Clusters & Business Networks Dr. Emanuela Todeva Director of Research Centre for Business Clusters, Networks and Economic Development University of Surrey

Clusters are agglomerations of firms & institutions, co-located in a geographic area, connected by value-added activities, and with access to benefits from input/output markets, infrastructure and environmental coordination via policies (E. Todeva, 2006). Definition of Clusters

Location Boundaries Bio-Medical & Health, Greater South East, 2008 Database Firms ‘Locational Concentration Across Regional Boundaries’ Greater South East, UK

-The Use of complementary databases comprising of the entire population of firms and funded research projects -Developed a Multi-Stage Cluster Methodology for Cluster mapping and analysis -Investigating Brokerage, Intermediation, & Information sharing across firm / regional / country boundaries Amadeus 2008 Diagnostics 240 Medical Care 4902 Social Care 3208 Medical Care Support Services 1154 Technical Support 265 Dental Practice 478 Telecare 63 Drug Development Support 376 Bio-pharma R&D 387 Integrated Pharma & Biotech 115 Health products & cosmetics 677 Medical Devices 719 Bio-Pharma Manufacturing 286 Bio-Pharma Support 496 Trade Pharmaceutical & bio-products 611 Pharmacies & Drug Stores 1161 Fitness & Wellbeing 309 Trade Medical & Optical Products 813 Universities / centres of excellence in research 61 © Todeva, 2008 Activities & Transactions Database Firms ‘Concentration of firms in the Value Chain in the Region’ Greater South East, UK Bio-Medical & Health, Greater South East, 2008

Cluster Value Chain: SURGICAL & MEDICAL INSTRUMENTS MANUFACTURING (198 firms, ties between firms based on 5 or more shared industry codes) (87% of firms have the core industry codes: Electro-medical and Electrotherapeutic Apparatus Manufacturing; Irradiation Apparatus Manufacturing; Surgical and Medical Instrument Manufacturing; Surgical Appliance and Supplies Manufacturing) © Todeva (2007) Holding companies All other personal care stores Wholesale Misc. metal products Electro-medical, electro- therapeutic, irradiation apparatus; surgical & medical instruments; surgical supplies manufacturing R&D Plastic products 198 firms 87% in 4 core industries Misc electrical equip & component manuf.

Regional Inter-University Alliances & Partnerships Bio-Medical & Health, Greater South East, 2008 Database Research Projects ‘Regional University Collaborations’ Greater South East, UK

© Todeva, 2008

Location of Capabilities Bio-Medical & Health, Greater South East, 2008 Database Firms ‘Regional Concentrations of Capabilities Measured with a Two-mode Graph of Relationships Between Regions and Clusters’ Greater South East, UK

RELATIONSHIPS STRUCTUREACTORS cultural approach relational approach structural approach The Network Diamond Emanuela Todeva (2006) Business Networks: Strategy and Structure, New York: Taylor & Francis.

RELATIONSHIPS STRUCTUREACTORS structural approach cultural approach relational approach overlapping networks multiplexity & dynamics structure of social relations bonds & network ties embeddedness roles, status, network position knowledge & technology interactionsinterconnected industrial markets supply chain cognitive & structural balance generalised exchange transitivitydiffusion power dependence purposeful action resource flowsactivity links resource dependence norms, rules, institutions cultural artefacts / entities context / actor-world text, stories, myths, ideas technology, standards heterogeneity network processes – selection, enrolment, translation, staging, representation, framing the effect of outcomes © Todeva, 2006 Theoretical Approaches

The Behavioural System of Business Networks Reactive & Strategic Behaviour in Networks Firm’s conditions & attributes Business operations Market conditions Manageability/Control Legitimacy & Role Relational framework / context Relational attributes Industry conditions Factor conditions Mediating factors Other connected activities Decision making & goal setting Negotiating identities, interests & agreements Bargaining & negotiating contracts Ascribing and accepting roles Structuring information flow Coordination Maximising profits, payoffs, benefits Minimising costs / Sharing costs Optimising behaviour & maximising ‘expected utility’ Manage the use of their assets Accumulation of heterogeneous resources Investment in assets capabilities & relations (incl. diversifying assets & capabilities) Building strategic capabilities Specialisation Initiation of contacts and entrepreneurship Contracting resources Developing relationships Extending commitments to partners (buyers, suppliers) Acquiring & maintaining power Monitoring & evaluation of partners, building expectations Exchange of incentives Strategic positioning Mimicry, conformity & compliance Legitimacy seeking Forming coalitions and partnerships Cooperation for a final outcome Learning Knowledge sharing Manipulating external & internal environment f a c t o r s © Todeva, 2006

EGO ALTER Attributes / Affiliated members and sub-units Dyadic & Multilateral Relationships E. Todeva, 2003

Initiating a link (including learning about the other) Establishing a relationship ( including certain reciprocity ) Market transaction ( including agreement ) Repetitive transactions (including a partnership agreement) Mutual recognition between human actors, or interaction with objects Single exchange of resources between human actors Repetitive exchanges, employing an object into a process Knowing someone or something Relation / Association between subjects & objects ► ▼ ◄ ♦◘♦◘ Co-presence in a field Interconnected relationships ( including transactions & resource flows ) Community exchanges & interconnected processes POTENTIAL RELATIONSHIP LONG-TERM RELATIONSHIP DYADIC MARKET RELATIONSHIP INTERACTION / COMMUNICATION LINK NETWORK RELATIONSHIP PRE- RELATIONSHIP © Todeva, 2006 Evolution of Network Relationship

Types of Structural Configurations hierarchical organisation (Weber, 1947) trans-national (Bartlett & Ghoshal, 1989) multidivisional organisation (Simon, 1962; Chandler, 1962; Williamson, 1975) matrix organisation functional organisation horizontal organisation / value-chain, supply chain - through vertical integration of activities (Porter, 1986) hegemonic / Ego-centred clustered / dispersed / distributed circular / regular / small-world universal / core-periphery / scale-free heterarchy (Hedlund, 1986) community / dispersed / distributed hybrid organisation (Miles & Snow, 1986, Powell, 1987) broker producer designer distributor supplier ▼ ◄ ♦◘♦◘ ▼ ▼ ▼ industry groups (Porter, 1980) © Todeva, 2006

Hegemonic Tree Circular Regular Universal Value Chain Clustered Core/Periphery (Scale-free) Small world © Todeva, 2006 Network Structure

hegu, hui, guanxi, kongsi Chinese Family & Community Business Networks © Todeva, 2005

Shacho-kai First tier suppliers Second tier suppliers GROUP BANK Japanese Keiretsu Networks © Todeva, 2005

Sogo Shosha trading company Foreign partners BANK Keiretsu network Firms Japanese Sogo Shosha Networks © Todeva, 2005

family Korean Chaebol © Todeva, 2005

Types of Supply Chain Networks Ego-centred Dispersed Project based Value-chain based A combination of value-added chains & strategic control networks

Global Commodity Chains DISTRIBUTOR SERVICE PROVIDOR MANUFACTURER BANK MARKETING TRADING COMPANY INTERMEDIARY RETAIL SUPPLIERS Value Chain Supplier Networks © Todeva, 2005

Distributed Supplier Networks and Commodity Chains BUYER PRODUCER MANUFACTURER BANK TRADING COMPANY SUBCONTRACTOR DISTRIBUTOR

value co-creation value measurement value diffusion value-in- context value-in- exchange value creation value extraction © Todeva, 2014 Network Approach to Value Management