing etc).




TABLE 6-5: Consolidated overview of the identified framework conditions for maritime industries (P = Precursor Stage; E = Embryonic Stage; N = Nurture Stage; G = Growth Stage; M = Maturity Stage)


1. Financial framework conditions P E N G M 1.1. Availability of public funding for research on Key Enabling Technologies (e.g., nanotechnology for marine coatings, solar powered vessels etc.)

1.2. Availability of seed and venture capital for new maritime industries companies


2.1. Critical mass of companies working in the field of new maritime industries

2.2. Critical mass of suppliers of relevant materials and services 3. Market framework conditions P E N G M 3.1. Proximity to raw materials (location in or near the harbor) 3.2. Proximity to customers (traditional maritime industry) 3.3. Critical mass of customers (traditional maritime industry)

136 De Langen, P. W. (2002). Clustering and performance: the case of maritime clustering in The Netherlands. Rotterdam: Erasmus University Rotterdam.


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4. Cultural framework conditions P E N G M 4.1. Collaboration with the traditional maritime industries (it may further improve the new technology, or create a market for it by showcasing it in an early stage)

5. Knowledge framework conditions P E N G M 5.1. Critical mass of engineers working in the field of new materials and other fields relevant for the development of new maritime products

5.2. Presence of universities and research centres focusing on Key Enabling Technologies (e.g., nanotechnology for marine coatings, solar powered vessels etc.)

6. Regulatory and policy framework conditions P E N G M 6.1. Open trade policy encouraging trade with foreign companies within and beyond the maritime industries

6.2. Regulation restricting carbon dioxide emissions (it forces the maritime industry to change and switch to new technological solutions)

6.3. Policy measures supporting internationalization of maritime industries (e.g., funding creative cross-border events; industry-to-industry dialogue; scouting missions; market intelligence; collective representation in international fairs)

7. Support framework conditions P E N G M 7.1. Presence of navigable water (navigable water allows for, among others, the transportation of goods)

7.2. Presence of formal industry networks (e.g., new maritime industries trade associations)

7.3. Strategy documents and roadmaps for the development of maritime industries in the region

7.4. Dedicated cluster organisation (cluster manager or similar) to coordinate the development of maritime industries in the region

7.5. Well-functioning technology transfer offices within academic institutes facilitating the adoption of new maritime industries solutions


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7. Preliminary results for mobile services industries

The current chapter presents the preliminary results of the analysis for mobile services industries. Similar to the




7.1. Introduction

As specified in Chapter 1, mobile services industries comprise companies whose activities enable the provision

of telecommunication, information, and entertainment services, including voice, internet, SMS, text, and other

data services. They include conversation services (mobile voice and person-to-person messaging), data access

services (GSM, GRPS, CDMA, EDGE, UMTS, WLAN/Wi-Fi and other methods), and content services (SMS-

based, MMS-based, browser-based, downloadable applications and others)137, targeting both consumers

(messaging services, transaction-based services, news/information services, entertainment services, mobile

marketing services, consumer portal offers) and corporations (messaging services, Wi-Fi wireless access

services, mobile office solutions, task-based applications, sector-based applications, corporate and professional

portals). Due to the ubiquity of mobile phones and the rapid development of other connected mobile devices

(tablets, e-books, etc.), mobile services industries constitute one of the fastest growing economic sectors

worldwide138.

FIGURE 7-1: Mobile services industry value chain inputs and outputs

Source: Sustainability Assessment of the Mobile Services Industry, by Rudi Anthony, Justin Bean, Jenn Coyle, Giles Hayward, & Kelly James, May 2011

This rise of the mobile services industry is fairly recent. It is important here to explain why the mobile services

industry is categorised as an emerging industry. In the context of this study, an emerging industry refers to an

industry that is most often driven by key enabling technologies, new business models such as innovative service

concepts, and by societal challenges that industry must address as a matter of survival. The mobile services

137 Vesa J. (2005) Mobile services in the networked economy 138 Sustainability Assessment of the Mobile Services Industry, by Rudi Anthony, Justin Bean, Jenn Coyle, Giles Hayward, & Kelly James, May 2011


86

industry fits this description. They key enabling technological driver of the industry is the development of

wireless data networks, leading to a vast array of new business models such as demonstrated by MSN Text

Messaging, Spotify, data roaming payment models, WhatsApp and many more. Furthermore, increasingly more

advanced smartphones allow for a whole new paradigm in digital mobile content, including the rapidly growing

mobile app and mobile gaming markets.






The precursor stage of the Emerging Industries framework pertains to activities that support the development

of a certain phenomenon and/or underpinning technology platform in the region, which stimulate industrial

interest and investment in particular market-directed feasibility studies. In other words, the precursor stage

refers to the framework conditions that were already in place to encourage the development of the emerging

industry.

Framework conditions relevant to the precursor stage of clustering within the mobile services industry are

specific to that industry. The development of wireless data networks was an important precursor to the entire

industry, followed closely by relatively wide-spread liberalisation of the mobile markets.

Existing prominent ICT equipment industry

The existence of a prominent ICT equipment industry is an important industrial framework condition for

mobile service clusters in the Precursor stage. ICT equipment manufacturers and distributors should have

established in the area and make up a noticeable share of the regional economy. Their presence in the region

will spur geographical clustering of relevant industry actors139.

Multi-operator market structure

Deregulation of markets which enables a multi-operator market structure relevant to the mobile services

industry is a market framework condition that leads to geographical clustering of stakeholders relevant to the

industry, as the multi-operator market structure combined with mobile market liberalisation and capital

market liberalisation allows for competitive pressures to innovate as well as the possibility to address these

pressures by expanding to new user groups, financed locally or through foreign direct investment140.

Critical mass of consumers

A critical mass of consumers is a market framework condition that is a prerequisite for establishing mobile services industry as well as a condition for accelerating growth. In particular a large base of consumers with demand for high end devices with wide application areas are important for industry emergence. In a reversed way mobile service companies often come up with innovative services for which demand is created due to the radical nature of the service offering. These companies are in need of a critical mass to deliver their novel services.

139 Paija L., ICT Cluster – The Engine of Knowledge-Driven Growth in Finland. Helsinki: ETLA, Elinkeinoelämän Tutkimuslaitos, The Research Institute of the Finnish Economy, 2000, 29s 140 Paija L., ICT Cluster – The Engine of Knowledge-Driven Growth in Finland. Helsinki: ETLA, Elinkeinoelämän Tutkimuslaitos, The Research Institute of the Finnish Economy, 2000, 29s


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Critical mass of Science and Technology Researchers; critical mass of talented and qualified ICT engineers

It is important for an innovation cluster in the Precursor stage to have access to competent human resources as

well as world class researchers. Specifically to the mobile services industry, the availability of science and

technology researchers as well as the availability of talented and qualified ICT engineers servers as an important

knowledge framework condition that leads to geographical clustering141.

Mobile market liberalisation

The liberalisation of the mobile market has served as an important catalyst for the development of mobile

industry clusters. This regulatory framework condition is specific to the mobile serviced industry and has lead

to geographical clustering by limited regulation on market entry and expansion as well as limited to no

protection for existing market actors142.

Table 7-1 depicts the framework conditions pertaining to the Precursor stage, their general typology, observed

effect, degree of specificity and the relevant indicators.

TABLE 7-1: Framework conditions for the mobile services industries at Precursor stage


This stage of the framework concerns those activities that improve the viability of the mobile services industry

as an emerging industry.

141 Paija L., ICT Cluster – The Engine of Knowledge-Driven Growth in Finland. Helsinki: ETLA, Elinkeinoelämän Tutkimuslaitos, The Research Institute of the Finnish Economy, 2000, 29s 142 Paija L., ICT Cluster – The Engine of Knowledge-Driven Growth in Finland. Helsinki: ETLA, Elinkeinoelämän Tutkimuslaitos, The Research Institute of the Finnish Economy, 2000, 29s

Nr Framework


1 Existing prominent ICT equipment industry (Paija L., 2000)

Industrial ICT equipment manufacturers and distributors have established in the area;

These companies make up a significant share of the regional economy.

2 Multi-operator market structure (Paija L., 2000)

Market For telephone network operation (multi-operator market structure); Capital market liberalisation.

3 Critical mass of consumers

Market Critical mass of consumers with demand for high end devices with wide application areas

4 Critical mass of Science and Technology Researchers

Knowledge Critical mass of Science and Technology Researchers attached to universities;

Critical mass of Science and Technology Researchers attached to research institutes;

Critical mass of Science and Technology Researchers attached to industry

5 Critical mass of talented and qualified ICT engineers

Knowledge Critical mass of talented and qualified ICT engineers attached to universities;

Critical mass of talented and qualified ICT engineers attached to research institutes;

Critical mass of talented and qualified ICT engineers attached to industry.

6 Mobile market liberalisation (Paija L., 2000)


Limited regulation on market entry and expansion;

Limited to no protection for existing market actors.


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Policy measures promoting entrepreneurship in mobile services industries

Mobile service clusters in the Embryonic stage are helped by an environment that promotes entrepreneurship.

This servers as a regulatory and policy framework condition that increases geographical clustering. Public-

private partnerships focussed on innovation, as well as government-backed vouchers for innovation support

can positively influence the entrepreneurial climate in a cluster in the Embryonic stage143.

Availability of seed and start-up venture capital for mobile services companies

The availability of seed and start-up venture capital for mobile services companies enables companies to start-up and grow in an early phase of the industry life cycle. Several examples exist where investment syndicates were established through which the public sector carries the technological risk and private investors carry the commercial risk of an enterprise or project144.

Table 7-2 depicts the framework conditions pertaining to the Embryonic stage, their general typology, observed


TABLE 7-2: Framework conditions for the mobile services industries at Embryonic stage

7.4. Nurture Stage

The Nurture stage refers to those activities which help to improve the price and performance of applications to

a point where sustainable business potential can be demonstrated. In other words, these activities are aimed

nurturing the business potential of the emerging industry in order for it to transition to the Growth stage of the

framework.

