Thesis Creative Clustering and the Neighbour Hood

8/8/2019 Thesis Creative Clustering and the Neighbour Hood

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Reasons for and consequences of the clustering ofcreative entrepreneurs in the

Wrangel neighbourhood, Berlin

October 2006B. Heebels 0162507

Supervisor: Irina van AalstUniversity of Utrecht

CREATIVECLUSTERING ANDTHE

NEIGHBOURHOOD


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Table of contents

1. Introduction ........................................................................................................................ 6

1.1 Scientific and social relevance of this thesis..............................................................61.2 The selection of the case study...................................................................................71.3 Some Definitions........................................................................................................71.4 Aim, goals and research questions........................................................................... 10

2. Creative industries, clustering and urban redevelopment ................................................ 12

2.1 General background to the rise of creative industries.............................................. 122.2 Shift from place marketing policies to creative cluster policies .............................. 142.3 Creative clusters and local redevelopment...............................................................152.4 The involved actors in stimulating clustering: motives and power relations........... 182.5 The individual creative entrepreneur: economic reasons for clustering ..................232.6 The individual creative entrepreneur: cultural reasons for clustering......................262.7 Conclusions ..............................................................................................................272.8 Hypotheses ............................................................................................................... 29

3. Research design and methods .......................................................................................... 31

3.1 Conceptual models and research design................................................................... 313.2 Research methods..................................................................................................... 323.3 Research design and data gathering ......................................................................... 33

3.4 Analysis of the data .................................................................................................. 363.5 Generalisability, reliability and validity of the results ............................................. 42

4. Geographical background: Berlin and Friedrichshain-Kreuzberg ................................... 43

4.1 Berlin in facts and figures ........................................................................................434.2 A short history of Berlin........................................................................................... 454.3 Government structure of Berlin................................................................................494.4 Berlin's economy...................................................................................................... 504.5 Creative industries in Berlin.....................................................................................524.6 Friedrichshain-Kreuzberg......................................................................................... 564.7 A short history of Kreuzberg and Friedrichshain..................................................... 58

4.8 Creative industries in Friedrichshain-Kreuzberg ..................................................... 604.9 The Wrangel Neighbourhood...................................................................................64


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5. The importance of creative entrepreneurs for the development of Wrangel.................... 67

5.1 The key persons and their organisations .................................................................. 675.2 The role of creative entrepreneurs within the cluster............................................... 69

5.3 Policies to stimulate the creative cluster .................................................................. 715.4 Horizontal and vertical cooperation ......................................................................... 735.5 Consequences of the creative cluster for Wrangel................................................... 745.6 Expectations of local institutions of the creative cluster.......................................... 815.7 Conclusions ..............................................................................................................83

6. Creative entrepreneurs in the Schlesische Strae and their location decision ................86

6.1 Research population................................................................................................. 866.2 Delegation of knowledge about the area .................................................................. 876.3 Location decision creative entrepreneurs .................................................................876.4 Contemporary cooperation between firms in the area ............................................. 92

6.5 Conclusions ..............................................................................................................947. Conclusions ...................................................................................................................... 96

7.1 What is the importance of creative entrepreneurs for the development of theWrangel neighbourhood? ..................................................................................................... 967.2 What are the main reasons for creative entrepreneurs to locate on the waterfront ofthe Schlesische Strae? ........................................................................................................997.3 Overall conclusions................................................................................................ 100

List of references.................................................................................................................... 102

Summary/ Zusammenfassung ................................................................................................ 108

Reflection ............................................................................................................................... 111Appendices ............................................................................................................................. 114


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List of tables, figures and boxes

Table 1: Sectors within the definition of creative industries

Table 2: Share Berlin in total employment rate of Germany in 1989, 1992 and 1997

Table 3: Creative industries in Berlin: number of firms, returns and number ofemployees per sector (absolute and relative) in 2002

Table 4: (Socio-)economic and population characteristics of Friedrichshain-Kreuzbergin comparison with Berlin

Table 5: Socio-economic situation in Wrangel (2004)

Table 6: The importance of the presence of creative entrepreneurs in the location

decision of facility-ownersTable 7: The difference between cultural- and other facilities in the importance of

creative entrepreneurs in their location decision

Table 8: The difference between cultural- and other facilities in average number of yearson this location

Figure 1: The river Spree: border between Friedrichshain and Kreuzberg. On the leftcreative offices in the Wrangel neighbourhood.

Figure 2: Conceptual Model I

Figure 3: Conceptual Model II

Figure 4: One of theHinterhfe

Figure 5: Schlesische Strae, man on the right walks into one of theHinterhfe

Figure 6: Diagram of main labels research question I

Figure 7: Diagram of main labels research question II

Figure 8: The four export windows of Maxqda

Figure 9: Berlin situated in GermanyFigure 10: Results of the election of the parliament of Berlin in 2001: percentage of the

votes per political party

Figure 11: Cln and Berlin in a 18th century map

Figure 12: East- and West-Berlin and the Berlin Wall

Figure 13: Concentration of music firms in Berlin (2004)

Figure 14: Situation of Friedrichshain-Kreuzberg in Berlin in relation to the other districts

Figure 15: Division of chairs in the Friedrichshain-Kreuzberg Parliament, 2001

Figure 16: Headquarter Universal (Left building)


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Figure 17: Headquarter MTV Eastern Europe

Figure 18: A sub-cultural scene

Figure 19: Young people strolling along the cultural axis

Figure 20: Wrangel as represented by the media: neglect of public space and alcoholics

hanging on the streetsFigure 21: A new restaurant is about to open in the Schlesische Strae

Figure 22: A variety of cultural facilities in the Schlesische Strae: a lunch bar, a caf, adesign shop and a restaurant

Figure 23: Age categorie(s) in which the facility-owners have most customers (thefacility-owners were allowed to give multiple (1-3) answers).

Figure 24: Has the amount of customers increased in the last couple of years?

Figure 25: Renovated houses in the Oberbaum Strae

Figure 26: The difference of renovationFigure 27: The waterfront view from one of the offices at aHinterhfe East from the

Oberbaum-bridge

Figure 28: The waterfront view from the garden atHinterhfe West from the Oberbaum-bridge

Figure 29: An example of a nicely restoredHinterhfe

Figure 30: An example of new architecture

Box 1: Entrepreneurial urban governance

Box 2: Two Dutch clusters

Box 3: Three main types of qualitative research

Box 4: Maxqda

Box 5: The real estate boom

Box 6: Music capital of Germany

Box 7: History of the Oberbaum area

Box 8: Questionnaire facility owners in the Schlesische and Falckensteinstrae


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1. Introduction

In todays globalising world, the increasing mobility of goods, people, money and

information has led to increasing competition between cities and networks of cities. In thisinter-urban competition, culture and creativity are of a growing importance as cultural andsymbolic qualities can make a certain place prevail over other places.

Already in the 1970s and 1980s, policy-makers in post-industrial cities started to useculture to boost the image of these cities and to redevelop derelict industrial sides and sociallydisadvantaged areas. These so called place-marketing strategies aimed to promote aparticular city by means of developing cultural facilities, such as museums. With such placemarketing strategies, cities should stay ahead of the rivals by making use of the consumptionof culture. From the 1990s onwards, cultural policies have shifted from this consumption-oriented approach to a more production-oriented approach. These production-oriented culturalstrategies emphasize on local creative industries, which increasingly export all over the world.

In particular, these new cultural strategies aim to develop and stimulate creative clusters.The growing importance of creative industries and creative clusters is related to theincreasing nexus between culture and economy in contemporary society. The increase ofdisposable incomes, education and leisure time in Western society have led to a growingdemand of products and services with high symbolic value. The cultural or design componenthas become crucial for the economic value of both manufacturing goods and services. At thesame time, culture increasingly involves economic activities. Culture is no longer restrictedto traditional high culture domains, such as arts and literature, but also includes low orpopular culture, such as (pop)music and advertising (Negus, 1996). For most popular culture,the production, distribution and consumption of products play a mayor role. At the same time,traditional cultural domains are also increasingly commercially oriented (OConnor, 2002).

