Visualising the Operating Behaviour of SMEs in Sector and Cluster: Evidence from the West Midlands

Abstract

Cluster policy in the UK, pursued by the Regional Development Agencies (RDAs), has readily adopted a simplistic definition based upon industrial sectors and location quotients. Evidence drawn from a study of the operating behaviour of SMEs belonging to two traditional manufacturing industries within the West Midlands—automotive components and clothing—provides a critique of this approach. Whilst the automotive components industry has been designated part of a key, high priority cluster, the clothing industry has not. Using case studies from both industries, this paper shows firms both within and outside RDA cluster definitions display a remarkably similar range of behavioural characteristics. Yet, based on weakly defined cluster policy, one industry enjoys considerably more policy support than the other. The paper begins to question the logic of RDA cluster policy and to ask whether a more sophisticated and locally sympathetic manner of visualising clusters and business behaviour rather than an emphasis on employment numbers would have a greater impact for policy.

Industrial Policy, FDI and Employment: Still ‘Missing a Strategy’

“…Tully and Berkeley (2004) even suggest that many RDAs now prefer the term 'sector' and are "quietly walking away from the cluster concept, but are just not telling the DTI". Although too early to confirm, whilst nationally there has been a shift from sectoral to horizontal approaches, more locally we may now be observing the re-emergence of sectoral policies all over again, where the ubiquitous regionally-based cluster policy can be seen as a new form of localised industrial targeting, with similar inherent dangers as at the national level of picking the 'wrong' 'clusters' if the selection process is dominated by an elite group and selection processes are not democratic (Cowling et al, 1999).…”

Rover and out? Globalisation, the West Midlands auto cluster, and the end of MG Rover

“…This group encompasses more complex interpersonal relationships, reflecting a recognised need to work together for common, beneficial goals. As Tully and Berkeley (2004) stress, the more sophisticated a firm's relationships, the more positive is their outlook, the more informed they are about market trends and the more likely they are to have links with universities. Such firms also invest more in new technologies, have better extra-regional links, and are more likely to be market leaders.…”

“…However, firms' differing levels of competencies are not only reflected in their technological and organisational trajectories, but also in the way they are networked, engage in collaboration, the markets they serve and their openness beyond the cluster. Tully and Berkeley (2004), drawing on Gordon and McCann's work on cluster types, Policy Studies 271 identify three groupings of firms in the West Midlands auto 'cluster'. The first (30% of the sample) does not cooperate or interact with competitors or customers, reflecting a 'pure agglomeration model'.…”

Globalization and restructuring in the auto industry: the impact on the West Midlands automobile cluster

“…Tully and Berkeley (2004) draw on Gordon and McCann's work to identify three different groups of firms in the West Midlands auto cluster. The first group (30% of the sample) had no cooperation or long-term interaction with competitors or customers, reflecting a 'pure agglomeration model'.…”

“…As Tully and Berkeley (2004) detail, the more sophisticated a firm's relationships with suppliers, customers and competitors, the more positive was their outlook, the more informed they were about market trends and the more likely they were to have links with local universities. They also undertook more investment in new technologies, had better links beyond the region, were more likely to be market leaders and outsourced more.…”