Availability of government funding for large-scale demonstration projects with active user involvement

At the Nurture stage, innovation clusters benefit from government funded projects that demonstrate the

application possibilities of specific innovations to relevant stakeholders, especially when end-users are actively

involved in the projects. Support for these projects serves as a financial framework condition that increases

cooperation and sharing among industry actors145.

143 European Mobile and Mobility Industries Alliance presentation, http://www.europe-innova.eu/c/document_library/get_file?folderId=307465&name=DLFE-10329.pdf 144 Björn Kijl, 2009, Developing a Dynamic Business Model Framework for Emerging Mobile Services, 20th ITS European Regional Conference “Telecommunications in the Broader Society: Maximising the Benefits and Reducing the Risks, pp.2 145 European Mobile and Mobility Industries Alliance presentation, http://www.europe-innova.eu/c/document_library/get_file?folderId=307465&name=DLFE-10329.pdf

Nr Framework


7 Availability of seed and -up venture capital for mobile services companies

Financial Existing or emerging venture capital market;

Investment syndicates where the public sector carries the technological risk and private investors carry the commercial risk of an enterprise or project.

8 Policy measures promoting entrepreneurship in mobile services industries


Public private partnerships;

Innovation vouchers.


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Investments in next generation technology and networks

At its Nurture stage, the mobile services cluster in Finland has benefited from government investment in

internet penetration and next generation data networks. While doing so the Finnish government has chosen not

to engage in direct infrastructure provision, to insure technology neutrality and free functioning of the market,

attracting new companies and businesses towards the region. This has served as an financial framework

condition resulting in greater geographical concentration146 147.

Critical mass of mobile services companies

In order to nurture the emergence of mobile services industries a critical mass of companies delivering these

services are necessary in order to improve the competition, price and performance of their offerings. The

presence of a critical mass of companies is beneficial for nurturing and growth.

Collaboration between regulators and operators

Mobile service clusters in the Nurture stage benefit from cooperation between regulators and network

operators. Developments in emerging markets have shown that regulation that encourages development and

market adoption, as well as the meetings or joint sessions from which they originate, can allow the industry to

generate economic gains while also servicing the least-affluent members of society, which may become valuable

clients as socio-economic developments progress. This sort of cooperation serves as a regulatory framework

condition that increases cooperation and sharing among the relevant stakeholders148.

Platform to promote service innovation in the region

Service innovation platforms can be important to innovation clusters in the Nurturing stage by connecting

government, academia and the industry, and by developing innovation roadmaps that deal with trends,

foresights, incubation, access to finance and links to other sectors. Also, they can build a bridge to

developments outside of the region through conferences and seminars. They serve as a support framework

condition that increases cooperation and sharing149.

Table 7-3 depicts the framework conditions pertaining to the Nurture stage, their general typology, observed


TABLE 7-3: Framework conditions for the mobile services industries at Nurture stage

146 Paija, Laura, ICT Cluster – The Engine of Knowledge-Driven Growth in Finland. Helsinki: ETLA, Elinkeinoelämän Tutkimuslaitos, The Research Institute of the Finnish Economy, 2000, 29s 147 Björn Kijl, 2009, Developing a Dynamic Business Model Framework for Emerging Mobile Services, 20th ITS European Regional Conference “Telecommunications in the Broader Society: Maximising the Benefits and Reducing the Risks, pp.2 148 World Economic Forum, 2009, The Global Information Technology Report 2008-2009 149 European Mobile and Mobility Industries Alliance presentation, http://www.europe-innova.eu/c/document_library/get_file?folderId=307465&name=DLFE-10329.pdf

Nr Framework


7 Availability of government funding for large‐scale demonstration projects with active user involvement

Financial International R&D cooperation projects;

User-heavy demonstration projects.

8 Investments in next generation technology and networks

Financial Internet penetration;

ISDN networks;

Next generation mobile networks (2G, 3G, 4G).

9 Critical mass of mobile services

Industrial Number of companies offering products or services within the mobile services industries


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7.5. Growth Stage

The Growth stage refers to those activities that support marketing, commercial and business development

leading to sustainable industrial growth in the region.

Agreements on interface standards

Agreements on interface standards allow innovation generated by the cluster to have an international impact,

as well as an impact on adjoining sectors. This serves as a market framework condition that greatly benefits

internationalisation for mobile services clusters in the Growth stage150.

Vertical integration of cluster actors

Mergers and acquisitions concerning content providers, packagers, distributors and service provides can benefit

an innovation cluster in the Growth stage, as organisational boundaries fade even further and the costs of

integrating several organisations is outweighed by the growth in revenue the holding manages to achieve. This

serves as a market framework condition that improves cooperation and sharing between stakeholders within

the industry151.

Exploitation of new distribution channels

The emergence of new distribution channels has proven to be pivotal in the mobile app market. Through new

distribution channels, content creators have been able to bring novel software to the market, spurring the

growth of specifically the mobile app market.

Apple’s app store is undoubtedly a key example here. The introduction of Apple’s app store meant a revolution

for the mobile app market. Up till then, application and content creators had to deal with many difficulties, such

as lack of information, low revenue shares, and regional fragmentation152. In addition, traditional distribution

channels needed to establish a great many things with bilateral contracts. As a result, app designers faced long,

proprietary and fragmented processes of application certification, approval, targeting and pricing153. Apple’s

app store alleviated this problem and provided a critical mass of users both through the introduction of its

iPhone and by integrating it in their existing, successful iTunes store. This situation has resulted in a market

that is offering new opportunities for both developers and content providers154.

150 Jeffrey L. Funk, 2009, The emerging value network in the mobile phone industry: The case of Japan and its implications for the rest of the world, in Journal of Telecommunications Policy, Volume 33 Issue 1-2, February, 2009, Pages 4-18 151 Paija, Laura, ICT Cluster – The Engine of Knowledge-Driven Growth in Finland. Helsinki: ETLA, Elinkeinoelämän Tutkimuslaitos, The Research Institute of the Finnish Economy, 2000, 29s 152 Jurgen, K. and H. Broker, (2011). "Emergence of the app-economy: what drives the mobile business industry in Germany?", International Journal of Business Research, Vol. 11:5. 153 Constantinou A, Camilleri E, and Kapetanakis M, (2010). “Mobile developer economics 2010 and beyond”. VisionMobile, London 154 Jurgen, K. and H. Broker, (2011). "Emergence of the app-economy: what drives the mobile business industry in Germany?", International Journal of Business Research, Vol. 11:5.

companies

10 Collaboration between regulators and operators

Cultural Regulations that encourage development and market adoption;

Meetings or joint sessions between regulators and operators.

11 Platform to promote service innovation in the area

Support Government, university, public-private or triple helix platform;

Development of innovation roadmaps;

Organisation of conferences and seminars on service innovation.


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Collaboration between mobile service companies and mobile device manufacturers

Mobile services clusters in the Growth stage benefit from good collaboration between mobile service companies and mobile device manufacturers. An alignment of their product and service offerings leads to increased chances of successful market uptake of mobile services (the collaboration of TomTom and Apple is a recent and successful example). Their collaboration serves as an cultural framework condition that increases cooperation and sharing among stakeholders within the industry155.

Collaboration and strategic alignment between network operators and mobile device dealers

Mobile services clusters in the Growth stage also benefit from good cooperation and strategic alignment

between network operators and mobile device dealers. This leads to networks that handle assigned mobile

traffic without abundant spare capacity, which increases the chances of successful market uptake of mobile

services. This serves as an cultural framework condition that increases cooperation and sharing among

stakeholders within the industry156.

Table 7-4 depicts the framework conditions pertaining to the Growth stage, their general typology, observed


TABLE 7-4: Framework conditions for the mobile services industries at Growth stage




155 Cellular News, 2009, The Big Challenge for the Mobile Industry in Emerging Markets, http://www.cellular-news.com/story/36464.php 156 Cellular News, 2009, The Big Challenge for the Mobile Industry in Emerging Markets, http://www.cellular-news.com/story/36464.php

Nr Framework condition Typology Indicators

12 Agreements on interface standards

Market Meetings between stakeholders or joint sessions to agree on interface standards;

Documents detailing interface standards.

13 Vertical integration of cluster actors

Market Mergers and acquisitions concerning content providers, packagers, distributors and service provides;

Mergers and acquisitions concerning business consultants, IT integrators and new media.

14 Exploitation of new distribution channels

Market Exploitation of new distribution channels (e.g., app store)

15 Collaboration and strategic alignment between network operators and mobile device dealers

Cultural Networks that handle assigned mobile traffic without abundant spare capacity;

Meetings between operators and dealers or joint sessions to increase strategic alignment.

16 Collaboration between mobile service companies and mobile device manufacturers

Cultural Meetings between stakeholders or joint sessions on interoperability of devices and components


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TABLE 7-5: Consolidated overview of the identified framework conditions for maritime industries (P = Precursor Stage; E = Embryonic Stage; N = Nurture Stage; G = Growth Stage; M = Maturity Stage)




















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8. Preliminary results for mobility industries

The current chapter presents the preliminary results of the analysis for mobility industries. Similar to the




8.1. Introduction

As information and communication technology (ICT) has improved in the technological age, the mobility

industries have become increasingly important in the 21st century. Generally, the concept of ‘mobility’ is

interpreted as “the quality or state of being mobile”157, i.e., on the move. Mobility-enhancing information and

communication technology (ICT) offers a person an opportunity to access, process and communicate

information while on the move, finishing and beginning job tasks, and while being located in different place.