1.1 Scientific and social relevance of this thesis

Not only policymakers are aware of the growing importance of creative industries and clustersfor the development of cities. The clustering of creative industries is a very interestingphenomenon for the scientific debate about the relevance of place in contemporary sciences.Creative clustering indicates that local ties remain important despite processes of increasingglobalisation. The clustering of diverse creative industries has already been investigated by anumber of authors (Scott, 1999, 2004; TNO, Santagata, 2002; Crewe and Beaverstock, 1998;Brown, OConnor & Cohen, 2000). However, most authors have focused on the meso or

macro level of creative clustering: they have studied the importance of creative clusters forthe economy of cities within wider restructuring processes or the importance of creativeclusters for urban redevelopment. There exists a serious lack of research on the micro-level ofthe creative entrepreneur. Without studying this micro-level and the relation between microand meso/macro level, the role of creative clusters in urban development and in cities as awhole cannot be fully understood. Especially studies on the stimulation and management ofclusters need insights in the functioning of clusters on the micro level.

At the moment, the stimulation and management of creative clusters is a relativelynew policy field. As a result, there still exists a lack of knowledge on the functioning ofcreative clusters and the consequences of creative clustering for local development. This studyhas focused on the meso level of the role of creative clusters in urban development and the

stimulation and management of clusters, but has also explored the functioning of clusters onthe micro level. The thesis is one of the first studies that explore the functioning of a creative


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cluster on the micro level by investigating the reasons for creative entrepreneurs to cluster. Byproviding more insight in these reasons, this study will contribute to a better understanding ofhow creative clusters originate. By doing so, it will cautiously start to give an answer to howone could possibly stimulate and manage clusters.

Besides the micro level, the study has explored the meso level of the consequences of

creative clustering for local development. In this way this study will contribute to a betterpicture of the impact of stimulating creative clusters. Apart from its academic relevance, moreunderstanding on the origination and development of clusters could also lead to better policy-measures.

1.2 The selection of the case study

The empirical study has been conducted in the Wrangel neighbourhood in Berlin, Germany.The city of Berlin is very interesting with respect to creative clustering, because of its manycultural scenes and its history as a divided city. The end of the East-West divide and thedemolition of the Berlin Wall have created new opportunity-areas in the inner-city, especiallyin the Eastern part of the city and on the former border. These areas consist of a lot of openspace and empty buildings and are ideal for (starting) creative entrepreneurs (Lange, 2003;Krtke, 2004). This study has investigated one specific creative cluster in the neighbourhoodWrangel, situated in the Friedrichshain-Kreuzberg district. Recently, areas in the border-district Friedrichshain-Kreuzberg have become popular locations for creative entrepreneurs(Krtke, 2004). After the gentrification of the former East-German neighbourhoodPrenzlauerberg, the former East district Friedrichshain and the former West district Kreuzberghave become the new places to be (Bader, 2005). The Wrangel neighbourhood is situated inKreuzberg, just on the border with Friedrichshain (Appendix A and B). This neighbourhood isintriguing because it is one of the poorest areas and one of the most creative areas of Berlin at

the same time.

1.3 Some Definitions

Before the aim, goals and research questions of this thesis will be stated, the most importantconcepts will be defined. These concepts are: creative industries, creative clusters and creativeentrepreneurs.

Many definitions exist of what exactly are creative industries. These definitions can beplaced on a continuum with creative industries narrowly defined as being the arts sector at theone end and creative industries as a generic term for all industries that add creative value atthe other. However, most studies perceive creative industries as industries that generate output

with a high symbolic or cultural value. In the below, a short overview of different definitionsof creative industries will be provided, concluding with the definition that has been used inthis study. The discussed authors use both the term creative industries and cultural industriesto indicate the same phenomenon. In this thesis, the term creative industries will be used. Thisterm emphasises the economic value of products, whereas the term 'cultural industries' is morelinked with arts and (high) culture (Drake, 2003). The meaning of the word 'culture' has astrongly historical connotation and is more linked with 'heritage'. The word 'creative', incontrast, is more linked with (industrial) processes and the development of new products. Thismakes the term 'creative industries more suitable for this study.

In 1998, the British government's Department of Culture, Media and Sport (DCMS)formulated a definition for the creative industries. This department had the intention tostimulate the development of the British creative industries to boost economical restructuringand convinced many local governments in the UK to invest in the creative sector. The DCMS


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defines creative industries as those industries which encompass activities which have theirorigin in individual creativity, skill and talent, and which have the potential for wealth and jobcreation through the generation and exploitation of intellectual property (Drake, 2003, p.512)However, in principal, almost all economic activities could be categorized as activities, whichoriginate from individual creativity, skill and talent. Therefore, this definition seems not very

useful for academic purposes. In the last decennium, academics have also formulateddefinitions of the creative industries. Some authors use relatively broad definitions of creativeindustries. For example, in his book about the creative industries, the economist RichardCaves defines creative industries as types of activities that generate products and services,which have a cultural, artistic or entertainment value (Caves, 2000, p.1). In the same line,Banks et al. (2000) suggest that creative industries produce goods and services with highaesthetic values. The last two definitions are interesting because they stress the importance ofsymbolic and aesthetic value in the output of creative industries. This is a first step to make adistinction between creative industries and other economic activities.

Allen Scott, who has done research on the clustering of creative industries, hasdistinguished three common features central to creative industries to clarify the boundary with

other economic activities. Firstly, production of the outputs always involves the creation ofaesthetic and semiotic content. Secondly, consumption of the outputs rises disproportionalwhen disposable income increases. And thirdly, competition stimulates firms to agglomeratetogether in dense specialize clusters or industrial districts. Although their products areincreasingly global, the local is crucial to many creative industries (Scott, 2004). For thepurposes of this study, it is also useful to draw on a more specific categorization of creativeindustries. The intention is not to give a general overview of creative industries, but to focuson particular creative sectors in a small geographical area. In their study of the creativeindustries in Amsterdam, TNO has made a categorization of creative industries into threecentral domains: media/entertainment, creative commercial services and the arts (Table 1).


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The domain of media/entertainment is primarily concerned with private consumers andconsists of publishers, photography, radio and television production and press agencies. Incontrast, the last domain is targeted towards businesses clients and consists of architecturaldesign, urban planning design, advertising and fashion designers. Although this categorizationis very useful, it blurs the distinction between local creative businesses, and influentialinstitutions or companies such as big museums or movie productions. The domain of the artsis less economically orientated than the other two domains and is more concerned with artisticmotives and individual development of creativity. Examples are small individual artists, butalso museums, galleries and theatres belong to this category. Although the domain of the artsincreasingly has economic motivations, there is a clear division with the other two domains.In this study, I will only investigate the first two, economically orientated domains.

In this study, I will use the following definition:Creative industries are industries that produce products and services with a high symbolic

and aesthetic value. Those products and services contribute to consumer demands forcreating experiences for individual expression. Therefore, creative industries are essential in

creating and maintaining cultural identities and lifestyles. The consumption rises

disproportional, when disposable income increases. Two major domains can be distinguished:

media/entertainment and creative commercial services. For both domains, entrepreneurship

is of utmost importance.

This thesis will often use the term creative entrepreneurs rather than creative industries. Theterm creative entrepreneurs differs from creative industries in two aspects: The term focuses on the individual The terms only includes small and medium-sized creative industries, which are not

quoted on the stock-exchange.

Source: TNO, 2004

Table 1: Sectors within the definition of creative industries

Arts Media/entertainment Creative Comercial

ServicesStage arts Publishers Architecture, technical

designProducers of stage arts Fotography Technical design/advice

urban planning

Creative/ manufacturing

arts

Film production

movie/video/DVD

Advertising and advice

agencies

Arts related services Support of film

production

Fashion designers

Galeries, expositions Broadcasting companies Other small designer

firms

Radio/television

production

Support ofradio/television

production

Movie houses

Other small

entertainment firms


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Scott s third characteristics of creative industries, the clustering of creative industries is notincluded in the definition used in this thesis. Rather, the term creative cluster is definedseparately. Following Wynne (1992) a creative cluster can be defined as that geographicalarea that contains the highest concentration of culture and entertainment in a city or town(p.19). Two points should be added to this definition: firstly, a city or even a town can have

more than one creative cluster. Secondly, creative clusters exist in many forms and shapes.For example, creative clusters differ in size: some clusters consist of single buildings orbuilding complexes, while others are whole quarters or neighbourhoods (Van Aalst andHitters, 2005).

