Provision of policy guidance on the development of local clusters of entrepreneurship and innovation is one of the key work areas of the OECD Centre for Entrepreneurship, SMEs and Local Development. Clusters are one of the most remarkable features of local economic development and small and medium-sized firm competitive advantage. Localised groupings of suppliers, customers, competitors and support institutions, all specialised in related activities, are present in all economies. They are particularly productive locations for the economic activities they host. They are sites of strong entrepreneurship and innovation vitality. And, because of this, they drive economic and employment growth. But what makes clusters grow? What threats do they face? How should policy intervene? Answering these questions is the key motivation of this book.

Contrary to popular belief, the globalised knowledge economy relies more and more on the local dimension. In order to boost economic development and respond efficiently to ever keener international competition, OECD member countries need to pursue entrepreneurship and innovation policies that reflect their own distinctive local characteristics. Throughout the OECD area, innovation is increasingly concentrated within clusters of enterprises and research/training institutions that work on complementary activities. Indeed, it has been demonstrated that clusters are an important source of innovation and competitiveness driven at the local level. Clusters create an environment conducive to productivity gains, which are a factor of growth, and so form a structure that helps enterprises meet the challenges of international competition. This local dimension of innovation and entrepreneurship nonetheless poses challenges to policy makers because clusters require policies and support schemes that are tailored to local needs.

This chapter sets out the key policy issues examined in the book on supporting entrepreneurship and innovation through clusters. It discusses the nature and importance of clusters, how clusters function, and the role of policy. Clusters stimulate entrepreneurship and innovation because they are sites of localised positive externalities in labour market pooling, input-output linkages and knowledge spillovers. Policy has a role to play in facilitating the emergence and growth of clusters and addressing some potential problems of clustering.

This chapter analyses the emergence and establishment of the micro-nanotechnology cluster in Grenoble, which has been recently labelled the Minalogic “pôle de compétitivité” by the French government. Grenoble is a particularly good example of a cluster that emerged “endogenously” from a critical mass of human and social capital but with strong support from targeted initiatives by the public sector. The chapter demonstrates the role that public authorities can play in supporting a cluster and the importance of establishing strong private-public and public-public partnerships. It shows how innovation has occurred in a collaborative but highly competitive environment. It highlights the importance of human and social capital and the need for “co-ompetition” as key ingredients of an internationally successful cluster.

This chapter provides an overview of the transformation of the hightech cluster in Oxfordshire following industrial restructuring in the UK. The case study illustrates the importance of the entrepreneurial dynamic as a source of talent, spin-offs and critical mass. It highlights the challenges faced by the Oxfordshire cluster in networking among the actors of the “virtuous circle” for clusters, and the ways in which these actors have been involved in order to fulfil the unmet needs of the cluster. The success of the cluster has been underpinned by the attractiveness and self-organisation of the territory. This chapter also outlines the key role played by the core actors of the cluster in tackling environmental challenges and social inequalities.

This chapter examines the development of the Vienna biotechnology cluster and the role of policy actions in its evolution. This contribution challenges the prevailing view that the development of high-technology industries is always a spontaneous phenomenon. It will be argued that in the case of regions such as Vienna which have weak potentials for high-technology industries, the development of biotechnology clusters can be promoted with proactive policy efforts to create a favourable environment for high-technology activities. Furthermore, it will be shown that, besides the leading role played by large firms, well co-ordinated policy approaches between the national and regional level are important for developing a biotechnology industry in a region.

This chapter provides a good example of a successful cross-regional cluster, and presents the challenges and benefits of such a structure. The engagement and the equal collaboration of the regions involved have been crucial in developing the cluster. Also, this chapter highlights the relevance of the “triple helix” model (industry, university, government) to stimulating innovation in a cluster, and the appropriateness of promoting a regional innovation system to dynamise the region. Moreover, this case shows and assesses the contribution of national and regional agencies for innovation in supporting the development of the cluster and encouraging collaboration.

This chapter illustrates how a remote medium-sized city can transform from losing human capital and industry, to becoming one of the most important economic centres of its country, on the edge of engagement with the world economy. This case will show that communication is important to attract investment and highly qualified talents to a cluster in a less known region. It will also demonstrate that active policies and initiatives are essential to ensure the availability of human capital in the cluster. Moreover, this chapter addresses the challenge of building networks of trust and collaboration in an environment in constant change due to important flows of migration. Finally, Dunedin is also a good example of the efforts required to build and strengthen international linkages in order to expand the market and increase the network of partners and suppliers abroad.

This chapter shows the central role played by the university in promoting economic development, innovation and knowledge across the region. The initiatives of the national and regional governments to spread the outcomes of the university to the regional economy are well illustrated in this chapter. The case of Madison, Wisconsin, also illustrates the various efforts made by the university to encourage commercialisation, licensing and technology transfer from the university to industry. With the support of related bodies such as the alumni association, the faculties and the technology transfer bureau, the University of Wisconsin Madison shows that universities can also play an important role in linking innovations to venture capitalists and industry, in stimulating the creation of spin-offs, and in facilitating the identification of the market for new products.

This chapter illustrates the approach and initiatives of the entrepreneurial university in Waterloo in building the region’s information and communications technology (ICT) cluster. The creation of spin-offs seems to be encouraged by a series of policies implemented in the university, among students and academia. This case study is also a good example of collaboration between university and industry to meet the demands of the cluster labour market concerning skills. The adaptation of the university to the needs of industry, and the tight co-operation between industry and university in training and developing specific skills in students, have had a positive impact on the development of the cluster. This chapter also shows how flexible intellectual property regulations at the university play an important role in stimulating innovation, collaboration and business creation.