As specified in Chapter 1, mobility industries comprise those businesses which provide products and services

that aim at optimising the intermodal mobility of goods and people by combining or connecting different means

and modes of transport (notably by car/road, train/rail, airplane/air and ship/water). They build upon

competences in transport and logistics on the one side and/or IT and mobile services on the other, but may also

cut into other sectors such as mobile navigation services, tourism, retail and financial services. The activities of

this emerging industry add value by providing, for instance, integrated, smart, clean, service-oriented and/or

user-focused mobility services and related products158. They provide new services to the particular needs of both

businesses (b2b) and customers (b2c). This includes the provision of different forms of facilitation and

mediation services such as tracking and management services and related products as well as the organisation

of specific service offers, such as deliveries or car-sharing in relation to other forms of transport.

Mobility industries include products from GPS devices in cars linked to global satellites to a Google Maps

application on an iPhone or Android OS mobile phone. Mobility industries offer efficient ‘end-to-end’ solutions

as well as whole packages of specialised services tailored for a wide variety of user groups. The user groups may

include professional users as well as school children and elderly persons under medical care. They gain

advantage by new functions and new ways of using mobile and wireless technologies (including satellite-

enabled ICT applications) that enhance mobility. They benefit from positive network effects. Like water and

electricity services, mobility services and related infrastructure are perceived as an easily available utility that

enhances value creation across the economy and into the wider society159.

More and more, ICT is being recognised as a toolbox to achieve ‘sustainable mobility’, which implies less travel

and more effective and responsible use of natural and other resources without compromising the ability of the

next generation(s) to meet their own needs. In short, sustainable mobility refers to “[...] mobility that meets the

needs of society to move freely, gain access, communicate, trade and establish relationships without

sacrificing other essential human or ecological requirements today or in the future”160. For example, mobile

157 Andersson, N., & Annerstedt J. (2010) “Clusters in the Mobility Industry: Automotive and Tourism Sectors”, European Cluster Observatory, Priority Sector Report 158 See pages 9-10 of the study “Building a New Mobility Industry Cluster in the Toronto Region” by ICF Consulting & Moving the Economy, available at http://www.direccionproyectos.com/documentos/FUNDACION/MTENewMobilityStudy.pdf 159 Andersson, N., & Annerstedt J. (2010) “Clusters in the Mobility Industry: Automotive and Tourism Sectors”, European Cluster Observatory, Priority Sector Report 160 http://www.SustainableMobility.org


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ICT is being looked upon as a way to achieve appropriate transport planning strategies by an inclusive multi-

sector approach to planning.

The mobility industries include a broad range of products and services (see Figure 8-1). Economic sectors of

relevance to the mobility industries have been divided into three categories: Enabling Sectors, Mobility

Initiatives and Applications Sectors.

Enabling Sectors: the enabling sector is made up of industries such as IT, Telecom and Geographical

Information Systems/Satellite systems. These are the industries that have developed the technology for

use in the mobility industries.

Mobility Initiatives refer to those initiatives that result in products broadly defined as the mobility

industries, such as TomToms, or an electronic map on a Smartphone.

Application Sectors: the term Application Sector is used to describe those industries in which the

technology that has been developed in the mobility industries is applied to, for example, the automotive

and tourism industries.

FIGURE 8-1: Overview of the Mobility sector (which includes the multi-modular developments, i.e., rail, bicycle, ship etc., within the automotive and logistics)

Source: Priority Sector Report on Mobility Industries161






The Precursor stage refers to the framework conditions that were already in place to encourage the

development of the emerging industry.

161 Andersson, N. & Annerstedt, J., 2010, Priority Sector Report: Clusters in the Mobility Industry: Automotive and Tourism Sectors, The European Cluster Observatory, European Commission Directorate General Enterprise and Industry, http://www.clusterobservatory.eu/common/galleries/downloads/mobility_report.pdf


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Frontier Technologies and R&D

As the new mobility industries comprise the use of new technologies and devices, it is obvious that they need to

be present in the first place. MTE (2002) notes that well-funded public and private sector research institutions

and programs covering various aspects of New Mobility need to be available. A high level of patents should

result from their efforts. Moreover, researchers should work aggressively to commercialise their innovations.

Governments should support commercialisation efforts by providing ample opportunities to pilot promising

innovations162.

One leading example can be found in the availability of GPS. Although satellite navigation has existed for some

time, and military applications go back quite some time now, its mainstream application is a more recent

phenomenon. Especially coupled with the downsizing of chips and the increasing scale at which they are

produced, both usability and price have improved tremendously over the years. A specific example of this is

GPS navigation on smartphones. The downsizing of chips on itself also provides new opportunities in this

industry, evidenced by the use of smart cards for public transport (e.g., OV-Chip card in The Netherlands,

Oyster Card in London, Izmir – Turkey’s Smart Card).

Established technical industry

Directly related to the availability of technical solutions is the establishment of technical industry. An

established technical industry is needed to be able to provide the technical solutions. Moreover, mainstream

(i.e., affordable) solutions typically make it beneficial to pursue new mobility alternatives. The technical

industry provides the linkages that are required, and especially the mobile ICT industry can be identified as

having been crucial at this stage. The availability of mobile technology, paired with a strong mobile industry,

mobile applications and a high pace of innovation result in consumer access to mobile navigation solutions.

Advanced communication devices and technologies

One of the particular conditions at the Precursor stage is the availability of advanced communication devices.

With communication devices we do not only mean smartphones, but also take note of dedicated GPS navigation

devices, such as TomTom. The integration of GPS technology in these devices have revolutionised the mobility

industries and has provided one of the key building blocks of its development to date. Modern logistics depends

heavily on sophisticated tracking and information management technologies163. Specialised software, GPS,

geographic information systems (GIS), wireless communication and their subsequent integration in end-user

products are merely examples of how this has allowed for the emergence of the new mobility industries.

Societal need for new mobility solutions

New mobility solutions offer a different approach to societal problems in, for example, the infrastructure

domain. Congestion is a well-known example to which new mobility products may provide a solution. The need

to come up with a solution for congestion, however, fundamentally drives the industry by creating demand pull

for new mobility solutions. New mobility solutions, such as teleconferencing, distance learning and e-commerce

potentially reduce congestion by offering new approaches.

Specialised Human Resources

A workforce that is highly educated with a full range of skills is needed for the mobility industries164. Education

institutions need to provide a range of courses and programs, with emerging crossover between traditional

program silos (e.g., sociology, marketing, design, real estate, civil engineering, information technologies,

162 ICF & MTE, (2002). "Building a New Mobility. Industry Cluster in the Toronto Region”, Toronto. 163 ICF & MTE, (2002). "Building a New Mobility. Industry Cluster in the Toronto Region”, Toronto. 164 ICF & MTE, (2002). "Building a New Mobility. Industry Cluster in the Toronto Region”, Toronto.


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environmental studies, urban planning, etc.). Moreover, training programs should exist to keep workers in the

emerging mobility industries up to pace with the (coming) developments in the industry.

Available Financing

For obvious regions, financing needs to be available to facilitate both R&D and the emergence of companies in

the mobility industries. There should be access to a range of financing opportunities to meet the various stages

of establishing and growing business enterprises. This includes venture capital and angel investor groups

serving start-ups, as well as traditional debt financing for more established companies165.

Competitive Business Climate

In order to spur industrial interest and investment, MTE (2002) argues that the business climate needs to be

competitive. Regions offering comparative advantages in terms of the costs and efficiencies of business

transactions are more likely to show the emergence of the new mobility industries. This includes tax rates and

production costs166.

Quality of Life

As has been discussed above, human capital is of key importance. The human factor is more often crucial for

the emergence of a successful industry (e.g., human capital drives Silicon Valley still to date).

Skilled workers are attracted to the region because of its attractiveness in terms of living. This includes a clean

environment, safe neighbourhoods, adequate and affordable housing, good schools, quality health care services,

and a range of cultural, multicultural, and recreational amenities167. Availability of these factors therefore helps

drive the emergence of the mobility industries by attracting skilled workers.

TABLE 8-1: Framework conditions for the mobility industries at Precursor stage

Nr Framework


1 Frontier Technologies and R&D (MTE, 2002)

Market Availability of technologies;

R&D spending; Number of patents.

2 Established Technical Industry

Market Size of ICT industry; Number of employees in technical industries;

Number of companies in technical industries.

3 Advanced communication devices

Market Availability of communication technologies; Number of dedicated navigation devices available;

Availability of GPS capable devices.

4 Societal need for new mobility solutions

Cultural Congestion statistics;

Road usage statistics;

Public transport statistics on crowdedness.

5 Specialised Human Resources (MET, 2002)

Knowledge Availability of people with industry-specific skills (software engineering, design skills, managerial skills, ICT skills, Geomatics skills, Environmental education etc.)

6 Available Financing (MET, 2002)

Financial Venture capitalists

Private and public funding

Information about relevant funding sources Large-scale private investment projects and infrastructure investment

foreign direct investment Voucher schemes to increase the demand of companies (from side of EMMIA

who is helping service companies in this sector bring their service innovations

165 ICF & MTE, (2002). "Building a New Mobility. Industry Cluster in the Toronto Region”, Toronto. 166 ICF & MTE, (2002). "Building a New Mobility. Industry Cluster in the Toronto Region”, Toronto. 167 ICF & MTE, (2002). "Building a New Mobility. Industry Cluster in the Toronto Region”, Toronto.


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Nr Framework


faster to a European market) Public-private partnerships (especially for infrastructure investments)

angel investor groups

7 Competitive Business Climate (MET, 2002)

Market Competition indicators (HHI, C4);

Competition analysis; Tax rate comparisons;

Transaction costs.

8 Quality of Life (MET, 2002)

Cultural Crime rates; Availability of recreational facilities;

Availability of cultural establishments.


In this sub-section, we consider the framework conditions that support the improvement of the reliability and

performance of technology to a point where it can be demonstrated in a market environment. Essentially, we

are finding the conditions that have improved the market feasibility of a technology within the emerging

mobility industries.