1.4 Aim, goals and research questions

After stating the relevance of this thesis and providing some definitions, the aim, goals, andresearch questions will now be discussed.The aim of my thesis will be to examine bothreasons for and consequences of the clustering of creative entrepreneurs on the waterfront ofthe Schlesische Strae. Hopefully, the study will also initiate some broader conclusions on thefunctioning of creative clusters and their consequences for local developments. My first goalis to provide some insight in the importance of creative entrepreneurs for the development ofthe Wrangel neighbourhood. In order to attain some insight in future consequences of thecreative cluster, local actors are asked about their expectations of the cluster with regard tolocal developments. My second goal is to clarify the motives of creative entrepreneurs tolocate in the Schlesische Strae. In addition, the study will attempt to gain some insight in therelation between the micro level of the creative entrepreneur and the meso level of(stimulating) creative clustering and local development.This has resulted in the following research questions:

What is the importance of creative entrepreneurs for the development of theWrangel neighbourhood?

- How important are creative entrepreneurs for the development of the creative cluster?- To what extent do local actors stimulate the creative cluster?- Which social, economical or physical consequences of the creative cluster can be

witnessed in the Wrangel neighbourhood?- What do local actors expect from the cluster with regard to local developments?

What are the main reasons for creative entrepreneurs to locate on the waterfrontof the Schlesische Strae?

- How have creative entrepreneurs been informed about the location beforehand?- To what extent does the proximity to other creative entrepreneurs have a role in their

location decision?- To what extent does the environment have a role in their location decision?- To what extent do the creative entrepreneurs cooperate with other creative

entrepreneurs in the area (in this moment)?


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This thesis is structured in seven sections. After this introduction, the second section involvesa theoretical framework. This framework contains a review of literature, from whichhypotheses have been deducted. This section is followed by a methodological section inwhich the hypotheses are translated in a research design and conceptual models. In addition,this section discusses the gathering and analysis of the empirical data. Before the empirical

findings are presented, section four first provides background information about Berlin,Friedrichshain-Kreuzberg and the research area. Section five and six present the empiricalfindings: the first discusses the results of research question I, the second the results ofresearch question II. The last section involves the conclusions of this thesis. In this section,the research questions are answered and the empirical findings are linked with theory.

Figure 1: The river Spree:border betweenFriedrichshain andKreuzberg. On the left,creative offices in the

Wrangel neighbourhood.

Source: Heebels, 2006


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2. Creative industries, clustering and urbanredevelopment

The purpose of this section is to provide a theoretical framework for the analysis andinterpretation of the empirical findings based on literature. The section will start with a shortsketch of the general background to the rise of creative industries and creative clusters. Thispreliminary paragraph will be followed by a paragraph on the development of cultural policiesand the rise of creative cluster strategies. Subsequently, creative clusters will be examinedmore thoroughly. Different typologies and dimensions of creative clusters will be discussed,as well as the (possible) role of creative clusters in local redevelopment. In addition, possibledifficulties with creative cluster strategies will be assessed. In relation to these difficulties,attention will be paid to the involved actors in the stimulation of creative clusters and to themotives of and power relations between these actors. After this survey of theories on creative

clustering on the macro and meso level, theories on the micro level of the creativeentrepreneur will be discussed. Firstly, economic reasons for clustering will be considered.Proximity to other creative entrepreneurs has a main role in these reasons. Secondly, culturalreasons for clustering will be considered. The (cultural) environment has a central role inthese reasons. The section ends with a conclusion and the formulation of hypotheses.

2.1 General background to the rise of creative industries

Globalisation and information technologies have largely influenced the academic debateabout the development of cities and regions over the past decades. Some authors have stressedthat the availability of new technologies, especially of internet, are leading to the death of

distance and the end of geography (Cairncross, 1997; Beck, 1999). Although most academicsconsider the death of distance as a step to far, many authors have written aboutglobalisation and the declining significance of the local (Sassen, 1994, Waters, 1995,Altvater/Mahnkopf, 1996). These authors claim that the hyper mobility of people, goods andcapital, the high standards of communication and the increasing availability of information areleading to the disintegration of traditional local/regional ties and contexts. Footloosemultinational firms are seen as the key players in the globalising world. These firms areorganised by constantly changing transnational networks and are no longer bound to a certainplace. However, the idea of a dispersed, transnational economy and the disintegration oftraditional local ties seem to be inaccurate. Globalisation processes have not led to theannihilation of the local. Local ties are still important both in cultural and economic sense(Lpple, 2001). In the cultural sense, although increasing globalisation also affects processeson the local level, the lives of most individuals still evolve around local ties and their localenvironment (Landry, 2000, p.23).

In the economicsense, the local context remains crucial because it is in this contextthat to a large extent the exchange of knowledge occurs, which is increasingly importantin todays economy (Scott, 2004). In order to understand the importance of the local in theproduction of knowledge, it seems essential to distinguish between information andknowledge, or in other words, between codified knowledge and tacit knowledge. Theworldwide access to information has certainly increased but most of this information cannotbe understood and interpreted without knowing its context. This knowing of a certain

context is called tacit knowledge. Tacit knowledge is the implicit knowledge in peoplesminds. This implicit, non-codified knowledge is strongly related to the person and the


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communication of this knowledge largely depends on a common cognitive, cultural and socialmilieu (Lpple, 2001). The most important ways of transferring this knowledge are face-to-face contact and inter-firm mobility of employees. Local proximity is still important since itprovides the opportunity to develop a common cognitive, cultural and social milieu andmoderates face-to-face contact (Scott, 2004; Storper & Venables, 2004).

In addition, the local qualities of places have become crucial, precisely because ofglobalisation processes. The decrease in spatial barriers to movements of goods, people,money and information as a consequence of globalisation has led to increased rivalry betweencities and networks of cities (Brenner, 2005). In this increased competition, it has becomemore and more important for cities to attract and maintain (multinational) enterprises and tooffer them advantageous conditions. Cities have to distinguish themselves with respect totheir social, cultural and symbolic qualities, since hard location factors are no longer of vitalimportance. The qualities of place have thus become crucial. This paradoxical process ofglobalisation and localisation is often referred to as 'glocalisation'.

In the light of increasing competition, symbolic qualities are of growing importance for theeconomy of cities. Firms increasingly depend on the cultural forms and meanings of theirproducts: they more and more attempt to improve the design and style of their outputs in orderto maintain the lead to their competitors (Scott, 2004). Furthermore, growing amounts ofleisure time and increasing disposable incomes have increased the demand of unique productsand services with a high symbolic value (Lash & Urry, 1994). Culture, creativity, innovation

and flexibility have become more important in the economy as a whole. Simultaneously, (thegeneration of) culture increasingly involves economic activities. Culture and economy have

Box 1: Entrepreneurial urban governance

These theories on glocalisation and the actual impact of these processes on society areconnected to a general transition from managerial approaches of urban government toentrepreneurial forms of urban governance. This shift is related to the economicrecession of 1973 (Harvey, 1973). Deindustrialisation, widespread (structural)unemployment and fiscal problems both at national and local levels in combination withthe growing popularity of neo-conservatism and the increasing believe in marketrationality and privatisation can be seen as initiating conditions for the rise ofentrepreneurialism. Whereas the managerial approaches of the 1950s and 1960s werefocused on redistributive economic policies to improve overall living and working

conditions in the city, these new entrepreneurialist approaches since the 1970s focus onthe construction or enhancement of certain places in the city to increase competitiveness(Harvey, 1989; Brenner; 2005, p.178). One of the main characteristics of thisentrepreneurialist approach to urban governance is the formation of public-privatepartnerships. These partnerships are entrepreneurial because their activities arespeculative in design and implementation, in opposition to rationally planned andcoordinated urban development. In this new economic and political context, cities areincreasingly seen as dynamic growth engines, which could promote the nationalcompetitiveness (Brenner, 2005, p.203). National, regional and local governmentinstitutions have promoted the shift of major socio-economic assets to strategic cities inorder to improve national competitiveness. This has also involved the decentralization of

governance to the local level (Brenner, 2005, p.213-214). This new strategy of investingin strategic cities has enlarged the economic gap between different cities and city-regionsand has reinforced the competition between cities and networks of cities.


