Cluster Importance for Small and Medium Enterprises

Clusters play a particularly critical role for SMEs. They are the backbone of the regional economy also affected by digitisation, yet often incapable of adopting new technologies, launching new solutions and following the suits of larger firms. What is central for cluster management are initiatives aimed at transferring the ‘know-how’ and technology to SMEs and micro-firms. Although, experts point out the need to cater to those clusters (and its members) with revealed potential, i.e. those who have already passed the market test, and proved they would be self-sustained in the long run, once the triggering of initial funding expires. Start-ups cannot be ordered from the top, created from scratch or commissioned by someone, so, clusters should also develop from natural bottom-up processes and natural accumulation of a critical mass of firms.

In the eyes of it’s OWL representatives, the presence of customers in the region (i.e. the business-to-business relations, B2B) proves critical for cluster development. Many manufacturing firms are here. These are ETCs, often family-run, only slightly exceeding the thr eshold of being defined as a large firm. Its owners still regard some as small start-ups, although, in manufacturing, this scalability is a critical factor of competitiveness. Thus, the internal scale economies, which are missing at the firm’s level, must be compensated by the cluster externalities, i.e. agglomeration positive effects and spill-overs.

It’s OWL hosts diversified, yet supplementary industries, such as mechanical engineering, automotive supply and electrical engineering, which is evidence of specific technological relatedness or a locally provided RV. The range of successfully completed transfer projects, and the variety of industries represented, can confirm this (Figure 4.1).

Intelligent technical systems, which constitutes the core competence of it’s OWL, is a cross-sectoral, horizontal issue, linking various stakeholders along the value chain. This RV also helps in a way, as firms which are not direct competitors, are more willing to co-operate. Instant collaboration across established domains, industries and groups of stakeholders seems ‘a must’ these days. As argued, therefore, businesses need to master crossover innovation, for instance, by the re-combination of old ideas in new ways (Cooke, 2018).

As seen in it’s OWL, (E2) ‘the related variety of the cluster is achieved through the higher-level topic of mechatronics. It means a merger of

Distribution of companies according to the industry—73 focused completed transfer projects (July 1,2014 to June 30,2016)

Figure 4.1 Distribution of companies according to the industry—73 focused completed transfer projects (July 1,2014 to June 30,2016)

Source: Own elaboration based on data courtesy of the representative of it’s OWL Clustermanagement GmbH, 2018, 2017-Technology_Transfer_web.pdf

mechanical, electrical, control engineering and informatics. Furthermore, mechatronics is also a superior domain of automation’. Thus, by its very nature, the mechatronics and the SE, which is the core of it’s OWL cluster, seems to incorporate the idea of RV.

The strategy of it’s OWL development assumes setting up new student progr ammes, designing new syllabuses, creating new research institutes and further developing technologies. Path dependency is visible in the history of this region, as well. The origins of it’s OWL go back to Heinz Nixdorf and his pioneering work on merging the IT and engineering, which, at that time, was a complete novelty. Today, this fusion of IT-Engineering seems to best depict the realms of 14.0. Innovation projects—bilateral initiatives between large firms and research institutions—result in generating new knowledge and new technologies. It proves extremely important to make it available to other local firms. This results in the idea of ‘taking these best practices—technologies—out of selected bilateral projects (literally— extracting out of the brackets as some common element) and transferring them to other firms’ (E5). It has happened, however, in a very informal and non-institutionalised way. People are carriers of this ‘know-how’. It’s OWL management has been considering setting up some digital online platform to network better the people who are carrying this unique expertise and the outcome of the projects. Although, for the time being, there is no proper physical/online repository. This knowledge is still sticky, tacit, not codified or stored in any library or archives.

Work 4.0, entrepreneurship, transfer of technology and innovations remain four pillars of it’s OWL strategy. Special attention is being paid to the entrepreneurship of existing films. The aim is consequently, not only to help to create new start-ups, but also to assist those already active, old, often a family-run business. The availability of smart factories, for instance, something most SMEs would not have afforded, is one such initiative. Assistance is provided by technology scouting or developing new business models. Interestingly, large firms who develop certain technologies themselves are willing to share this knowledge. They set up academia and offer specific courses. In that way, a ‘win-win’ situation is created. SMEs can get access to valuable new technologies; large firms can train future co-workers.

Local companies also appreciate marketing actions, which increase cluster visibility. Firms are identifying themselves with the brand of it’s OWL (El, E3 and E4). ‘Often, when they go somewhere and take part in fairs or exhibitions, they take rollups, and represent proudly, it’s OWL’. ‘The brand over the last five years, has indeed proved to be valuable for firms. It helps in contacts with outsiders, is seen as a certificate of high quality and expertise, (Kompetenz Vermutung) and helps attract talents’. Co-ordinated actions help, but proximity, trust, and frequent contacts, all matter a lot for successfiil development of ITSs, and ultimately, for the cluster’s growth. The initial funding won in the competition from BMBF has already expired. Following the rounds of negotiations, it has been replaced with assistance from the federal government of North Rliine-Westphalia (NRW) to the nine of 56 million EUR (must be doubled with money from the business). In 2015, the regional government of NRW secured the additional funding of 930,000 euro for it’s OWL ( foerdert-spitzeucluster-its-owl-mit-930000-euro). With support from the state of NRW, the activities of it’s OWL will be continued from 2018 to 2022 ( leading-edge-cluster-its-owl/). Overall, with the support of state, federal and EU governments, projects of around EUR 200 million are to be implemented up till 2022 (Who makes SMEs .. ., 2019).