Product Testing

At this stage, it is important to establish the feasibility of the technology as well as to find potential customers

willing to invest in the product. Testing is also required in order to iron out any flaws that exist in the

technology.

Many firms incorporate a testing phase in the development of their products. This also holds for the mobility

industries. For instance, the “OV-chipkaart”, the Dutch smart card for public transport, was extensively tested

in the public domain. Although the introduction of the smart card was planned for 2009, testing in the

Rotterdam area already took place in 2005168.

User interaction (proximity to customers)

As product testing already indicated, user-producer interaction is vital for the emergence of the mobility

industries. Customers have specific needs for mobility, and it is key that producers offer products that meet

these needs169. Suppliers that interact closely with their target audience can monitor trends or initial reactions

by early consumers’ of their own products. They can therefore adjust their products to meet specific demand,

and by doing so create a market for their new mobility solutions.

Growth in transportation demand

Socio-economic and demographic trends virtually guarantee a continuation of the rapid escalation in mobility

demand seen in the last 50 years in developed countries and even more so in developing countries. Mobility

demand generally follows population, urbanisation, economic activity, disposable income and per capita motor

vehicle ownership170. Together these factors suggest that mobility demand will continue to grow into the

foreseeable future. This growing demand threatens the economic, social and environmental benefits of

transportation, and increases the need for new mobility solutions171. Growth in transportation demand thus

urges the adoption of alternative mobility solutions, creating a market for new mobility industries.

168 http://www.rijnmond.nl/nieuws/21-06-2007/testfase-ov-chipkaart-succes 169 ADL, (2009). "Future of Mobility 2020: The Automotive Industry in Upheaval?" 170 ICF & MTE, (2002). "Building a New Mobility. Industry Cluster in the the Toronto Region”, Toronto. 171 ICF & MTE, (2002). "Building a New Mobility. Industry Cluster in the the Toronto Region”, Toronto.


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Growing recognition that future demand for mobility can only be met through major innovations

One of the crucial factors for the further development of the mobility industries is a growing recognition that

future demand for mobility can only be met through major innovations. Some of the current challenges include

congestion, high infrastructure costs, expanding cities, poor urban air quality, limited mobility for those

without motor vehicles, and the possible near-term end of cheap oil. These factors give a playing field for new

mobility industries to emerge that provides an alternative to the traditional methods. Navigation systems, for

example, give end-users the possibility to take alternative routes to their destination without needing to be

familiar in the area. This gives end-users more flexibility to avoid congested roads, effectively spreading out the

load on the available infrastructure.

Environmental / ecological awareness and consideration

Another key driver at the Embryonic stage is environmental and ecological awareness and consideration. This

factor works from two angles. A regulatory push for more environmentally friendly mobility solutions can spur

the development of the emerging mobility industries. Through, for example, taxes on CO2 emissions, new

mobility solutions may become more interesting to potential end-users, fostering development of such

solutions. End-users who are becoming more environmentally aware, however, also affect the emergence of new

mobility industries. End-users who are more environmentally aware also demand more environmentally

friendly mobility solutions, which in turn provide new mobility industries with plenty of chances to emerge.

Widespread availability of (smart) technology

At the Precursor stage, we identified that innovative technologies needed to be available in order for the new

mobility industries to emerge. While it is true that it needs to be available, one of the factors that allow the

mobility industries to further emerge is the widespread availability of such technologies. New mobility

industries can only grow further when end-users adopt it. That means that the underlying technologies need to

be widely available to end-users as well. For instance, smartphones are widely available in Europe and allow

users to navigate with GPS. Navigation systems, such as TomTom, also depend heavily on the availability of

GPS for end-users; without GPS widely available to them, end-users simply cannot use the system to navigate

themselves to their destination.

TABLE 8-2: Framework conditions for the mobility industries at Embryonic stage

Nr Framework condition Typology Indicators

9 Product Testing Market Number of public test phases;

Company feedback on product testing.

10 Proximity to customers Cultural Need for critical demand for mobility good and services

11 Growth in transportation demand (ICF & MTE, 2002)

Cultural Congestion;

Number of road users; Number of public transport users;

Aviation traffic

12 Growing recognition that future demand for mobility can only be met through major innovations (ICF & MTE, 2002)

Cultural Population growth;

Urbanisation trends; Economic activity;

Disposable income trends;

Per capita vehicle ownership

13 Environmental/ ecological awareness and consideration


Compatibility of New Mobility Industry with green strategies following green regulations, requirements, policies etc.

14 Widespread availability of (smart) technology

Market Availability of technologies;

Availability of communication technologies;

Number of dedicated navigation devices available; Availability of GPS capable devices.

Availability of necessary technologies in current end-user products


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8.4. Nurture Stage

We now consider the Nurture stage. The Nurture stage refers to those activities which help to improve the price

and performance of applications to a point where sustainable business potential can be demonstrated. In other

words, these activities are aimed at nurturing the business potential of the emerging industry in order for it to

transition to the Growth stage.

Individualisation of society

The individualisation of society directly affects customers’ needs for products, not only in the mobility domain.

It therefore affects the adoption of new mobility technology and is a factor that needs to be taken into account.

The megatrend individualisation with respect to the mobility industries describes the consumer’s

disengagement from mass movements172. ADL (2009) provides an engaging example in their report. They argue

that a successful entrepreneur can drive a subcompact regardless of its status symbol, while a student, on the

other hand, is equally as likely to favour a dependable family station wagon. What it means for the market,

though, is that the customer increasingly expects mobility solutions adapted to his own personal attitude to life.

Specifically, this also includes individual mobility concepts that are beyond traditional transportation methods,

such as the automobile173.

Increasingly cheaper and smaller chips

Although seemingly unrelated at first, the trends in the chip industry - the Semiconductor Industry –are highly

relevant to the business potential of the emerging mobility industries. The new mobility industries are highly

dependent on technologies and integrated devices. Chips are increasingly becoming smaller, especially with

coming developments on the 450mm manufacturing process174. New semiconductor manufacturing processes

also lead to more economies of scale, pushing down the price per chip on the market.

Both cheaper and smaller chips allow producers of new mobility products to increase the functionality of new

products and offer such highly complex solutions at a lower price. This improves the price and performance of

applications.

Service-Oriented Business Models

One of the underlying changes in the changing mobility industries is a move towards more service-oriented

business models. As a means of providing added value to customers, businesses now tend to shift away from

putting emphasis on selling products towards a greater focus on providing services. New mobility industries

reflect this trend by shifting the emphasis in transportation away from selling vehicles to providing mobility

services175. ICF & MTE (2002) argue that “ [...] access to mobility is being decoupled from motor vehicle

ownership.” They note that this is particularly true in the domain of goods movement, where third-party

logistics professionals offer clients goods movement services and coordination. The service-oriented factor here

is that they provide their clients with a form of “mobility” for their goods, while also eliminating the need for

clients to operate their own fleet of vehicles for this transport.

Service-Oriented business models may thus increase the application area of new mobility solutions, further

expanding the emergence of new mobility industries.

172 ADL, (2009). "Future of Mobility 2020: The Automotive Industry in Upheaval?" 173 ADL, (2009). "Future of Mobility 2020: The Automotive Industry in Upheaval?" 174 For more information on 450mm manufacturing initiatives, see e.g. http://www.g450c.org 175 ICF & MTE, (2002). "Building a New Mobility. Industry Cluster in the Toronto Region”, Toronto.


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Tailoring to specific needs of particular users

Increasingly, transportation products and services are tailored to the specific needs of particular users. This has

an important impact on the business potential of the emerging industry as it can offer a competitive advantage

on the market. Lifestyle and demographic dimensions significantly influence the choice of transport modes by

users, and marketing strategies are taking this into account as customers become increasingly more specific

about the services that fit their lifestyle, expectations and needs176.

In Paris, for example, flexible transportation methods have emerged that allow for a greater degree of freedom

for end-users. Across the city, bicycles have been made available by VELIB that provide a low-cost and

environmentally friendly alternative for commuting within the city177.

Programmes for Local Deployment

One of the driving factors in a region where the new mobility industries have been emerging, is to have

programmes for local deployment. ICF & MTE (2002) argue that the best innovations from regional suppliers

must also be successfully implemented in full-scale local applications. Moreover, by gaining an international

reputation as a centre of excellence in the emerging mobility industries, much interest from foreign buyers can

be generated178.

TABLE 8-3: Framework conditions for the mobility industries at Nurture stage

Nr Framework


15 Increasingly cheaper and smaller chips

Market Trends in semiconductor manufacturing;

Price of electricity consumer products;

Price of CPUs.

16 Service-Oriented Business Models (ICF & MTE, 2002)

Market Number of companies providing mobility services;

Trend in number of companies providing mobility services.

17 Tailoring to specific needs of particular users (ICF & MTE, 2002)

Market Availability of differentiated products;

Trends in product differentiation; Marketing strategies.

18 Programmes for Local Deployment (ICF & MTE, 2002)


Availability of Local Deployment programmes;

8.5. Growth Stage

In this section, we consider the Growth stage of the mobility industries. The Growth stage refers to those activities that support marketing, commercial and business development leading to sustainable industrial

growth in the region.

Presence of Greenovators

The Greenovator is a special kind of customer that impacts the mobility industries. One of the key aspects is

that they directly link environmental awareness and a sustainable lifestyle with their quality of life. ADL (2009)

176 ICF & MTE, (2002). "Building a New Mobility. Industry Cluster in the Toronto Region”, Toronto. 177 http://www.velib.paris.fr/ 178 ICF & MTE, (2002). "Building a New Mobility. Industry Cluster in the Toronto Region”, Toronto.


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describes in their report that one of the most dominant mobility consumers is represented by the Greenovator.

In 2020, they are expected make up just under 30% of the total automotive market.