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become intertwined in contemporary society. Creative industries are both cause andconsequence of the increasing nexus between culture and economy. Not surprisingly, theimportance of creative industries has grown significantly in the last decades. Scott (2004)suggests that the creative industries in the United States encompassed a little more than threemillion people in 1992, which is about 2.4 percent of the total workforce. The British

Department of Culture, Media and Sports (1998) reports that around one million people workin the creative sector in Great Britain. This department stated that in 1995, the creativeindustries made up for almost four percent of the gross domestic product (Hall, 2000).Example Germany? These shares may not seem very significant, yet the impact on absoluteemployment and income is unmistakable.

Creative industries often cluster together in specific urban areas (Scott, 2004). Thesespecific urban areas of cultural production and creativity are called creative clusters. Creativeclusters are crucial for cities, since they have a chief role in the generation of new ideas andinnovations and can create a favourable local climate.

2.2 Shift from place marketing policies to creative cluster policiesIn the 1970s and 1980s, industrial cities in Western Europe witnessed a huge social andeconomic crisis as a consequence of large-scale deindustrialisation processes. Manymanufacturing industries closed or moved to surrounding regions or developing countries(Musterd & Ostendorf, 2004; Krtke, 2004). Cities were increasingly seen as places ofanomaly with many unsolved problems and derelict industrial sides (Musterd & Ostendorf,2004; Lpple, 2001). However, this negative image of cities has gradually changed since the1990s. Culture has played a considerable role in this change.

From the 1980s onwards, many former industrial cities in Europe started to design andimplement place marketing strategies to get rid of their 'old industrial' image and to attract

new investors, tourists and professional workers (O'Connor, 1997; Scott, 2004; Hall &Hubbard, 1998, p.7-8). The place marketing approach was part of a model of urbanredevelopment drawn from North America. Culture was an important part of this approachand was used as a tool to improve the citys image (Brown, OConnor & Cohen, 2000).According to Hall (2000), culture was seen as the magic substitute for all the lost factoriesand warehouses, and as a device that will create a new urban image, making the city moreattractive to mobile capital and mobile professional workers (p.2). Next to the economicneed for industrial cities to restructure their economy, these cities also had enough space forthe development of new cultural infrastructures both in cultural terms and in physical terms.Most industrial cities did not have an established cultural tradition and were open-minded tonew cultural initiatives. The deserted industrial infrastructure could be used for such new

cultural functions (Mommaas, 2003). Rapidly, almost all cities in the (Western) world startedto implement place marketing policies due to the increasing competition between cities(Bianchini, 1993, p.18). Place marketing involves the investment in cultural software such asfestivals and events and in cultural hardware such as new museums, theatres orshopping/entertainment complexes (Mommaas, 2003). Place marketing strategies based onproviding cultural hardware often involved the development of so called flagship projects:significant, high-profile and prestigious land and property developments which play aninfluential and catalytic role in urban redevelopment (McCarthy & Pollock, 1997, p.254). Ingeneral, place marketing strategies have put emphasis on prominent projects for the upmarketconsumption and have been implemented in a top down manner (Mommaas, 2003; Scott,2004).


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Some strategies based on place marketing had relatively successful outcomes, forexample in Bilbao, where the Guggenheim Museum (as a flagship project) has made the cityfamous (Beatriz, 1999). However, place marketing policies have only been successful in asmall amount of cases and even then the economic impact is questionable. Many cities havetried to copy the marketing strategies of successful cities (Scott, 2004). This has nearly always

failed, since it is crucial to consider the specifics of the local context such as politicalbackground and economic structure. Other problems of the development of especially culturalflagships are: the lack of possibilities to create jobs and facilities for local residents, the highpercentage of public financing that is needed and the lack of accountability (Mc Carthy &Pollock, 1997, p.261).

As a reaction to these problems, a new generation of policies has developed, whichemphasizes less on place marketing and more on creative production (Scott, 2004). This newgeneration of policies is bottom-up rather than top-down and may have a more positiveimpact on local economies and employment. In other words, these policies can becharacterised as collaborative and developmental (Mommaas, 2004). The main focus of this

new approach is small and medium-sized creative industries (Scott, 2004; Mommaas, 2003).Whereas the 'old policies' were predominantly aimed at redistribution within the public artssector and promotion of (mass) consumption, new cultural strategies have a broaderorientation and aspire to create and stimulate new urban spaces for cultural production andcreativity: creative clusters (Mommaas, 2003). According to numerous authors, cities cangreatly profit from effective policies to stimulate creative industries and creative clusters for anumber of reasons: The growth of creative firms provides direct increase in employment Even more jobs can be gained by growth in auxiliary industries Strategies to stimulate creative industries and creative clusters can also complement

policies to encourage tourism The development of creative clusters could lead to intra-urban synergies because of

intensive transactions between firms Creative clusters can function as a catalyst for urban redevelopment processes and can

improve the image and the actual live and work situation of a place (OConnor, 1998;Landry, 2000; Florida, 2002; Hall, 2000, 2002; Scott, 2004; TNO, 2004, 2005; Wynne,1992).

In the next paragraphs, different types of creative clusters, their significance for such localredevelopment processes and the difficulties with the implementation of creative clusterpolicies will be discussed more thoroughly.

2.3 Creative clusters and local redevelopment

In the introduction of this thesis, it has been stated that creative clusters exist in many formsand shapes. Santagata (2002) has distinguished four types of creative clusters: the industrialcluster, the institutional cluster, the museum cluster and the metropolitan cluster. Theseclusters differ in degree of government involvement and the emphasis on consumption orproduction. Mommaas (2004) has made a more detailed classification of clustercharacteristics. He has distinguished seven core dimensions of clusters, of which three will bediscussed here. The other four dimensions relate to the degree of government involvement.These dimensions will be discussed in the next paragraph. The three dimensions, which will

be discussed here, relate to the type and structure of the cluster and to its location. The firstdimension is the level of 'horizontal' connections and the extent of intra-cluster collaboration.


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Some clusters are narrowly focused on one specific creative sector and have no (inter-sectoral)cooperation, while other clusters have integrated many different sectors and experienceextensive collaboration between leisure elements and creative businesses.

The second dimension is the level of 'vertical' connections within the sectors of thecluster. Clusters can be predominantly consumption or production oriented or can be a

multifunctional mix of consumption, presentation and production. Not only can the extent ofhorizontal and vertical cooperation differ, the networks through which cooperation occurs canalso vary: ranging from heterarchic webs of small creative firms to more hierarchicalstructures in which the work of groups of small creative firms is coordinated by a dominatingcentral firm, with every possible variation between these two extreme cases (Scott, 2004).

The third dimension is the position of the cluster in the changing spatial and culturalurban field. Conventional consumption clusters are predominantly situated in the inner city,whereas alternative (production) clusters are more often situated in more peripheral urbanareas. The rest of this section will deal with creative clusters in general, although there will bean emphasis on production oriented clusters. Within such production oriented clusters, smallenterprises have a significant share. Whereas large firms are important for the image of the

cluster, small enterprises interact with these large firms and are the major sources forinnovation and creativity (O'Connor, 1998). In addition, pioneering small creative firms canplay a crucial role in the origination of clusters (Crewe and Beaverstock, 1998).

