How innovative industries emerge and survive in peripheral regions

Abstract

Within the literature on Regional Innovation System (RIS), previous studies have focussed on successful RISs, but fail to explain how companies can succeed in peripheral regions. This paper explores why some firms locate in regions that do not fulfil the typical requirements of a successful RIS and how they survive in these regions. To this end a case study was performed on the Dutch province Frisia. Three clusters within Frisia were analysed: the High-tech Systems and Manufacturing (HTSM) cluster, the water technology cluster and the dairy/food cluster, using a framework that draws on both the RIS literature and the literature on Technological Innovation Systems (TIS). Specifically, the three clusters are studied in-depth from a system structure and function perspective (typically used for analysing TISs) within the context of a RIS: the province Frisia.

The results form this study show that firms locate in Frisia because of one or several of the following reasons: relatively low production costs compared to metropolitan regions, the presence of sufficiently large supply of MBO schooled labourers, the availability of resources and last financial incentives by the local government. Moreover, the results from the system function analyses provided insight in the minimum requirements that enabled local companies to grow and start clustering. Entrepreneurial activities (F1), knowledge development (F2), market formation (F5) and the availability of resources (F6) were most important in an early stage of regional development, of which only the last was geographically bounded. Knowledge exchange (F3) and guidance of the search process (F4) become increasingly important for the clusters to grow.

This research has two major implications on the RIS literature. First, this study shows the value of analysing the development of RISs from a system structure and function perspective. Doing so provides insight in how the structure of a RIS interacts with the development of its clusters. Second, this study shows how the requirements of firms change as clusters emerge and develop over time. For policy makers this indicates that in early stages of regional development, the chance to create new clusters can be increased by attracting a large company or knowledge institute and identifying and maximising the place surplus of their region. As several companies locate in a region and the needs of companies become more knowledge oriented, a focus on strengthening the structure and dynamics in the RIS becomes more important.