Mobility consumption is affected by this type of consumer in a direct way. Greenovators are primarily

interested in intelligent and sustainable mobility solutions179. The demands that Greenovators pose to mobility

products and services will be more complex, giving the emerging mobility industries a bigger playing field. The

customer demand for such sustainable and environment-friendly mobility products may accelerate the growth

of the emerging mobility industries by creating demand for new solutions.

Trend to integrated transportation

A key element of the emerging mobility industries is a better integration across systems and modes, both for

passenger transportation and for goods movement180. Modal integration has been a prominent issue for freight

for many years, in an effort to create better door-to-door customer service using the most competitive

combination of truck, rail, air and marine. ICF & MTE (2002) describe two examples that help integrate modes

for moving people. These are described as following181:

Izmir, Turkey’s Smart Card: this smart card payment system integrates commuter train, transit and

ferry services into a one-payment network and provides travellers with complete intermodal service. As

an extra incentive to use these modes and help contain the growth of the personal vehicle population,

the Smart Cards allow travellers one hour between modes to run errands before reboarding on the same

fare.

Canadian National Railway’s RoadRailer and Canadian Pacific Railway’s Expressway: Canada’s two

major railways are implementing new intermodal technology to further integrate truck trailers and rail

cars. The systems eliminate the need for cranes and other infrastructure to load trailers onto traditional

rail cars, and reduce time spent at transfer facilities. The systems make rail more attractive to shippers

by adding the flexibility of trucking’s door-to-door capacity.

More emphasis in the integration in transportation thus spurs the growth of new mobility solutions.

Integrated planning for infrastructure and development (Smart Growth planning)

Aside from an integrated approach to transportation, ICF & MTE (2002) also describe a shift to integrated

planning at the level of infrastructure and development. Smart Growth planning concepts brings people and

their needs closer through mixed-use (jobs-housing balance) and higher density (more compact) developments

linked by transit and other sustainable transportation systems. This can effectively lower infrastructure costs,

and potentially free up land that would be used for transportation. In other words, it offers clear cut benefits for

regions to pursue this. This in turn stimulates the use of new mobility solutions, further spurring the growth of

the emerging mobility industries.

Change in demand of end-users

One of the key drivers at the Growth stage is the overall change in demand of end-users. We already mentioned

how the specific needs of end-users affect the emergence of the mobility industries. At this stage, change in

demand of end-users particularly drives the growth of the emerging mobility industries.

ADL (2009), for example, describes that a particular group, the so-called “Low-End User”, will decisively turn

mobility markets upside down. In the future, many end-users are no longer expected to be able to afford

individual mobility to the extent that they now do. Rising fuel prices are making mobility ever more expensive,

179 ADL, (2009) "Future of Mobility 2020: The Automotive Industry in Upheaval?" 180 ICF & MTE, (2002). "Building a New Mobility. Industry Cluster in the Toronto Region”, Toronto. 181 ICF & MTE, (2002). "Building a New Mobility. Industry Cluster in the Toronto Region”, Toronto.


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which also goes for increasing financial burdens through taxes and charges on gas consumption and CO2

emissions. These factors combined drive the demand for mobility solutions in the near future. More explicitly,

ADL (2009) argues that the threat of having to forgo individual mobility drives a growing demand for efficient,

inexpensive mobility solutions182.

TABLE 8-4: Framework conditions for the mobility industries at Growth stage

Nr Framework


20 Presence of Greenovators (ADL, 2009)

Cultural Number of green mobility users;

Number of green mobility solutions

21 Trend to integrated transportation (ICF & MTE, 2002)

Cultural Availability of integrated transportation initiatives;

Usage of integrated transportation initiatives.

22 Integrated planning for infrastructure and development (ICF & MTE, 2002)


Infrastructure planning information

Types of infrastructure development projects.

23 Change in demand of end-users (ADL, 2009)

Cultural Trend in types of (mobility) products sold;

Energy price forecasts.




TABLE 8-5: Consolidated overview of the identified framework conditions for mobility industries (P = Precursor Stage; E = Embryonic Stage; N = Nurture Stage; G = Growth Stage; M = Maturity Stage)


1. Financial framework conditions P E N G M 1.1 Availability of government funding for large-scale infrastructure projects

1.2 Investments in next generation mobility technology and networks

1.3. Availability of seed and venture capital for mobility companies 1.4. Availability of mobility-related R&D subsidies 2. Industrial framework conditions P E N G M 2.1. Critical mass of companies offering mobility solutions and providing mobility services

2.2. Critical mass of supply chain actors: presence of mobility consultancy services, presence of research centres for mobility issues, presence of equipment suppliers etc.

3. Market framework conditions P E N G M 3.1. Proximity of companies in traditional industries in transition towards new mobility solutions -> Critical mass of business consumers of mobility industries

3.2. Proximity to private customers who need new mobility solutions (e.g., with regard to public transport, congestion, road usage)

3.3. Widespread availability of (smart) technology (dedicated navigation devices and other relevant technologies in current end-user products)

3.4. Presence of Greenovators (green mobility users)

182 ADL, (2009). “Future of Mobility 2020: The Automotive Industry in Upheaval?”


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4. Cultural framework conditions P E N G M 4.1. Social attitude supporting mobility (e.g., attitude of citizens towards mobility issues, public awareness of environmental problems related to mobility, perception of mobility by private consumers, perception of mobility by business)

5. Knowledge framework conditions P E N G M 5.1. Availability of people with skills relevant for mobility industries (e.g., software engineering, design skills, managerial skills, ICT skills, Geomatics skills etc.)

5.2. Presence of universities and research centres focusing on mobility technologies

6. Regulatory and policy framework conditions P E N G M 6.1. Policy measures promoting mobility industries (e.g., compatibility of mobility industries with green strategies following green regulations, requirements, policies etc.)

6.2. Integrated planning for infrastructure and development 6.3. Policy measures supporting the internationalisation of mobility clusters (e.g., regional support in representing the cluster abroad; regional support for inward investment activities)

6.4. Policy measures supporting interdisciplinary cooperation (e.g., measures promoting interdisciplinary cooperation between mobility industries and other industries)

7. Support framework conditions P E N G M 7.1. Established infrastructure offering integration possibilities for new mobility solutions (e.g., public transport system, highway system etc.)

7.2. Strategy documents and roadmaps for the development of mobility industries in the region

7.3. Dedicated cluster organisation (cluster manager or similar) to coordinate the development of mobility industries in the region

7.4. Well-functioning technology transfer offices within academic institutes facilitating the adoption of mobility industries solutions


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9. Preliminary results for personalised medicine

The current chapter presents the preliminary results of the analysis for personalised medicine industries.

Similar to the previous chapters, we first provide some background information on the industry itself, and then

move on to describing general and specific framework conditions relevant to each of the stages of the industry’s

life cycle up to the maturity stage.

9.1. Introduction

Personalised medicine is widely expected to increase the competence of health care providers of administering

patients the right drug at the right time. The concept of matching therapy to patient is not new, yet the

traditional approach to doing so bears much resemblance to trial and error. Currently, when a diagnosis is

made, a drug is prescribed that is commonly expected to help the patient. If the drug does not work or has side

effects that are too severe, the dose is changed or a different drug is prescribed – if available. This approach is

related to the manner in which drugs are designed – to treat the average patient presenting a specific disease, in

an attempt to maximise the size of the patient pool. This resembles a “one-size-fits-all” approach, and results in

the emergence of subpopulations of patients that either do not respond to the drug or experience serious

adverse effects183.

As specified in Chapter 1, Personalised Medicine industries comprise those activities that are designed to supply

innovative medical products and services in a number of fields in a customised form, e.g. in medical technology,

medical and surgical equipment and devices, Personalised Medicine information technology, Personalised

Medicine infrastructure and services, clinical trials, as well as preventative Personalised Medicine care and

general well-being (natural Personalised Medicine care, sport and recreation, community services, Personalised

Medicine information, Personalised Medicine homes)184. These industries combine the fields of science,

engineering and technologies to facilitate new innovations in the biomedical sphere and an increasing

convergence of physical and biological technology platforms. They are key to supporting breakthroughs in

medical knowledge and technologies, addressing major personalised medicine and societal challenges (such as

the threat of new diseases, pandemics or ageing), enabling greater choice and the customisation of personalised

medicine care (personalised medicine) and a move towards new personalised medicine lifestyles.

The innovative cross-sector and knowledge-intensive characteristics of Personalised Medicine make the

application of the cluster concept and cluster organisations highly relevant for this emerging industry.

183 BioInformatics, 2009, Opportunities in the US Personalized Medicine Market, BioInformatics, LLC, www.gene2drug.com 184 Personalised Medicine and Wellbeing Industries: Exploring the Potential, Final Report, Prepared by Adroit Economics and GH Regeneration for and on behalf of Our Life, DH Northwest, the Strategic Personalised Medicine Authority and NWDA, 2010


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FIGURE 9-1: Personalised medicine industries

Source: Oxford Journals185; personal genomics connects genotype to phenotype186 and provide insight into

disease. Pharmacogenomics connects genotype to patient-specific treatment. Traditional medicine defines the

pathologic states and clinical observations to evaluate and adjust treatments.






The precursor stage of the analytical framework refers to activities that support the development of a certain


investment in particular market-directed feasibility studies.

Framework conditions relevant to the Precursor stage of clustering within the personalised medicine industry

are specific to that industry. The complete sequencing of the human genome was an important precursor to the

entire industry. Networking possibilities for scientists and interlinks between academia and the life science

industry have also been important factors to the development of personalised medicine clusters. Ever

increasing healthcare demand serves as a driving factor for the development of these clusters.