The locations where creative clustering initiates will gain infrastructural spin-offs and will geta symbolic meaning in the course of time because of the arrival of creative industries. Thiswill again lead to the attraction of more creative entrepreneurs (Mommaas, 2004). Culture,leisure, and tourism become increasingly mixed in such areas and synergies originate betweenall kinds of facilities using the created physical and communicative infrastructure (Zukin,1987, 1995; Mommaas, 2004). These processes can have a number of positive effects for thelocal environment. In this respect, Crewe and Beaverstock (1998) have distinguished threeintersecting culturally constructed economies in which creative clusters contribute to localdevelopment. The first economy is that of firm embeddedness, networks between firms, andrelationships between firms and consumers. Creative entrepreneurs tend to share tacitknowledge through informal social and cultural interaction. This interaction often takes placeoutside of working hours in a variety of cultural facilities (Banks, Lovatt, O'Connor & Raffor,2002). Therefore, this economy is not just important for the creative economy on the city-level but also for the development of cultural facilities on the local level, such as restaurants,nightclubs, coffee bars, museums, theatres, cultural shops and also remarkable architecture,studios and other cultural working spaces.

These facilities give shape to the second economy of culture and consumption.

Although the local population may not directly profit from these cultural facilities in terms ofemployment and a better social situation, the economy of culture and consumption will leadto an image boost and will give a considerable impulse to the local economy. These positiveeffects can also initiate physical improvements to the area, because of a decrease in vacancyand more attention for the area. In this way, the economy of culture and consumption is not

just favourable for (established) creative entrepreneurs and high-income residents and visitors,but also for a variety of other consumers, such as students, the young avant garde and localworkers.

The third economy involves the cultural organisation of the night-time economy(Crewe and Beaverstock, 1998). The development of such an economy is often related to sub-cultural initiatives, such as underground clubs. Sub-cultural initiatives can be characterised by

their demarcation from mainstream culture. Along the lines of Bourdieus (1984) culturalcapital, Sarah Thornton (1997) uses the concept of sub-cultural capital: this is accumulated


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sub cultural learning that provides social status in the form of hipness. The demarcation frommainstream culture and the importance of hipness connects sub culture with creativeentrepreneurs: many creative entrepreneurs perceive quality and originality as crucial andkeep apart from the mass market by their local exclusive and innovative character (Bader,2005, p.108). When a vibrant night-time economy develops in combination with creative

clustering, this significantly contributes to a better local image and to competitiveness, wealthcreation and cultural redevelopment on a local level of scale. Overall, the three intersectingeconomies can stimulate (further) creative clustering and urban redevelopment, not justbecause of their considerable role in the local economy, but also because they create newimages and identities for a place.

Not surprisingly, the creation or stimulation of creative clusters is increasingly seen as a newway to enhance urban redevelopment. However, the implementation of such strategies is notwithout difficulties. It is complicated to use creative clusters as a policy instrument for urbanredevelopment, since the origination of creative clusters heavily depends on the local socio-economic context. According to Santagata (2002) this context implies two constraining

consequences. Firstly, it is impossible to simply apply a certain creative model on a sociallyand economic deprived area. This will inevitably lead to failure. Secondly, a creative cluster isthe result of a long incubation process of spontaneous settlement with a high fluctuation ofbusinesses due to hard market conditions. Santagata (2002) states that creative clustersincreasingly take the shape of institutionally branded clusters in order to overcome the above-mentioned constraints. The branding of such clusters and their products should identify withthe local culture to make clusters successful. Thus, in order to be successful, clusters shouldhave an image that corresponds with the local culture. Crucial aspects to enable such localspecific branding are the creation of synergies between culture, leisure and tourism and therealisation of a common physical and communicative infrastructure (Mommaas, 2004).

Brown, OConnor and Cohen (2000) show some of the difficulties of using creativeclusters as a tool in urban redevelopment in their study of a creative cluster in Sheffield. InSheffield, the local authorities intended to lure creative businesses to the creative cluster bybuilding new facilities. They hoped that these facilities would attract enough creativeentrepreneurs to the area to generate a creative buzz with a mix of small-scale retail, bars,restaurants and creative businesses. Ironically, such a mix of consumption and production didnot develop in the aimed regeneration cluster, yet it did originate in another street inSheffield outside the cluster. Firstly, this example illustrates that a top-down approach ofapplying a creative model might not be the best approach for stimulating creative clusters.Brown, OConnor and Cohen (2000) state that clusters can be encouraged and supported by acreative cluster strategy, yet this has to be a low key strategy. Secondly, this example

demonstrates that it is crucial for the success of clusters to attract sufficient creative producersand consumers in order to generate a creative buzz.

As Zukin already wrote in 1982, the establishment of a critical infrastructure (or in otherwords: the establishment of a creative cluster with a critical mass of creative producers,consumers and activities), is vital for any chance of success in urban development (Zukin,1982, 1991, p.201, p.202). A certain amount of creative producers and consumers is requiredto make a cluster successful and to generate positive externalities. In addition, three aspectsare necessary to create a vivid creative cluster with such externalities: A mix of functions, both service and production related A mix of people with different socio-cultural backgrounds

A dispersal of these people over time (Crewe and Beaverstock, 1998; Brown,OConnor & Cohen, 2000; van Aalst and Hitters, concept version 2005).


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Even when a creative cluster has indeed attracted a critical mass of creative producers,consumers and activities, and its branding is successful, the regeneration of the surroundingarea can still be problematic. A successful cluster does not necessarily have positive effects ona neighbourhood and its residents. In her book 'Loft Living: Culture and Capital in Urban

Change', Zukin (1982) takes a critical perspective on culture-based regeneration. She intendsto show how culture and cultural mediators have transformed the vernacular of urbandowntown. According to Zukin, the economic value generated by culture and creativity islikely to fall into the hands of real estate agencies and multinationals. The original creativityand local character of the regenerated area will then be lost (p. 29, p. 197). In her book'Landscapes of Power', Zukin (1991) further explores the shift from production toconsumption. She sees the restructuring of the city as the imposition of a new perspective onthe city, which is based on cultural power (p. 194). According to Zukin, private institutionsand market forces increasingly have the upper hand in urban development. Culturalconsumption is only used as a justification for that.

These criticisms can also be applied to creative clusters as cultural tools for urban

redevelopment. In the initial phase of clustering, small creative firms and other culturalpioneers move to an area because of its low rent and artistic or cool image. After a while, acritical infrastructure of creative firms leads to an improvement of both the image and theappearance of the area. This increase in economic value can in the end lead to the out-pricingof these creative pioneers and the displacement of original residents by property markets. Thismeans that small creative firms, traditional residents and also traditional industrial firms willno longer be able to pay the increasing rent in the area, and will be displaced by larger, moreestablished firms and higher income residents. In case of low intervention, ad hoc approaches,small creative businesses and other local firms and initiatives can be pushed to the margins byproperty development and the global creative economy. However, according to numerousrecent publications on creative clustering, doom scenarios of clusters that inevitably lead todisplacement and increasing powers of real estate agencies should be avoided (Brown,OConnor & Cohen, 2000; Mommaas, 2004, OConnor, 2002). These publications are allbased on European case studies, whereas Zukins theories are based on research in the UnitedStates. Private institutions and market forces have much more power in urban development inthe United States than in urban development in Europe. As a consequence, the danger ofdisplacement will be less strong in most European cases.

2.4 The involved actors in stimulating clustering: motives and powerrelations

The difficulties mentioned above illustrate that the balance between public and private sectorsis precarious. Therefore, it is important to investigate the motives of the different actorsinvolved and the power relations between them in order to identify in which cases and whichways local governments can stimulate clustering.

Except for Zukin (1982, 1991), the authors mentioned above have paid little attentionto these aspects. Brooks and Kushner (2001) have concentrated on the management ofcreativity in their research on creative clusters in major American cities. Their researchconcludes that effective leadership and intervention is needed to create successful creativeclusters. In addition, both public and private sectors should manage clusters and differentgovernment scales should be involved. However, Brooks and Kushner remain abstract and donot consider the power relations between public and private actors. Mommaas (2004) further

explores the management of creative clusters. He has not only categorized clusters by culturaland spatial characteristics (p.15), but also by organisational form. Related to organisational


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characteristics, Mommaas has identified four different core dimensions. The first dimension isthe organisation or management of the cluster. The clusters can be very different in theirmanagement and level of organisation. The management can be public, private or mixed andthe organisation can range from no clear management at all to a strong central management.

