Report
Understanding Cluster Growth Potential
In support of Innovate UK’s continuing mission to enhance place-based innovation, the Innovation Caucus recently completed a report to understand the future growth opportunities of place-based innovation clusters in the UK, and developed a framework to explore what aspects of these clusters merit further investment to strengthen their contribution to GVA, and potentially also contribute to the levelling up agenda.
Clusters are industry or sector specific. They comprise groups of firms and intermediary organisations involved in related activities, and the focus of inquiry is generally on understanding how the group benefits, and contributes to collective benefit, from positive feedback loops associated with collocation with each other. The inherently place-based nature and tendency to lead to increased innovation make clusters, and cluster strategies, attractive policy tools for both innovation and levelling up agendas. Our framework was developed based on a survey of the state of the art in identifying and measuring clusters. It also considered cluster evaluation as conditional on the state of evolution of a cluster and in light of previous and potential cluster growth trajectories. As innovation adoption sits alongside innovation output in successful clusters, the framework additionally proposes methods to evaluate the conditions that contribute to absorptive capacity.
The report surveyed three clusters selected in consultation with Innovate UK – East Midlands medical technologies, Solent marine and maritime, and Belfast cyber security. The cases were intentionally selected to be at different evolutionary stages, based on very different technologies and industries, and are located in different parts of the country. This enabled us to test and refine the framework across a diverse range of cases.
Applying the framework demonstrated the importance of looking beyond the numbers to assess gaps and growth potential. Structurally, these clusters were very different with distinctive growth trajectories and emerging developmental opportunities. The marine and maritime sector in Solent is fragmented and contains what might be characterised as a number of subclusters (freight and logistics; naval defence; leisure craft and luxury vessel design, construction, and outfitting; cruise and marine hospitality; ferries and marine transportation; maritime engineering; marine ecology and biotechnology; and maritime law and regulation), rather than being a cluster itself. Many of these industries are looking to opportunities in net zero (around alternative fuels, production, and operations) and autonomous vessels as shaping their future markets and innovation strategies. By contrast, the medical technologies cluster in the East Midlands is a subcluster of the wider health and life sciences sector in the region. The cluster covers a range of activities (e.g. product development, contract manufacturing, contract research). Future market development will bring medical and digital technologies more closely together, with the potential for leveraging related digitals skills in surrounding regions. The cybersecurity industry in Belfast was regarded by most interviewed as a relatively nascent cluster. Looking to the future, there is both growing domestic and international demand for products and services with diversification opportunities in a variety of other technology specialisms such as fintech, machine learning and AI.
Given the differences in growth stages, core technologies, and cluster structures, it is no surprise that these clusters exhibited different strengths and weaknesses across the four domains surveyed (core assets, skills, knowledge exchange, and governance networks). However, there were some commonalities between them. For instance, each featured relatively strong knowledge generation within local higher education and research labs, but these entities had lower than expected connections with the commercial R&D community. Skills and talent retention are an enduring challenge in all clusters. While each cluster had at least one industry or cluster association performing a convening and foresight role, all reported that these could be better resourced and supported to more effectively engage the cluster community.
While these insights were generated from a limited number of cases, they support an assessment approach that acknowledges and seeks to understand cluster- and place-specific gaps, challenges, and opportunities while also providing an evidence base to gauge national trends.
Next steps might include:
- Developing an evaluative framework for comparing different clusters based on the known information about their emergent characteristics and growth potential;
- Developing a methodology to synthesise lessons across cluster case studies to inform national policy priorities and strategies. For instance, commonalities on skills pinch points seen across clusters could be aggregated to inform national skills and training policies.