185 http://bioinformatics.oxfordjournals.org/content/27/13/1741/F1.expansion.html 186 The genotype of an organism is the class to which that organism belongs as determined by the description of the actual

physical material made up of DNA that was passed to the organism by its parents at the organism's conception. The

phenotype of an organism is the class to which that organism belongs as determined by the description of the physical and

behavioral characteristics of the organism, for example its size and shape, its metabolic activities and its pattern of

movement. For more information see http://plato.stanford.edu/entries/genotype-phenotype/


106

The complete sequencing of the human genome

The complete sequencing of the human genome has served as an important catalyst for the development of

personalised medicine, currently moving beyond the genome and into the entire spectrum of molecular

medicine, including the proteome, metabolome and epigenome187. It took almost 3 billion EUR and thirteen

years to sequence the first draft of the human genome188. This major milestone is an important building block in

the scientific framework of personalised medicine clustering, initiating cooperation and sharing among

academia and industry on a grand and increasing scale. This framework condition is highly specific to the

personalised medicine industry.

Networking possibilities for scientists

Early networking possibilities for scientists of different departments and different institutes are an important

scientific framework condition at the Precursor stage of clustering in the personalised medicine industry. For

example, in the BioAlps region in Switzerland, a pilot project on collaborative research lead to the substitution

of an insular research model to a networking effort that puts great emphasis on collaborative research projects,

merging research disciplines to become more interdisciplinary and extend this to the academic teaching efforts

in the region. This led to greater collaboration and sharing as well as specialisation of research institutions

within the region, serving as a hallmark for years to come189.

Interlinks between academia and the life science industry

The forging of strong bonds between Swiss academia and the life science industry took a start at the turn of the

century. In 2000, the Science-Life-Society programme was initiated, which included public-private

partnerships and large research infrastructure development projects190. This serveas as a Precursor stage

industrial framework condition that increased cooperation between industry and academia on matters of

research and development.

Increasing healthcare demand

An important precursor for clustering in the personalised medicine industry is the increasing demand in

healthcare. This demand pressures the life science industry as a whole to come up with increasingly better

solutions to healthcare challenges. Personalised medicine holds the promise of better and more cost efficient

diagnostics as well therapeutics as much sought-after means to prevent health problems. The complicated

challenges posed by societal as well as scientific developments spurs the need for geographical concentration of

research institutions, healthcare providers and industrial manufacturers.

Table 9-1 depicts the framework conditions pertaining to the Precursor stage, their general typology, observed


187 The Case for Personalized Medicine, 3rd Edition, pp.4 188 The Case for Personalized Medicine, 3rd Edition, pp.8 189 BioAlps, The first 10 Years, in Technology by Bilan, pp.18 190 BioAlps, The first 10 Years, in Technology by Bilan, pp.18


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TABLE 9-1: Framework conditions for the personalised medicine industries at Precursor stage


At this stage, we look at the transition of the Personalised Medicine Industry from Precursor to Embryonic

stage.

A broad academic and scientific base in personalised medicine and life sciences in general

A broad academic and scientific base in personalised medicine is an important framework condition for a

personalised medicine cluster at the Embryonic stage. For example, development of molecular diagnostics and

imaging tools in North Rhine-Westphalia has been spurred by the presence of universities with specialised life

science departments and university hospitals in the area, as well as the presence of pharmaceutical

manufacturers and public or private life science research institutions. This has lead to greater geographic

concentration of scientific and industrial players focused on personalised medicine191.

Universities and non-academic research that have sound molecular biology and biochemistry centres

This broad academic and scientific base should be strengthened by the presence of strong molecular biology

and biochemistry centres. Developments in North Rhine-Westphalia have shown that this scientific framework

condition, which is specific to the personalised medicine industry, improves collaboration between the relevant

actors, as the centres are at the core of research and development in personalised medicine192.

Fundamental research that is combined with concrete diagnostic and therapy approaches

The combination between fundamental research and practical diagnostic and therapy approaches increases

cooperation and sharing between academia and industry within the personalised medicine industries. It is most

often through integrated research and development projects that this combination is achieved, implying

cooperation between universities, hospitals and industry stakeholders193. This industrial framework condition is

191 Capgemini Consulting, 2010, Roadmap for the Development of a Knowledge-Based Bio-Economy in North Rhine-Westphalia, p. 12 192 Capgemini Consulting, 2010, Roadmap for the Development of a Knowledge-Based Bio-Economy in North Rhine-Westphalia, p.12 193 Capgemini Consulting, 2010, Roadmap for the Development of a Knowledge-Based Bio-Economy in North Rhine-Westphalia, p.12

Nr Framework


1 The complete sequencing of the human genome

Knowledge Complete sequencing of the human genome;

Extensive opportunities for advanced research;

Cooperative research projects aimed at further understanding of the human genome and its implications for personalised medicine.

2 Links between higher education and industry

Knowledge Cooperative research and development projects staffed by experts from both academia and industry;

First steps towards shared research and development infrastructure.

3 Networked academics Knowledge International conferences on the possibilities of personalised medicine; Networking events aimed at researchers key to the development of personalised

medicine that result in combined research.

4 Healthcare demand Market Increasing national and international healthcare costs;

Ageing populations in established economies.


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specific for the personalised medicine industry, although it can be expected that it would apply to other life

science industries as well.

Clear opportunities offered to companies – especially SMEs – by personalised medicine for product innovations and their cost/benefit ratio

Already at the Embryonic stage, it is important for clusters in the personalised medicine industry to clearly

articulate product innovation opportunities to companies, especially SMEs, including their cost/benefit ratio.

For example, developments in North Rhine-Westphalia have shown a cluster to be positively influenced at the

Embryonic stage when SME representatives understand opportunities offered by personalised medicine, as

actual product innovation based on personalised medicine occurs within SMEs194. This framework condition

thus pertains to the market for personalised medicine solutions and increases cooperation and sharing between

academia and the private sector.

A coordinated strategy of the personalised medicine knowledge bases for cluster development

Care must be taken to ensure that different organisations or groups do not start redundant initiatives due to a

lack of coordination. At the Embryonic stage, a coordinated strategy for cluster development serves as a

supporting framework condition that improves cooperation and sharing between the relevant actors. This

implies the development of strategies and road maps and the establishment of a coordinating platform or office

to maintain overview of the activities deployed within the region195.

Good availability of skilled employees and access to know-how for industry participants

At this stage, it is important for personalised medicine clusters to generate enough skilled employees as well as

access for industry participants to know-how generated by academia and research institutions. Higher

education institutions in the region need to produce graduates with the required skills. If not, employers need

to attract skilled employees from outside the region. At the same time, technology transfer offices need to be

established within academic institutes to allow industry participants to benefit from research and development

within the region. Access to know-how can also be improved by collaborative research and development

projects with representatives from both industry and academia196.

Balanced regulatory requirements and related cost pressure

Cluster development at the Embryonic stage is best supported by a framework of balanced regulatory

requirements that protect the industry from damaging accidents, hazardous practices or IP disputes that limit

innovation, while at the same time allowing for enough flexibility, pace and cost effectiveness to allow

innovative developments to flourish. In general, such a regulatory framework would increase geographical

concentration of academic, industrial and market players needed for cluster development.

Excellent university and industry collaboration

Universities, university hospitals and industrial actors need to combine their strengths in cooperative efforts to

spur innovative development in personalised medicine. Collaborative research and development projects at the

highest level of scientific and technological excellence that lead to products and processes that have commercial

value for industry, will attract more and more actors from both academia and industry, improving the

geographical concentration of these actors and strengthening the embryonic personal medicine cluster197.

194 Capgemini Consulting, 2010, Roadmap for the Development of a Knowledge-Based Bio-Economy in North Rhine-

Westphalia, pp.12-15 195 Capgemini Consulting, 2010, Roadmap for the Development of a Knowledge-Based Bio-Economy in North Rhine-Westphalia, p.16 196 The Swiss Medical Technology Industry 2008 Survey, p. 6 197 Swiss Biotech Report 2010, pp.11 - 13


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Table 9-2 depicts the framework conditions pertaining to the Embryonic stage, their general typology, observed


TABLE 9-2: Framework conditions for the personalised medicine industries at Embryonic stage

9.4. Nurture Stage

The Nurture stage refers to those activities which help to improve the price and performance of applications to

a point where sustainable business potential can be demonstrated. In other words, these activities are aimed

nurturing the business potential of the emerging industry in order for it to transition to the Growth stage of the

framework.

Nr Framework


5 A broad academic and scientific base in personalised medicine and life sciences in general

Knowledge Universities with life science departments and university hospitals geographically present

Pharmaceutical manufacturers geographically present Public or private life science research institutions geographically present

6 Universities and non-academic research that have sound molecular biology and biochemistry centres

Knowledge Universities with life science departments and university hospitals geographically present that focus on molecular biology and biochemistry

Public or private life science research institutions geographically present that focus on molecular biology and biochemistry

7 Fundamental research that is combined with concrete diagnostic and therapy approaches

Industrial Universities cooperating with hospitals and health care industry stakeholders;

Integrated research and development projects leading to novel diagnostics and therapies

8 Clear opportunities offered to companies – especially SMEs – by personalised medicine for product innovations and their cost/benefit ratio

Market SME representatives understand opportunities and cost/benefit ratios for personalised medicine product innovation

Actual product innovation based on personalised medicine occurs within SMEs

Instances of communication of these opportunities from academia to industry, especially SMEs.

9 A coordinated strategy of the personalised medicine knowledge bases for cluster development.

Support Strategy documents are developed as well as roadmaps; No instances of redundant initiatives within the region;

A coordination platform or office is established.

10 Good availability of skilled employees and access to know-how for industry participants

Support Higher education institutes in the region that produce graduates with the skills required by industry;

Well-functioning technology transfer offices within academic institutes; Collaborative research and development projects with representatives from

industry as well as academia.

11 Balanced regulatory requirements and related cost pressure


Regulations that optimally serve their protective and regulatory goals;

Regulations that do not unnecessary stifle research, development and innovation;

Regulations that take into account their influence on costs to enforce and adhere to.