The second dimension is related to the difference in management and contains the

financial aspect. In other words: the extent to which the cluster depends on public support.The third dimension concerns the level of openness (adaptability) or closedness(solidity) of the involved programmes. This is the balance between too much openness andthe danger of loosing the creative identity and too much closedness and the danger of lock-inand stagnation. The fourth and last dimension is the development path of the clusters, whichcan vary between top-down, planned development and bottom-up, more spontaneousdevelopment. Although most clusters will be a mix of both extremes, the development ofconsumption-oriented clusters is more frequently top-down and the development ofproduction-oriented clusters more frequently bottom-up.

In addition to these cluster dimensions, Mommaas has also distinguished five differentmotives for local policy makers for creating or stimulating creative clusters:

Strengthening the identity, attraction power and market position of places Stimulating innovation and creativity Stimulating a more entrepreneurial approach to arts and culture Finding a new use for old buildings and derelict sites Stimulating cultural diversity and cultural democracy (Mommaas, 2004,

p.521-524).

These different motivations will play a vital role in policy-decisions to stimulate or develop acertain cluster. Although Mommaas cluster and policy categorisations are profound, hisanalysis is based on five Dutch clusters, which are all a product of spatial planning. As aresult, his analysis predominantly contains illustrations of one side of each dimension. Hiscase studies are all more or less closed, top down clusters, in which the government has asignificant role. In addition, Mommaas takes other involved actors into account, yet, likeBrooks and Kushner (2001), he does not emphasize on different actors and the (power)relations between these actors.

Mommaas' analysis can be supplemented with theories on the relation between differentactors in urban development and in the creation of urban policies. The motives for policy-makers to create or stimulate creative clusters can be related to the urban-growth-machineapproach. The sociologists Logan and Molotch (1987) have mainly developed this approach.In this approach, the underlying motives, goals and effects of policies are central. The urban-

growth-machine approach originates from the US in the end of the 1980s. The competitionbetween cities for new capital was already at its height in the US. The urban-growth-machineapproach is developed against this background and is primarily focused on economic factors.According to Logan and Molotch, the activism of entrepreneurs is crucial in urbandevelopment (p.52). Whereas most people in a city are focused on the use-value of propertyand real estate, a small group of people is focused on their exchange-value and on financialprofits. This small group of property and real estate owners intensifies the use of theirproperty in order to maximise the value. The establishment of a good business climate andthe attraction of companies and institutions are crucial for these investors (p.29). Toaccomplish a good business climate, these property and real estate owners join with otherstakeholders, who are also aimed at economic growth and the attraction of businesses. These

coalitions are the so called growth machines. These growth machines contain three other


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main groups of organisations and institutions, which join with the property and real estateowners: The business world with for example real estate agents, building companies, architects

and financers, who directly profit from urban development Service providers with for example public service companies and the local media, who

indirectly profit from urban development Local organisations with for example cultural facilities, small retailers anduniversities, who indirectly profit from urban development (p.62-85).

The local government is not specified as a separate group, which forms part of the growthmachine. However, Logan and Molotch (1987) suggest that local governments also benefitfrom economic growth and are thus in favour of growth machines (p.63). Governmentalorganisations could be seen as another group, which joins with property and real estateowners.

To return to Mommaas, the first four motives of policy makers could be related to the urban-

growth-machine-approach. Especially, the first motive clearly corresponds to this theory. Itseems that the stake of property and real estate owners and of real estate agents, architects andfinancers is directly represented in the aim to strengthen the identity, attractive power andmarket position of places. The groups of service providers and of local organisations alsobenefit from this aim. The growth machine approach also provides a background to themotives of stimulating innovation and creativity, stimulating a more entrepreneurialapproach to arts and culture and finding a new use for old buildings and derelict sites,although to a lesser extent. The strong focus on property developments of the growth-machine-approach makes this approach less useful as a background to these motives.Moreover, the lack of attention for other than economic motives makes the approach lessvaluable. The fifth motive distinguished by Mommaas for stimulating cultural diversity andcultural democracy, for instance, cannot be explained by the growth-machine-approach, at all.Despite these disadvantages, the approach still gives a more detailed insight in how motivescome about and how different groups of stakeholders are involved in urban clustering. Thiscan be illustrated by Newman's (2000) study on creative clustering in London, on the southbank of the Thames.

Newman investigated to what extent clustering at the sub-regional level can beinfluenced by public strategies in order to stimulate cultural consumption, creative industriesand the local population. In the studied case, the local government (The Greater LondonCouncil) functioned as a networking institution with the aim to attain capital from diversesources. To accomplish this, the local government has tried to form interactive partnerships or

networks with actors from different stakeholder groups. Newman distinguished threestakeholder groups: one group that aims at property speculation, one group that aims at localeconomic development, and one that aims at community development. The first two groupsshow a striking similarity with the groups involved in urban growth machines. In contrast toLogan and Molotch, Newman has identified a third group of community developers, whichalso relates to other than economic motives. The outcomes of Newman's analysis are that thedifferent interests of the stakeholder groups are conflicting. The interests of property and realestate owners and developers to invest in cultural consumption and the image of the quarterclash with those of the groups aiming at local economic or community development toencourage small creative enterprises. The investments in cultural attractions and imageimprovement encourage high-value uses and this works against the establishment of more

small creative firms.


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In Newmans study, it became clear that the different groups of actors involved did not haveequal power. A theory that explores the actors involved in urban policy and the powerrelations between these actors is the urban regime theory. One of the important authors onurban regime theory is the political scientist Stone (1989). In contrast to the urban-growth-machine-approach, this theory has much attention for the public sector. The power relation

between the public and the private sector are central to the urban regime theory. This theorycan thus be related to the organisational dimensions of clusters from Mommaas. In thebeginning of this section (box 1), the shift from a managerial approach of government toentrepreneurial forms of governance has been discussed. It was stated that the role of thegovernment has changed as a result of the increasing competition between cities and thedecentralisation of socio-economic assets to the local. Regime theory focuses on this changingrole of (local) governments and the fragmentation and complexity of decision-makingprocesses. Due to the fragmentation of governmental organisations, governments are limitedas controlling organs. In addition, the increasing complexity of decision-making processesalso demands a different role of governments. Rather than being agencies of control,governments more and more have the function of mobilising and coordinating organs in a

complex web of relations between organisations and individuals. In their coordinating andmobilising role, governments join with different actors to form a regime:

an informal yet relatively stable group with access to institutional resources that enable it tohave a sustained role in making governing decisions (Stone, 1989, p.3).

The involved organisations and individuals are divided in three groups: public actors, privateactors and a third group of actors of organised associations. This third group includes forexample voluntary organisations. The goal of regime theory is to explore the conditions forcooperation between these groups and to come to understanding about decision-makingprocesses (Stone, 1989). Rather than just focusing on economic factors, this theory grasps theimportance of policy making in urban changes and urban development. The formation ofregimes depends on social, cultural and political processes and is not just the outcome ofeconomic processes.

The limitations of regime theory are its lack of attention for changing circumstancesand for the wider political context (Painter, 1998, p.263). According to Painter, urban regimesnever arise spontaneously. The formation of regimes occurs on the basis of local culture andinstitutionalised social norms. Cities with different types of urban regime will follow differentdevelopment paths and will encounter different social and economic effects (Painter, 1998,p.264). In addition, processes in higher echelons of governance influence the formation andthe political results of urban regimes. With these critics in mind, urban regime theory is a

useful approach to interpret governance. Urban regime theory can be used to attain moreinsight in the power relations behind the organisational dimensions of clusters fromMommaas. The organisation of clusters, the relation between public and private finances, theopenness of the organisation of clusters and the development path of clustering are allinfluenced by power relations between the different actors involved in the decision makingprocess. The impact of different regimes and different power relations for the organisationaldimension of clusters will be illustrated in box 2, which discusses a study conducted byHitters and Richards (2005).


