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Industrial Clusters in Local and Regional Economies

Dr. Helen McGrath

In a departure from the predominantly Porter (1990; 1998) influenced cluster studies that were performed on Irish manufacturing throughout the 1990s i.e. studies which examined primarily market based relationships in the national context, this book focuses on local and regional industry concentrations and the nature of inter-firm relationships within those concentrations. Underpinning this approach is a broad theoretical framework that combines three streams of related literature: industrial districts, Porter's clusters and regional systems of innovation.


This book offers empirical insight into industrial clustering in the Irish context and in particular inter-firm dynamics in traditional, local industrial sectors: fish processing; printing; and bakery. By compiling and reviewing the relevant theoretical and empirical cluster literature and offering a step-by-step guide as to how to identify clusters at a local and regional level this book appeals to both academic researchers and policy makers who wish to undertake similar studies.


About the author:

Dr. Helen McGrath B.Sc. (Surv) Ph.D.

Dr. Helen McGrath is a lecturer in the School of Real Estate and Construction Economics, Dublin Institute of Technology, Dublin, Ireland. She undertook her PhD research in the field of industrial economics in Dublin City University Business School under the supervision of Prof. David Jacobson.

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Chapter 1: Introduction

What Do We Mean by a Post-Porter Approach to the Identification and Evaluation of Industrial Clusters? The Evolution of the North Dublin Cluster Study. How is this Study New? Structure of the Book.


Chapter 2: Literature Review and Theoretical Framework

Introduction. Definitions of Clusters. Interpreting Geographic Concentration.

Local Clusters. Clusters as Economic and Territorial Concepts. Cluster Characteristics. Size and Scale of Local/Regional Clusters. Stages of Cluster Development.Cluster Types. Dynamics of Clusters. The Importance of Co-operation. Types of Co-operation. Facilitating Co-operation – The Role of Trust.

Co-operation versus Non Co-operation – The Factors at Play. The Nature of Competition. Uncertainty. Industry Life Cycle. The Importance of Local and Regional Clusters. Localisation and Globalisation. Theory of Agglomeration.

Increasing Returns to Scale. Externalities - A Short Historical Account.

Agglomeration Economies and Linkages. Barriers to Cluster Formation.

Alternatives to Clustering: The Stand Alone Firm. Industrial Clusters: Three Models of Development. Towards a Theoretical Framework. Linkages Driven by Players and Sectors. Spontaneous Interaction. Interaction Driven by Leader Firms.

Interaction Facilitated by Organisations Other Than Firms. Place in Context.

Transactional and Contextual Environment.


Chapter 3: Clusters in the Irish Context

Introduction. Irish Industrial Development and Policy – A Brief History. Over-Reliance on MNEs? Industrial Policy – The Regional Element. Regional Development – Implications for North Dublin. Policy Interest in Clusters. Elements of Cluster Development. Linkage Development in North Dublin. Research on Clusters in Ireland. National Studies. Alternatives to Porter – Local and Regional Studies in Ireland. Discussion.


Chapter 4: Methodology

Introduction. Top-down Vs Bottom-up Approaches. Level of Analysis in Cluster Identification. Micro-Level Analysis. Meso-level Analysis. Cluster Identification.

Porter’s Approach. Input-Output Analysis. Location Quotients. Expert Opinion.

Approaches to Cluster Analysis in North Dublin. Methodology for Initial Scan. The Data Set. Process of Scanning Data. List of Sectors. Problem with Sector List – Acquisition of Additional Data. Refining Sector List. Further Investigation Using Qualitative Sources. Usefulness of Interviews. Initial Interview Format. Why Case Studies? Case Study Design. Unit of Analysis. Linking Data to Propositions and Criteria for Interpreting Findings. Data Collection. Triangulation of Data Sources.

Data Analysis. Validity and Reliability. Construct Validity. Internal Validity. External Validity. Reliability. Summary.