12 Excellent university and industry collaboration

Industrial Collaborative research and development projects at the highest level of scientific and technological excellence that lead to products and processes that have commercial value for industry.


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Legal regulatory frameworks that do not unnecessary complicate the business challenge of adopting innovations

An important regulatory framework condition at the Nurture stage pertains to rules and regulations that do not

hamper adoption of innovations by businesses and healthcare providers. By offering maximum clarity on

research rules, especially concerning genetic research, and by introducing a fast track for regulatory clearance

of promising innovations and by endorsing for instance pharmacogenomic methods in drug trials, regulators

can achieve a regulatory framework that offers protection to society and the economy while at the same time

allowing innovation to flourish. Additionally, intellectual property regulations that evolve along with developing

innovation processes in the area also help strengthen geographical concentration of industry-relevant

stakeholders198.

A framework of ethical, psychological, and social concepts that encourage adopting innovations

A cultural framework condition that encourages geographic concentration at the Nurture stage of a cluster is

the presence of a framework of ethical, psychological, and social concepts that encourage adopting innovations.

For instance, a normative framework that encourages entrepreneurialism, embedded in a culture of calculated

risk taking, can increase the acceptance and commercialisation of personalised medicine199200. Although this

can be said for any innovation cluster, it is specifically valid for the personalised medicine industry, as the

health and safety risks for both society and the individual are particularly high, noticeable and under public

scrutiny.

Venture capital firms and stock market investors that anticipate and understand that “discovery” precedes adoption and see an easy and reasonable-term exit

A major obstacle to the breakthrough of many innovations is the financial ‘valley of death’ that occurs after

initial investments have been burned and follow-up investments are not obtained. A financial framework

condition for cluster development at the Nurture stage pertains to investors that understand the lifecycle an

innovation undergoes and are willing to invest and re-invest according to the needs of the innovation process,

even when it defies prevalent investor logic. The presence of an investor community and an investment culture

that fits the financing needs of innovation trajectories increases geographical concentration of relevant industry

stakeholders, as sufficient investment opportunities will be present in the region201.

A framework that allows sufficient clinical trials

Clinical trials are crucial to the development and application of personalised medicine. A support framework

condition that increases geographic concentration of the stakeholders most relevant to the industry pertains to

the possibility of conducting sufficient clinical trials in the region. This includes the extent to which medical

schools in the region provide a genetics curriculum of sufficient depth, the extent to which doctors are trained

to use genetic and genomic methods and are available for participation in trials, sufficient clinical trials

participants, and insurance practices that support patient participation in clinical trials to increase the available

funding for conducting such trials202.

Supportive attitude from insurers and pharmaceutical companies

A financial framework condition specific to personalised medicine clusters is the attitude of insurers and

pharmaceutical companies towards personalised medicine. In order to increase the financial support for

personalised medicine development, it is important that healthcare providers as well as insurance companies

adopt personalised medicine and educate both the public and the industry on its applications and its benefits.

198 The Future of the Biomedical Industry in an Era of Globalization, NYSE Group' p.62 199 The Future of the Biomedical Industry in an Era of Globalization, NYSE Group' pp.62-64 200 BioAlps moves ahead 2010 Overview, pp1 201 The Future of the Biomedical Industry in an Era of Globalization, NYSE Group' p.68 202 The Future of the Biomedical Industry in an Era of Globalization, NYSE Group' pp.68-69


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Also, it is important that insurance practices support patient participation. A supportive attitude from regional

insurers and pharmaceutical companies in the region will increase geographical concentration of relevant

industry actors203.

Private sector involvement

Cooperation and sharing within a personalised medicine cluster at the Nurture stage is stimulated by

involvement from the private sector. Investments by private sector actors can help develop the necessary

technology and information infrastructure for personalised medicine to thrive, while collaborative research and

development projects can increase the availability of resources and the sharing and exchange of knowledge,

data and expertise. Private sector involvement is an industrial framework condition that increases cooperation

and sharing within the cluster204 205.

Government funding to boost research, development and cooperation

An important financial framework condition for innovation clusters at the Nurture stage pertains to

government funding to boost research, development and cooperation. Developments in North Rhine-

Westphalia as well as the United States show that such government funding, when aimed at projects in the

region, have a positive effect on geographic concentration of relevant actors within the industry and increase

opportunities for cooperation and sharing. This is not only specific to the personalised medicine industry206 207.

Table 9-3 depicts the framework conditions pertaining to the Nurture stage, their general typology, observed


203 The Future of the Biomedical Industry in an Era of Globalization, NYSE Group' pp.70 204 The Future of the Biomedical Industry in an Era of Globalization, NYSE Group' pp.68-70 205 The Case for Personalized Medicine, 3rd Edition, pp.8 206 Highly Effective Personalized Drugs Thanks to Biotech, Germany trade & invest, pp.1 207 The Case for Personalized Medicine, 3rd Edition, pp.12


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TABLE 9-3: Framework conditions for the personalised medicine industries at Nurture stage

9.5. Growth Stage

Finally, we can consider the Growth stage of the Personalised Medicine Industry as an emerging industry. The

Growth stage refers to those activities that support marketing, commercial and business development leading

to sustainable industrial growth in the region.

Private investment in research and development

Private investment in research and development serves as an important financial framework condition. Both

investments in research and development within private sector organisations and R&D investments by private

sector organisations in research institutes, universities and hospitals, as well as acquisition of intellectual

Nr Framework


13 Legal regulatory frameworks that do not unnecessary complicate the business challenge of adopting innovations.


Clarified genetic research rules;

Rededication of promising innovations to a fast track;

Endorsement of pharmacogenomic methods for use in drug trials; Appropriate intellectual property regulations

14 A framework of ethical, psychological, and social concepts that encourage adopting innovations.

Cultural A culture of calculated risk taking;

A normative framework that encourages entrepreneurialism.

15 Venture capital firms and stock market investors that anticipate the understand that that “discovery” precedes adoption and see an easy and reasonable-term exit.

Financial Sufficient investments from VC and stock market investors;

Displayed understanding of an innovation life cycle among investors; Occurrence of timed divestments by early investors and similarly timed investments

by follow-up investors.

16 A framework that allows sufficient clinical trials

Support Medical schools in the country that provide a genetics curriculum of sufficient depth;

Doctor participation in trials with medical doctors trained to use genetic and genomic methods;

Sufficient clinical trial participants;

Insurance practices that support patient participation in clinical trials.

17 Supportive attitude from insurers and pharmaceutical companies

Financial Healthcare and insurance companies adopting personalised medicine and educating the public and the industry;

Insurance practices that support patient participation in clinical trials.

18 Private sector involvement

Industrial Investments by companies to help build the technology and information infrastructure;

Participation in collaborative research and development projects.

19 Government funding to boost research, development and cooperation

Financial framework

Government-funded genomics efforts, such to boost development;

Government funding for a broad biotechnology and pharmaceutical companies;

Clinical trials for personalized drugs and companion diagnostics funded under government grants and programs.


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property or of research-heavy organisations by the private sector can spur growth and lead to

internationalisation of the cluster208.

Supportive regulatory framework

A supportive regulatory framework can increase cooperation and sharing within a personalised medicine

cluster at the Growth stage. A well balanced regulatory framework can encourage coordinated development of

drugs and diagnostic tests through IP regulation. A clearly defined path for regulatory approval of novel product

combinations can increase certainty for companies on how much they will need to invest in clinical trials or

comparative studies to get personalised medicine products make an impact on the market209.

Coordinated activities to open up new markets and opportunities

An innovative cluster at the Growth stage can benefit greatly from coordinated activities to open up new

markets and opportunities. Hosting international conferences in the region that focus on markets and

valorisation, as well as organisation of well-planned business trips to potential new markets, can add to the

internationalisation of the cluster. This is a market framework condition that can be extended to other

innovation clusters as well210.

Support from insurance companies

Personalised medicine clusters at the Growth stage can benefit greatly from support from insurance companies.

When insurances in the region cover personalised medicine therapeutics and diagnostics, this serves as a

financial framework condition that offers all actors involved in personalised medicine research and

development a financial focal point on which to base investment decisions. A defined path for achieving

coverage for individual therapeutics and diagnostics strengthens this influence. Finally, if personalised

medicine diagnostics are reimbursed by insurance companies, they can be widely used in practice, which

increases the possibilities to gather evidence to supply proof of cost-effectiveness for personalised medicine,

allowing for further investments in personalised medicine research and development211.

Investment in information technology suitable for personalised medicine

Application of personalised medicine solutions requires specific information technology. A personalised

medicine cluster at the Growth stage benefits greatly from investment in information technology that is capable

of handling, sharing and analyzing the genetic and outcome data needed to promote the continued development

of personalised medicine. Similarly, the preventive potential of personalised medicine can be tapped when

patients can be connected to their own medical records from their homes and via their mobile and portable

devices. Investment in information technology thus serves as a industrial framework condition that increases

cooperation and sharing among personalised medicine stakeholders212.

Governmental support for personalised medicine

Personalised medicine clusters at the Growth stage benefit from government support for personalised medicine.

This support can take the form of funding for collaborative research and development projects that focus on

basis scientific discovery to close existing evidence gaps, as well as applied research and valorisation

trajectories. Government support can also take place through policy, for instance by steering the transition to

208 The Case for Personalized Medicine, 3rd Edition, pp.8 209 The Case for Personalized Medicine, 3rd Edition, pp.10 210 BioAlps moves ahead 2010 Overview, pp3 211 The Case for Personalized Medicine, 3rd Edition, pp.12 212 The Case for Personalized Medicine, 3rd Edition, pp.17


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industry-wide use of electronic health records. Government support can increase cooperation and sharing and

serves as a support framework condition213.