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It is important in the stimulation of clusters to both consider economic interests and cultural,social and physical interests. A good balance between public and private actors shouldprevent that economic interests will get the upper hand. The research of ALICE on creativeindustries in the region of Eindhoven, for example, concludes that the public sector should not

just focus on large scale, low-risk projects of property developers, but also on small (starting)firms (ALICE, 2003). Newman (2000) concludes that instead of focusing on local propertyinterests, more comprehensive approaches of governance are needed to also meet culturalinterests. In such comprehensive approaches, governments, as controlling organs on differentlevels of scale, should not just focus on private actors and their interests, but also on otheractors of the third group, such as local community development organisations. In addition,

more comprehensive approaches would demand horizontal integration between differentdepartments within the public sector (Brown, OConnor & Cohen, 2000; case study: Newman& Hitters, 2005). A coordinated approach should integrate culture and economics, but alsoareas such as transport, housing, licensing and policing. It is important not just to stress theeconomic aspects of creative clustering, but also to integrate the business of culture into awider cultural policy, which could challenge free market economics (Brown, OConnor &Cohen, 2000).

Box 2: Two Dutch clusters

Richards and Hitters (2005) have studied the creation and management of two Dutchclusters, the Westergasfabriek in Amsterdam and the Witte de With Straat in Rotterdam.

The local government owns the site of the Westergasfabriek cluster, but a propertydevelopment company owns the buildings. This company is thus responsible for themanagement of the buildings and the selection of renters. The local government functionsas project coordinator and guards the project's clear emphasis on cultural and creativefunctions. In the future, the development of the cluster will be led by a public-privatepartnership, formed by the property developer and the local government. In the Witte deWith Straat cluster, the governance of the area has a very informal nature and powerrelations are less clear. The official administrative power is in hands of the localgovernment, but close links exist between the local government and voluntary sectororganisations such as the tenants association and the local business association. Within thelocal government, the departments of Economy and Urban Development and Housing are

involved in the development of the cluster rather than the department of culture. Thedifferent power relations and 'regimes' in combination with different contexts andunderlying motives have led to different development paths of the clusters. Thecommercial approach of the Westergasfabriek cluster has led to a much clearer image andidentity, but has also instigated the discussion whether it will be possible to maintaincurrent creative institutions because of possible rising rents. The Witte de Wit cluster haswitnessed a more spontaneous development. Creative entrepreneurs in this cluster are notlikely to be out-priced. However, the lack of horizontal integration between differentdepartments and the focus on urban development rather than creativity and culture makescreative entrepreneurs in this cluster more vulnerable to market pressures.


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2.5 The individual creative entrepreneur: economic reasons for clustering

The studies discussed above have all focused on the meso or macro level in relation toclustering. Only recently, Van Aalst and Hitters (concept version 2005) have stated thatexisting research should take the micro-level into account. Moreover, further research should

emphasise the relationship between macro and micro level.In the above it is stipulated how different actors attempt to stimulate creative

clustering, but it is not clear how such clusters originate. Why do creative entrepreneurschoose for a certain location? What is the role of cooperation? And how important is thecultural atmosphere of the area? It becomes clear that there is a serious lack of research on thefunctioning of clusters on the micro level in relation to the development and management ofclusters. Policy makers will only be able to stimulate or create creative clusters if there ismore understanding of the reasons for creative entrepreneurs to cluster in certain areas. Theexisting literature on the development and stimulation of creative clusters has paid insufficientattention to these reasons for clustering. Economic-geographic approaches partly fill this gapof knowledge. These approaches focus on economical reasons for clustering such as theimportance of spatial proximity for cooperation between (creative) entrepreneurs.

The existing literature on the importance of proximity and clustering has mainly focused onthe enhancement of the economies of lagging city-regions (Gordon, 1999). This literature hasused the terms cluster, agglomeration, new industrial area, embeddednes, milieu andcomplex to indicate the same phenomenon of spatial clustering. In an attempt to stimulategreater clarity and more critical investigation, Gordon (1999) has developed a framework inwhich he distinguishes three basic models or ideal types of spatial industrial clustering: The model of pure agglomeration The industrial-complex model

The social network model (Gordon, 2000).The first two models fit within classical traditions of economics, while the third model has asociological background. Although most creative clusters will have characteristics of all threemodels, it is useful to become aware of the different aspects of clustering. This awareness willclarify the difference between various reasons for clustering and will thus make it easier tostudy these reasons. The model of pure agglomeration can be derived as far as AlfredMarshall's analysis of clustering in 1925 (Gordon, 2000; Lagendijk and Oinas, 2005, p. 5). InMarshalls agglomeration model, propinquity to other firms and external economies of scaleare crucial. Clusters are solely formed because of the significance of geographical proximityto similar firms to gain 'economies of agglomeration'. Marshall suggested that there are three

main reasons why firms would localise within the same area. These reasons concern: The maximum flow of information and ideas; The increased local provision of non-traded input; The development of local pools of specialised labour (Gordon, 2000).

According to Marshall, the communication of new information and ideas takes place insocially dense economic environments. Firms locate in each others proximity in order tomaximize the exchange of information and ideas. The clustering of firms could also generatelocal services, institutions and an extensive infrastructure, which small firms cannot generateon their own. Furthermore, clustering can attract a qualified workforce, which will make iteasier for firms to find specialized employees.

Marshalls three reasons can be an explanatory factor for the clustering of creativeindustries. Creative industries could benefit from inter-firm labour migration or informal


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contacts between members of different firms to increase information flow and creativity. Non-traded inputs could also play a significant role in the clustering of creative industries. Creativefirms in clusters could benefit from better local services both regarding availability andefficiency and from better local availability of financial capital. Examples of such localservices are specialized schools, workers organizations, overhead facilities and cultural

facilities (Scott, 1998). Especially for small creative firms with limited own investmentpossibilities, the last two facilities could be essential. In addition, the generation of local poolsof specialized labour could be a reason for clustering. Creative clusters could provide efficientsearch and job-match possibilities, a flexible workforce with increasing know-how andcreativity, low labour costs and a high firm productivity.

Since Marshall designed his typology, other authors have also developed theoriesabout these economies of agglomeration (Lagendijk and Oinas, 2005, p.4-6). The 1980s haveseen a revival of agglomeration models, with the resurgence of and renewed attention forindustrial districts and high-tech clusters. An important author in this revival was MichaelPorter, who wrote on specialised regions and focused on localized, cluster related externalities(Porter, 1990) Porter and other authors have attempted to further specify Marshall's three

reasons for agglomeration. Furthermore, they recognized that agglomeration economies aremore complex and can vary by sector and by area (Lagendijk and Oinas, 2005, p.5; Boschma,Frenken, Lambooy, 2002). These authors perceive specialized clusters as most creative andinnovative. Jacobs (1969) opposes this way of thinking and states that diversity is the mainsource of creativity and innovation (Boschma, Frenken, Lambooy, 2002). According toJacobs (1960), complex combinations of agglomeration economies will occur in cities andregions. Specialised clusters can also have negative effects, because of lock-in processes. Thiscan be linked to Mommaas (2004) third creative cluster dimension of the level of openness(adaptability) or closeness of creative clusters. Another critic to Marshalls agglomerationmodel is that this model does not include co-operation between entrepreneurs and looks onlyat rational economic interests in an atomised and competitive environment (Granovetter,1985). However, this criticism applies less to newer Marshallian approaches such as Storpers(2000) research on localisation and globalisation.