Chapter 5: Industrial Profile of North Dublin

Introduction. North Dublin’s Industry. Firm Size in North Dublin. Indigenous Employment  - Growth and Decline. Numbers of Indigenous Firms. Employment in Foreign Firms - Growth and Decline. Numbers of Foreign Owned Firms. First Scan of Local Economy. Concentrations of Sectors. Second Scan of Local Economy. Sub-Sectoral Spatial Concentrations in North Dublin. Location of Spatial Concentrations within North Dublin. The Next Step.


Chapter 6: Introduction to Case Studies

The Need for Case Studies. The Role of Location Quotients (LQs) in Case Study Selection. Use of Triangulation in Case Studies.


Chapter 7: Inter-firm Relationships in the Fish Processing Sector

Introduction. Chapter Layout. Analytical Considerations. From Market Transaction to Co-ordination Integration. Co-operation and Co-ordination Mechanisms. Organic Interaction to Co-ordinated Interaction. Organic Co-operation. Conscious Co-operation. Transaction Type and Co-ordination Type. Co-operation Versus Integration. Additional Thoughts on Co-ordination Mechanisms. Leader Firms.

The Role of the Leader Firm in Knowledge Transfer and Innovation processes.

Introduction and Background to Case Study. Economic Conditions and Environment. Support of Non-Firm Organisations. Location - Howth Harbour.

Fish Processing Firms in Howth. Elements of Co-operative Competition.

Information Sharing (Commercial). Resource Sharing. Information Sharing (Technical). Mix of Relationship Types and Co-ordination Modes. The Evolution of a Leader firm-Supplier Relationship. The Oceanpath-Superquinn Partnership.

Collaboration and Dependency. Frequency of Communication. Resource Sharing.

Information Sharing about Processes and Products. Co-design Practices.

Degree of Dependency. Changes and Innovation in Oceanpath. Changes in Oceanpath’s Production Process. Product Changes. Organisational Change.

What Has The Partnership Meant To Superquinn? Discussion and Further Analysis.


Chapter 8: Inter-firm Relationships in the Printing Sector

Introduction. Contingencies of Relationship Formation. Additional Thoughts on Motives and Facilitating Conditions. Trust and Firm Reputation as Facilitating Conditions. Structural Characteristics of Alliance Formations. Case Study Context. A Brief History of Printing in Ireland. Concentration of Employment and Firms in North Dublin. Importance of Industry. Firm Size. Industry Trends.

Catalyst for Change. Motivation for PCI Formation. Origins of the PCI. Trust and the PCI. Formalisation Process. PCI Operation and Co-ordination. Advantages of Co-operation. The PCI  - An Industrial District? Italian Gruppi. Assessment of PCI Performance. The Role of Location. Discussion.


Chapter 9: Inter-firm Relationships in the Bakery Sector

Introduction. Theory. Industry Composition. A Declining Industry. Key Players in the Industry. Explaining Bakery Closures. Structural Changes. Linkages in the Value Chain. Rivalry Rather Than Co-operation. Rivalry at Inter-firm level. Rivalry at Inter-Organisational Level. Sources of Rivalry. Hidden Ownership Ties. Limited Organisational Change. Why Cuisine de France is a “bad” Leader Firm. Discussion.


Chapter 10: Case Study Discussion

Introduction. Transactional and Contextual Environment. The Three Sectors: Common Features. Contextual and Transactional Environments in the Fish Processing Sector. Contextual and Transactional Environments in the Printing Sector. Contextual and Transactional Environments in the Bakery Sector. Contextual and Transactional Environments in the Three Sectors: Explaining the Differences. The Importance of Co-operation in the Sectors. Answers to Research Questions. Do Clusters of Industry Exist in North Dublin? What Theory Can Best Explain the Reasons for and Processes of Clustering or Non-Clustering as Presented in North Dublin? Summary of Contribution to Knowledge. Suggestions for Further Research.


Chapter 11: What can we conclude?