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Regional cluster adoption: The role of Regional cluster adoption: The role of transaction costs, resource transaction costs, resource

characteristics, and technologycharacteristics, and technology

Grant CastnerGrant CastnerUniversity of OregonUniversity of Oregon

Peter GreenPeter GreenUniversity of QueenslandUniversity of Queensland

OASIS WorkshopOASIS WorkshopDecember 2004December 2004

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OverviewOverview

BackgroundBackground

MotivationMotivation

Research model Research model

Research methodResearch method

Results and conclusionsResults and conclusions

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BackgroundBackground

Clusters are “geographic concentrations of Clusters are “geographic concentrations of interconnected companies, specialized interconnected companies, specialized suppliers, service providers, firms in suppliers, service providers, firms in related industries, and associated related industries, and associated institutions (e.g. universities, standards institutions (e.g. universities, standards agencies, trade associations) in a agencies, trade associations) in a particular field that compete but also particular field that compete but also cooperate” (Porter, 2000, p.16). cooperate” (Porter, 2000, p.16).

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Example – Study CairnsExample – Study Cairns

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BackgroundBackground

Substantial government agency interest in Substantial government agency interest in cluster development.cluster development.

SMEs looking for methods to develop their SMEs looking for methods to develop their business.business.

Consulting projects on how to use e-Consulting projects on how to use e-commerce technologies for cluster commerce technologies for cluster development are prevalent.development are prevalent.

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MotivationMotivation

Identify factors relevant to the extent of cluster Identify factors relevant to the extent of cluster adoption by organizations.adoption by organizations.Reconcile factors from transaction cost Reconcile factors from transaction cost economics and resource-based view of the firm.economics and resource-based view of the firm.Investigate relations amongst innovation Investigate relations amongst innovation diffusion factors.diffusion factors.Explore the role of technology in cluster Explore the role of technology in cluster adoption.adoption.Improve participation and take-up rates of Improve participation and take-up rates of organizations into clusters.organizations into clusters.

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Research modelResearch modelCompatibility

TrialabilityResult demo. Visibility

Specificity

Frequency

Technology

Complexity

Relative advantage Adoption

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Research methodResearch method

12 semi-structured interviews with cluster 12 semi-structured interviews with cluster members from five different clusters.members from five different clusters. Shorter informal interviews were also conducted to Shorter informal interviews were also conducted to

provide further evidence.provide further evidence.

Members were from both aborted and current Members were from both aborted and current clusters to increase validity.clusters to increase validity.All cluster members had participated in All cluster members had participated in government initiatives to facilitate clusters.government initiatives to facilitate clusters.Survey data was also collected from a wider Survey data was also collected from a wider range of clustersrange of clusters The survey results are the subject of another paper.The survey results are the subject of another paper.

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Results – aborted clustersResults – aborted clusters

Mean case-study results of aborted clusters (n = 9)

-7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7

Compatibility

Trialability

Result demonstrability

Visibility

Complexity

Specificity

Frequency

Technology

Relative advantage

Adoption

Co

ns

tru

ct

Importance

Negative Scores

Positive Scores

The magnitude The magnitude of the score of the score indicates the indicates the importance of importance of the construct to the construct to the adoption the adoption decision.decision.The sign of the The sign of the score indicates score indicates the presence the presence (positive) or (positive) or absence absence (negative) of a (negative) of a particular particular construct.construct.

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Results – current clustersResults – current clustersMean case-study results of aborted clusters (n = 3)

-7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7

Compatibility

Trialability

Result demonstrability

Visibility

Complexity

Specificity

Frequency

Technology

Relative advantage

Adoption

Co

ns

tru

ct

Importance

Negative Scores

Positive Scores

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Case study results and conclusionsCase study results and conclusions

Construct Result Conclusions

Compatibility Partially supported

Previous experience with successful clusters increases cluster adoption. Members of aborted clusters do not believe that a lack of compatibility is an important factor in non-adoption, indicating that potential adopters with no previous experience require higher levels of trialability, result demonstrability and/or visibility to overcome this lack of experience.

Trialability Partially supported

Failure to provide opportunities to trial the cluster substantially reduces cluster adoption. Trialability is not important for current adopters.

Result demonstrability

Supported Failure to properly demonstrate cluster benefits substantially reduces cluster adoption. Adopters place some importance on result demonstrability.

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Case study results and conclusionsCase study results and conclusionsConstruct Result Conclusions

Visibility Partially supported

Failure to see other successful clusters substantially reduces cluster adoption.

Visibility is not important for current adopters.

Complexity Not supported

Complexity is not an important factor in cluster adoption, even if cluster members believe clustering is difficult.

Suspicion bias may affect this conclusion.

Relative resource specificity

Supported Specificity is an important factor in determining when a cluster is the appropriate method for controlling the transaction. Clusters allow members to retain some control of the transaction (compared to a pure market transaction).

Clusters should not be limited to narrowly defined industries as it reduces the scope for developing resources of higher specificity. This finding reinforces the Porter’s (1998) conclusions.

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Case study results and conclusionsCase study results and conclusionsConstruct Result Conclusions

Relative transaction frequency

Supported Clusters that facilitate increases in transaction frequency reduce costs, leading to greater relative advantage and cluster adoption. Transaction frequency was important to most cluster members because they were often low-risk transactions for the cluster (such as group purchasing of supplies).

Information and communication technology (ICT)

Supported E-mail is essential for cluster co-ordination. Most clusters use web pages for communication and marketing. ICT is important for facilitating cluster transactions but does not substantially affect the relative advantage or adoption of the cluster.

Relative advantage

Supported Cluster members require knowledge about the resource value of other cluster members to determine the relative advantage of cluster adoption. Current successful clusters require at least one resource that is unique (immobile and heterogeneous).