The second model of spatial industrial clustering is that of the industrial-complex. Accordingto this model, the only possibility for clustering to occur is that individual firms will choose(deliberately or not) to locate close to other firms within the same production andconsumption hierarchy, because they think that this will minimise their spatial transactionscosts. The model is a traditional economic model based on Webers ideas (1909/1929) anddeals with the relation between costs and production processes. Gordon (2000) states that:

this type of model is essentially static and predictable in nature, and is primarily concernedwith cost-saving in relation to production links. The notion of space in these models is not

explicitly urban or related to the potential for new forms of exchange, but is rather concerned

with the minimization of distance costs in the formation of crucial, pre-planned (and hence

identifiable) linkages (Gordon, 2000, p.7).


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Granovetters criticism on Marshalls theory also applies to the industrial-complex model.Both theories lack attention for bounded rationalities. The underlying premise of both modelsis that entrepreneurs act as rational economists, whereas entrepreneurs are constrained in theirrationality in two manners. Firstly, entrepreneurs do not posses all relevant information tomake rational choices and secondly, they are not able to use the information in a rational,

most efficient way. The industrial-complex model will probably be the least applicable forinvestigating clusters of creative industries, because the role of physical and electronicinfrastructure and other hard agglomeration factors is of minor importance for creativeindustries (Mommaas, 2004). The only hard factor that may have a role in the locationchoice of creative entrepreneurs seems the availability of cheap space.

Mark Granovetter is an important author on theories of the third model of spatial industrialclustering. This is the social-network model. This model started as a critique of the neo-classical approach to institutionalise trust within the economic system. Sociologists disagreedwith the institutional perspective of transactions between firms and individuals of thisapproach and advocated more attention to social relations within economic processes.

Clustering is not just about agglomeration economics and economic opportunities, but is alsoabout social integration and embeddedness within social networks. In his article 'the problemof embeddedness', Granovetter (1985) explains that most academics perceive economic actionand social structures either in an 'undersocialised' way or in an 'oversocialised' way.Traditional economists tend to have an undersocialised perception, while many sociologistshave an oversocialised perception. Granovetter's central point is that:

both have in common a conception of action and decision carried out by atomized actors(Granovetter, 1985, p.485).

Thus, there is no attention for the social and historical processes behind economic relations.The social-network model is an attempt to incorporate these processes. Particularly socialprocesses are key elements of social-network studies. More attention for historical processescan be found in evolutionary economics (Boschma, Frenken & Lambooy, 2002, p.97). Theseevelotionary economics stress the path-dependency of cluster formation. Both social-networkstudies and evolutionary economics state that social (economic) networks depend on thebuilding of trust. It is important to develop common interests and values, to have socialcontrol (to a certain extent) and to attain at least some mutual gains (Gordon, 2000; Boschma,Frenken & Lambooy, 2002, p.97-99). This building of trust has become crucial in todayseconomy, in which competitive advantages to other firms and the exchange of tacitknowledge are increasingly important. The spatial aspect of the social network model and

evolutionary economics lies in the importance of geographical proximity for informalpersonal contacts (face-to-face contact) and the establishment of trust. Moreover, by enablinga high communication density and frequent personal meetings, geographical proximitystimulates creativity and innovations and the establishment of new firms (Hertzsch &Mundelius, 2005).

In the past decades, studies on spatial industrial clusters in regions have incorporatedthis social and historical context of clustering. The umbrella concept of innovative milieusused by many authors to investigate regional industrial clustering (Aydalot 1986, Aydalot andKeeble, 1988, Fromhold-Eisebith, 1995; GREMI group: Camagni, 1995, Crevoisier, 2001, etall) is mainly based on elements of evolutionary economics and the social-network model.This innovative milieu concept presumes that crucial interrelations develop among clusters of

(small or medium-sized) businesses, which will secure economic growth and innovation in(lagging) regions. In addition to the advantages of spatial proximity mentioned above, the


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high firm density in creative milieus contributes to the mobility of the local labour market.This means that employees often change from one job to another. As a consequence,knowledge of workers spreads in a high speed and this generates learning effects.

Although the innovative milieu concept is mostly used to investigate industrial clustering in

regions, this concept is also useful for investigating creative clusters in cities. 'Milieu' effectscould be a significant factor in the clustering of creative entrepreneurs. Within clusters, intra-cluster transactions could occur between different creative sectors and firms, both in the formof traded and un-traded dependencies. Clusters could serve as a context of trust, socialisation,knowledge exchange, innovation and inspiration for creative entrepreneurs and should be asafe haven in an uncertain and competitive business climate. Especially for small creativefirms, the proximity to other creative firms may be a way to survive (Gordon, 2000; Banks,Lovatt, OConnor & Raffo, 2002). Moreover, the geographical proximity to other firmsmakes it easier for skilled creative workers to switch jobs. Many jobs in the creative industriesare part-time, temporary or freelance. As a result, the possibility to easily switch jobs is ofprimary importance (Scott, 2004). Examples of studies where milieu effects were indeed

significant for creative clustering are Pratts analysis of media industries in New York (Pratt,2000), Gordons study of patterns of linkages and specialisations in the London region(Gordon, 2000) and Grabhers study on the embeddedness of economic action in a creativecluster in London (Grabher, 2001).

2.6 The individual creative entrepreneur: cultural reasons for clustering

Although the approaches discussed above recognize that, apart from economic factors, socialand historical factors can also be important explanations for clustering, they miss attention forcultural factors as reasons for clustering. Two of the few authors who have paid attention to

these cultural factors are Amin and Thrift (1995). They have distinguished the terminstitutional thickness to refer not only to social, but also to cultural and institutional factorsof clustering. The term involves (local) institutions and the interaction between theseinstitutions on the meso and macro level and creative entrepreneurs, cultural facilities andtheir visitors on the micro level. The combination of these institutions stimulates thecreation of synergy effects and a common identity within clusters. Thus, the extent ofinstitutional thickness determines how successful a cluster is. As local institutions and theirinteraction are already discussed in paragraph 2.4, this paragraph will focus on the micro levelof cultural reasons for clustering.

The cultural environment could be an important reason for creative firms to clustertogether. The area and the available facilities could then be a determinant for clustering. This

conforms to some extent with the above-mentioned non-traded input factors and some milieueffects, but the emphasis is no longer on cooperation between the entrepreneurs: it is the placeitself that counts as a location factor. The quality of a certain location will be determined byboth real characteristics of the place, such as available space or the presence of a culturalinfrastructure, and imagined characteristics of the place, such as a trendy cultural image. Theimagined or constructed images of places can be at least as important as the 'real' or objectivecharacteristics of places (Drake, 2003). Thus, both the presence of a mix of cultural facilitiesand a vivid or trendy urban atmosphere may attract all kinds of creative industries.

Most creative entrepreneurs do not have a nine-to-five job and walk in and out ofoffice to meet clients or colleagues. The availability of cultural facilities could be importantfor creative entrepreneurs, because these facilities can function as meeting places. Although

there are several theories about the importance of meeting places, these theories are notconnected to creative clustering. One of the first authors who accepted the importance of


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meeting places was Ray Oldenburg in his book 'The Great Good Place'. He introduces theterm 'the third place' as a description for those places that are the main setting of informalpublic life (Oldenburg, p.16, 1989). After the home as the first place and the work setting asthe second place, a variety of public spaces belong to the third place. Or as Oldenburg puts it:the third place is a generic designation for a variety of public places that host the regular,

voluntary, informal and happily anticipated gatherings of individuals beyond the realms ofhome and work (Oldenburg, 1989, p.16). The third place enables conversations and contactsbeyond the associations of home and work and makes it possible to get to know colleaguesbetter than in the workplace. However, not every place outside the realm of home and work isa third place. Third places are not aimed at attracting a high volume of strangers or passing-bycustomers (Oldenburg, 1989, p.36). Most customers are local regular visitors, who drop inand out when they please. Many third places are not very explicit places either in theirappearance or management. The attraction of a third place to the regular visitor lies in thepresence of other customers and in the atmosphere of the place. For creative entrepreneurs,third places could include cafs, bars and restaurants, but also museums, theatres, ateliers andclubs. Whereas the first three are especially meeting places, the last three are more related to

the atmosphere of the place. The atmosphere of a place is something rather subjective.Neverthel

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Thesis Creative Clustering and the Neighbour Hood