Location: Providence, RI, U.S.A.
The second week of the Technology, Entrepreneurship and Management BIARI began yesterday with a number of lectures on economic development and start-up growth. While I anticipated attending a lecture on technology in rural India (hoping to find further material for the India at Brown blog) I instead received a crash course on business clustering in Asian industrial sectors. The term “clustering” entered the lexicon of business analysis after the publication of Michael Porter’s The Competitive Advantage of Nations in 1990. Since then, clustering has become a key factor in the expansion of tech industries: Silicon Valley, most notably, offers a prime example of successful clustering along Sand Hill Road. Scholars and tycoons alike have determined that the increased proximity of various companies to one another via clustering (or “urban agglomeration” in urban studies parlance) promotes greater productivity and influences the development of business strategy. Speakers Jane J. Zheng of the Chinese University of Hong Kong and Hyejin Yoon of the University of Wisconsin-Milwaukee spoke on the dynamics of urban agglomeration in Shanghai and southern Seoul, respectively. In both cases, the clustering of related industries has not necessarily improved creative output or fostered greater networking.
The urban center of Shanghai has experienced a significant growth in creative industry clusters (termed CCJQs) since the late 1990s. As Shanghai’s manufacturing sector relocated to the outskirts of the city, “creative industry” workers reclaimed the downtown area. To expand these clusters, developers often repurpose or renovate buildings with historic and architectural merit. These redesigned structures, in turn, have come to represent modern Chinese industry and serve to attract foreign capital into the city. The proprietors of these buildings may also use the spaces as a business incubators to house up-and-coming artistic and educational groups for lower rate rent.
Yet there remains some debate on the ability of the CCJQs to effectively facilitate the expansion of the “creative” industries. The clustering phenomenon in China is relatively recent and remains understudied: Zheng pointed to the absence of an “evaluation matrix” for determining the effects of clustering on the local urban sphere. Researchers, moreover, have not situated their studies of clustering within the context of the Chinese cultural and economic systems. To further analyze the role of the CCJQs in industrial development, Zheng conducted interviews with over 100 participants throughout 8 CCJQs. In collating her findings, she analyzed the cultural climate of the CCJQs, the functional effects of clustering on an economic level, and the ability of the physical environment to stimulate creative growth.
Despite their innovative structural designs, the CCJQs do not significantly increase collaboration or efficiency within the creative industrial sector. While certain networks of communication exist between the resident tech firms, these companies held their present locations before the wave of CCJQ development. In terms of intellectual collaboration, the CCJQs lack any observable connection with neighboring universities. According to Zheng, the CCJQs have operated as “physical containers” that restrain the transmission of knowledge. The “creative” nature of the CCJQs also offers a topic for debate: most firms housed in the CCJQ are engaged in highly lucrative industries like consulting, R&D and architectural design. The amount of space allocated to micro-business and small start ups is almost nonexistent. Based on this data, the greatest success of the CCJQs is most observable in the urban renewal that has accompanied the redevelopment of the downtown area.
Switching regional focus but continuing with the theme of business clustering, Hyejin Yoon focused her presentation on the formation of technological industries in southern Seoul during the late 1990s. This research, Yoon stated, derived from her Master's thesis and would serve as a framework for a renewed study to be undertaken in the near future. The South Korean government enacted a series of policy reforms in 2008; a comparative study with the 1990s data could clarify the effects of this legislation on the local technological industries.
During the Asian financial crisis at the end of the last decade, the high-tech sector in South Korea experienced marked decline. Employees of established companies, faced with early retirement and layoffs, flocked to southern Seoul as a base for new business ventures. 78% of the firms in this cluster, Yoon calculated, were “spin-off” companies with past connections to larger entities. Southern Seoul proved an ideal location for business clustering, given the cheaper rents and close proximity to former clients. It is this focus on retaining past business relationships, however, that impeded social networking between firms and curbed the exchange of intellectual material.
Expect further lectures this week on entrepreneurial strategy and the tech sphere as the BIARI session winds down.