Musings on Entrepreneurship and Innovation
Monday, September 22, 2003Big Bang Biotech?
The September issue of fedgazette includes another article of interest to those on the economic frontier. This one explores the economic potential of a bio-revolution in the region:
"Many say a 'bio' revolution is under way, but complex logistics and other factors make it hard to predict the who-where-when of its economic impact of the district."
One entrepreneur who is bullish on the prospects of his company, Bacterin, is Guy Cook, a Pioneer Entrepreneurs member. Guy's company is building upon the world-class biofilm research and technology that originated at Montana State University:
"I think [biotech] is the equivalent of the Industrial Revolution. I believe the whole thing. We are on the cusp of having the right tools [and the next step is to] see [those tools] transferred into viable companies."
Courting Clusters
Phil Davies wrote a very nice, balanced piece on economic clusters for the latest issue of fedgazette. In cluster theory, Michael Porter and others have provided us with a potentially powerful tool for understanding the dynamics of our economy. Lee Munnich at the University of Minnesota is quoted by Davies as saying:
"The cluster approach gives you a better understanding of the dynamics of your economy and what the key drivers are. But for people to suddenly expect this to fundamentally change things...it's not something that you can turn on, and all of a sudden the jobs start to flow."
On the one hand, I agree with cluster consultant Stuart Rosenfeld when he points out,
"Most of the clusters I've looked at were not started by government. But in almost every case there was a government action that really strengthened the cluster and helped it grow."
(See Understanding Silicon Valley: The Anatomy of an Entrepreneurial Region for an example of how government played a key participative role in the evolution of the technology cluster in Silicon Valley.) However, Davies captured my concern that better understanding can sometime translate into governmental "oversteer":
"What we see as a cluster is the result of innumberable transactions and interactions over an extended period of time, including factors and agents that we can't even see, much less understand. I think it's grossly ambitious to think with any kind of precision that we can manage clusters."
One source of my skepticism is a tendency noted toward the beginning of Davies' article:
"Driven by their sponsors' desire to embrace as many constituencies as possible, cluster studies often define clusters very broadly and spread them statewide."
Rosenfeld goes on to note:
"...the more generic and geographically dispersed a cluster, the less likely it is to confer any economic benefit."
Rosenfield's firm is an author of a recent cluster study sponsored by Dave Gibson, the chief business officer of the Montana office of economic opportunity, which walks a fine line between poliltical necessity and economic reality. In the end, though, I think that Gibson has got it right, "The state has no intention of creating new, expensive programs to funnel money to clusters." Rather, Gibson stresses the government's role as a convenor or catalyst, roles which it is particularly well-suited to play.
It's a testament to the power of Porter's ideas that cluster theory has become such a standard topic in the debate over economic development policy. However, as Ron Martin and Peter Sunley noted not long ago in the Journal of Economic Geography[1],
"...the mere popularity of a construct is by no means a guarantee of its profundity...Whilst we do not wish to debunk the cluster idea outright, we do argue for a much more cautious and circumspect use of the notion, especially within a public policy context: the cluster concept should carry a public policy health warning."
Let's incorporate those parts of cluster theory that we find particularly helpful to our understanding of economy - particularly the emphasis on dynamics - without attempting to make cluster theory the answer to our economic development challenges.
[1] "Deconstructing clusters: chaotic concept or policy panacea? Journal of Economic Geography, Vol. 3, No. 1, January 2003, pps. 5-35.