Healthcare providers prepared to engage in personalised medicine

In order to strengthen personalised medicine clusters at the Growth stage, regional healthcare providers should

be prepared to engage in personalised medicine. The community of healthcare providers should be educated in

the field of personalised medicine, and should invest in necessary tools and equipment to deliver personalised

medicine solutions. Successful applications personalised medicine in practice can strengthen the

internationalisation of personalised medicine clusters. Prepared healthcare providers serve as an industrial

framework condition specific to the personalised medicine industry214.

Table 9-4 depicts the framework conditions pertaining to the Growth stage, their general typology, observed


TABLE 9-4: Framework conditions for the personalised medicine industries at Growth stage




213 The Case for Personalized Medicine, 3rd Edition, pp.12, 14, 15 214 The Case for Personalized Medicine, 3rd Edition, pp.14

Nr Framework


20 Private investment in research and development

Financial Investments in research and development within private sector organisations;

Investments in research and development by private sector organisations in research institutes, universities and hospitals;

Acquisition of IP or research-heavy organisations by private sector organisations.

21 Supportive regulatory framework


A regulatory framework that encourages coordinated development of drugs and diagnostic tests through IP regulation;

A defined path for regulatory approval of novel product combinations.

22 Coordinated activities to open up new markets

Market Occurrence of internationally oriented conferences that focus on markets and valorisation, hosted in the region;

Occurrence of business trips to potential new markets; A platform or organisation that coordinates the above.

23 Support from insurance companies

Financial Insurance coverage of personalised medicine therapeutics and diagnostics;

A defined path for achieving coverage for individual therapeutics and diagnostics.

24 Investment in information technology suitable for personalised medicine

Industrial Investment in IT systems that are capable of handling, sharing and analyzing the genetic and outcome data needed to promote the continued development of personalized medicine;

Investment in the expanding use of Health IT in the clinical setting, as well as the potential to connect patients to their own medical records from their homes and smartphones.

25 Governmental support for personalised medicine

Support Commitment from governments to complete the transition to EHRs; Government funding for collaborative research and development projects focussed

on basic scientific discovery as well as applied research and valorisation trajectories.

26 Healthcare providers prepared to engage in personalised medicine

Industrial The provider community is educated in the field;

The provider community has invested in necessary tools and equipment to deliver personalised medicine solutions.


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TABLE 9-5: Consolidated overview of the identified framework conditions for personalised medicine industries (P = Precursor Stage; E = Embryonic Stage; N = Nurture Stage; G = Growth Stage; M = Maturity Stage)


1. Financial framework conditions P E N G M 1.1. Availability of public funding for genomics projects 1.2. Availability of public funding for the support of companies willing to adopt personalised medicine solutions

1.3. Availability of seed and venture capital for personalised medicine companies

1.4. Clinical trials for personalised drugs and companion diagnostics funded under government grants and programs

1.5. Investments in personalised medicine-related R&D by private sector organisations in research institutes, universities and hospitals


2.1. Critical mass of companies offering personalised medicine solutions

2.2. Critical mass of pharmaceutical companies in the region 2.3. Critical mass of supply chain actors: presence of personalised medicine consultancy services, presence of research centres for personalised medicine issues etc.

3. Market framework conditions P E N G M 3.1. Adoption of personalised medicine solutions by healthcare and insurance companies

3.2. Proximity to private customers who need personalised medicine solutions

3.3. Critical mass of clinical trial participants in the region 4. Cultural framework conditions P E N G M 4.1. Social attitude supporting personalised medicine (e.g., attitude of citizens towards personalised medicine issues, public awareness of personalised medicine, perception of personalised medicine by private consumers; insurance practices supporting patient participation in clinical trials etc.)

4.2. Collaboration between academia and healthcare industry in the field of personalised medicine (R&D projects staffed by experts from both academia and industry; shared R&D infrastructure)

5. Knowledge framework conditions P E N G M 5.1. Availability of people with skills relevant for personalised medicine industries (i.e., critical mass of highly skilled graduates to work in the personalised medicine industries)

5.2. Presence of universities, research centres and hospitals focusing on personalised medicine

5.3. Genetics embedded in the curriculum of medical schools 6. Regulatory and policy framework conditions P E N G M 6.1. Clarified genetic research rules 6.2. Endorsement of pharmacogenomic methods for use in drug trials

6.3. Regulatory framework that encourages coordinated development of drugs and diagnostic tests through IP regulation

6.4. A defined path for regulatory approval of novel product combinations

7. Support framework conditions P E N G M 7.1. Strategy documents and roadmaps for the development of personalised medicine industries in the region

7.2. Dedicated cluster organisation (cluster manager or similar) to coordinate the development of personalised medicine industries in the region

7.3. Well-functioning technology transfer offices within academic institutes facilitating the adoption of personalised medicine solutions

7.4. Presence of IT systems that are capable of handling, sharing and analysing the genetic and outcome data needed to promote the continued development of personalised medicine


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10. Next steps

The current chapter elaborates on the next steps of WP2, and specifically on the validation round by experts

and empirical surveys on region-specific framework conditions for newly emerging industries.

10.1. Objective 1: methodology for the identification and benchmarking of framework conditions

As presented in Chapter 2, we have selected an analytical framework that can be used for mapping the

framework conditions that are conducive to the emergence of world-class clusters in emerging industries. We

have also performed an extensive desk-research for identifying the relevant general and specific framework

conditions for all seven industries. The framework conditions have been categorised along the stages of the

analytical framework. The results of this desk-research were presented in Chapters 3 – 9 of this report.

The final step aiming at fine-tuning the preliminary results implies validation interview rounds with external

experts in each of the identified industries. Such interviews will allow the research team to cross-check the key

findings and make a final selection of key general and specific framework conditions for each industry which

can be further operationalised into measurable items and transformed into empirical surveys.

The analytical framework containing the key stages of the development of emerging industries will be used at a

later stage of the study for detailed case study descriptions of three emerging industries: creative, eco- and

mobile services. Such approach will allow for employing a dynamic perspective towards the analysis of

emerging industries and would thus adequately reflect the nature of such industries.

10.2. Objective 2: Empirical surveys on framework conditions

The key requirement towards the empirical surveys is to generate comparable regional data within and between

the emerging industries in question. For that purpose, we suggest to use the typology of framework conditions

introduced in Chapter 2 of this report. The identified framework conditions for all industries can be grouped

around the following seven categories:

1. Financial framework conditions referring to a system of actors providing funds to support cluster

activities (availability of seed capital, venture capital, grants from foundations, loans/borrowing etc.);

2. Industrial framework conditions referring to a system of large companies and SMEs, their

specialisation and focus, sectoral composition and other factors characterising the industrial base of a

cluster;

3. Market framework conditions referring to factors influencing the exchange of goods and services,

interaction of supply and demand, and the presence of competition.

4. Cultural framework conditions referring to a set of shared attitudes, values, goals and practices that

characterises the cluster (risk-taking vs. risk-aversion, entrepreneurial orientation, openness to work

with intern. part.);

5. Knowledge framework conditions referring to a system of higher-education and research

organisations (universities, research centers, industry-specific training institutions etc.), their

reputation and ability to generate scientific and other knowledge and deliver a skilled workforce;;

6. Regulatory and policy framework conditions, i.e., regulations and the means to enforce them, usually

established by a government to regulate a specific activity (incl. tax incentives); and

7. Support framework conditions referring to supporting structures that facilitate cluster activities by

providing trainings, business and legal advice, supporting knowledge transfer activities etc.


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Each relevant framework condition will be operationalised into one or several statements that can be assessed

by the respondents on a scale from 1 to 5 depending on the presence of this framework condition in a certain

region (1 being hardly applicable to the region, and 5 being highly applicable to the region). After collecting the

data, we will be able to calculate average scores for each framework condition, as well as each category of

framework conditions (seven categories mentioned above). The latter will provide the basis for benchmarking

between regions within one industry category, and between different industries. The visual solution for

benchmarking could be in a form of spider diagrams with seven dimensions corresponding to seven categories

of framework conditions.

Below we present a model survey for creative industries.

Model survey for creative industries

Please indicate to what extent the following conditions are applicable to your region (1 = the condition is

hardly applicable to the region; 3 = the condition is to some extent applicable to the region;

and 5 = the condition is highly applicable to the region).

1. Financial framework conditions 1 2 3 4 5

1.1. Guarantee systems and other financial engineering mechanisms (e.g., availability of innovative financial instruments such as guarantees and other risk sharing instruments that are delivered through market players (e.g., crowdfunding – crowdfunding sites help gathering small-scale investors, for example, for independent film financing, indiegogo.com)


Average score (1) = SUM (a1-an)/n (n=2)

2. Industrial framework conditions 1 2 3 4 5 2.1. Critical mass of publishers and content creators 2.2. Critical mass of physical retailers (e.g., video game stores and rental outlets)



3. Market framework conditions 1 2 3 4 5

3.1. Customer proximity (i.e., critical mass of consumers of creative industries which is especially relevant for e.g. artists, fashion designers, photographers)


4. Cultural framework conditions 1 2 3 4 5

4.1. Presence of historical, cultural and artistic heritage (e.g., tangible cultural heritage such as buildings, monuments, landscapes, books, works of art, and artifacts; intangible cultural heritage such as folklore, traditions, language, and knowledge; natural heritage including culturally-significant landscapes, and biodiversity)



5. Knowledge framework conditions 1 2 3 4 5

5.1. Broad educational and research landscape focusing on both creative and technical disciplines (proximity of universities, research centres,


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5. Knowledge framework conditions 1 2 3 4 5

schools) 5.2. Measures supporting creativity through education (e.g., targeted training; extra-curricular education; vocational education related to creative industries)


6. Regulatory and policy framework conditions 1 2 3 4 5

6.1. Clearly defined copyright system that assigns an equivalent of property to new creative products







7. Support framework conditions 1 2 3 4 5

7.1. Presence of physical and social creative environment (e.g., arts galleries, coffee shops, nightlife, work-live spaces at affordable prices)