The need for developing technology, but even more so the role of proper and efficient transferring of it can be regarded in terms of ICs; as a provision of much needed capabilities crucial for innovativeness. Regions need ICs, which act as a pool of idiosyncratic regional assets, enabling innovation processes and enhancing development paths (Pisano & Shih, 2012; Bailey & de Propris, 2014).

Contrary to simple assumptions and despite some impressive advancements through ICT, knowledge is not a cost-free commodity, but subject to path dependency and innovation is spatially concentrated and strongly supported by a specific, idiosyncratic, systemic context (Bramanti, 2016). It is of paramount importance for SMEs who cannot afford many new technologies, lack funding, can be under-staffed and suffer the liability of smallness (Aldrich & Auster, 1986). Cluster SMEs can capitalise on different inter-firm collaborations within clusters to enhance the growth in the face of various constraints deriving from the size liability (Kale & Arditi, 1998; Elessels & Parker, 2013). A crucial role for SMEs in the OWL region is played, in this respect, by the smart factoiy—a laboratory where they can see the practical application of new solutions. ICs are co-developed and shaped by interactions between technology providers (supply) and technology beneficiaries—SMEs (demand). The SmartFactoryOWL from Fraunhofer Society and the OWL University of Applied Sciences, located in Lemgo, is a manufacturer-independent 14.0 application and demonstration centre, and also a testing area for the SME sector. Interested companies can try out and test new 14.0 technologies, and then integrate them into their production and work processes with the support of experts. The key competencies provided encompass image processing and pattern recognition, or analytical methods in automation. Besides, firms can benefit from services, such as demonstration models, consulting or training. The provision of such commons also happens via other establishments. HMI Transfer Laboratory is the Bielefeld-located human-machine interaction transfer laboratory operated jointly by Bielefeld University, research institutes, such as Heinz Nixdorf Institute in Paderbom, the Institute for Cognition and Robotics (CoR-Lab) and the CITEC. Provided competencies include virtual/augmented reality, interactive robotics, machine learning and automatic image processing, whereas the available sendees encompass pilot projects, demonstration models, consulting and training. Another example is Paderbom-based Systems Engineering Live LAB, associated with the Fraunhofer IEM. It is an application and transfer centre, in which the latest methods and tools for the development of technical systems are tested, compared and employed. Companies can leam about SE techniques and languages, model-based systems, engineering and are provided with assistance in pilot projects, consulting, training or certifications. The practice of the cluster functioning re-directs the attention and re-focus to the concept of ICs, to the need of not only assuring the provision, but also the dissemination and broader availability of new technologies and competences.

Related variety seems to be another crucial component emanating from the review of cluster activities, and the discussions and exchange of opinions of experts. In it’s OWL cluster, it takes the form of SE, i.e. the efforts to merge various engineering fields which is a pre-requisite for successful implementation of 14.0. SE encompasses inter-disciplinary engineering and engineering management that focus on the design and execution of very complex systems throughout the whole life cycle. It combines social, human with technical disciplines and handles issues, such as risk management or optimisation. SE is about discovery and problem-solving, meaning that the need for cross-fertilisation and marrying disciplines cannot be under-estimated (Suwala & Micek, 2018) and inter-disciplinary integration seems critical. It, among others, is the task of Fraunhofer Institute, IEM, or HeinzNixdorf Institute at the University of Paderbom, (www. edge-cluster-its-owl/). SE meets the requirements of developing modem, extremely complex, production systems. The continuous discipline-spanning approach (system modelling and analysis) enables the development of multi-disciplinary systems. SE offers a holistic and inter-disciplinary, hence an appropriate, perspective for analysing 14.0 in the modem business environment, as it focuses on design, development and implementation of complex systems (Bines, 2018). SE ensures that all possible project or system dimensions are considered and integrated into a whole. It requires the incorporation of various aspects of complex systems and processes, and contribution from diverse technical disciplines. So, it might be argued, it stipulates the growing importance of the provision of ICs and foresees the role of RV, inevitably. The ‘V’ model, central in SE (developed in the space industry in the 80s), assumes the joint work on given problems or concepts. It happens fust, separately, by each domain (e.g. mechanical engineering, software development and electrical engineering), and then by the integration phase, when all the solutions proposed independently, should be bound together. (E2) ‘Some joint syntax, operating the same model vocabulary, is necessaiy for effective communication among different engineering fields’. The attributes of 14.0 and the challenges it poses for manufacturing, in fact, intelligent technical production systems, require a certain level of this interengineering collaboration.

The RV and diversification imply certain industrial and sectoral openness and a readiness to accept less specialisation. The peculiarities of mechatron- ics and SE (i.e. the core of it’s OWL) suggest some cluster’s stretching. In particular, they facilitate its blending, i.e. the expansion of subjects, areas, if not sectors. Stretching of the cluster, as seen by it’s OWL representatives, though it is perhaps inevitable, should be kept to the minimum. Otherwise, the core feature and idiosyncrasy of the term ‘cluster’ might be missed. Therefore, geographic expanding can be accepted to some limited extent, likewise increasing the scope of primary industries. Clusters, nevertheless, should stay focused on then core competences, on a few related domains,

36 Knowledge, Business, Policy in Cluster

such as mechanical engineering, electrical/electronic and automotive supply industries.

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