WRITING A CLUSTER DIAGNOSTIC STUDY Originators: Foundation for MSME Clusters (FMC), UNIDO

Reducing poverty through sustainable industrial growth Why Do We Need a Diagnostic?  Current status of linkages and support services  What are the key challenges (strategic issues) that each value chain partners face?  Which of these strategic issues can be solved through different routes such as: investment promotion Schematic assistance, Linkages with markets BDS development/linkages, institutional strengthening public private partnership

Reducing poverty through sustainable industrial growth Objectives  Understand uniqueness of the cluster with respect to: Firm typicality Presence & relationship with stakeholders Joint activities and pressure point(s)  Identify initial entry points into a cluster  Build trust with stakeholders  Spot leaders, implementers, participants  Create a base for future monitoring and evaluation

Reducing poverty through sustainable industrial growth What Does it Take?  Who does it?  How long does it take?  What are the sources of information? Secondary Primary  Does the primary source of information need to be random based?  Who (people/institutions) should be interviewed?  How to validate the findings of the study?  Emerging new models/ thinking?

Reducing poverty through sustainable industrial growth Steps in Diagnostic 1.Define the Cluster – Product & Place 2.Gather Preliminary Data on number of principal firms, their turnover, number of support firms, BDS providers, other relevant agencies, etc. through past knowledge of the IA local area surveys and censuses, district plan, local bank reports, internet search, etc. 3.Preparation of Questionnaire 4.Selection of Samples Representatives of all stakeholders are interviewed Principal stakeholders Forward linkage providers Supplier, support institutions, Associations and/or networks Policy makers

Reducing poverty through sustainable industrial growth Steps in Diagnostic 5.Sample Size Around 8 to 10 interviews of principal firms (for each value chain) Also in addition 2 to 3 of each type of critical support firms Relevant technical institutions Bank, other financial institutions Relevant MFI Associations should be interviewed 6.Setting up of interviews Start off with broad discussions with associations In absence: Government Organizations (GOs), which have considerable influence or active NGOs

Reducing poverty through sustainable industrial growth Steps in Diagnostic 5.Guidelines on behavioural aspects The diagnostic study is not an academic survey understand from an interviewee the set of issues face in the cluster. Topics should not necessarily be introduced in the order of the questionnaire format, but rather as determined by the flow of discussion Explaining the purpose of the Project eases the interviewee and enhances chances of a fruitful interview The interview should not last more than 90 minutes concentrate on the interview rather than on making notes

Reducing poverty through sustainable industrial growth Survey Analysis  Enterprise Issues Identify the current strategies of various types of principal firms, Understand how they manage their central business functions (production, marketing, finance, etc.) Assess Strengths and weaknesses List out suggestions that have been given both from the demand as well as the supply side in addressing the issues  Inter firm Organization List how far and in what ways the various current and suggested future linkages promote or can promote: Joint learning/ exploration/business promotion about markets, products, processes, etc.  Assessment of Governance Structures Identifying whether any suitable institutional structure(s) exist on which governance capacity, in terms of capacity to react to challenges/opportunities faced by the cluster (Stakeholder associations/consortiums, technical/financial institutions, local NGOs)

Reducing poverty through sustainable industrial growth Interviewees to Obtain Information  Support firms (forward & backward)  Service providers  Development agencies  Technical training institutes/universities  Industry/trade associations  Networks  Relevant policy bodies

Reducing poverty through sustainable industrial growth Interviewing Techniques  Sampling/complete enumeration – technique and sample size  5 stages of interview: comforting, trust building, discussion on area of interest, derive joint action, take reference for joint action/interview  Start with association and knowledgeable person  Interview duration: 90 minutes  Recording of information later  Preferably a two-person unbiased team – CDA is a must  Mix types of stakeholders for interviews

Reducing poverty through sustainable industrial growth Issues for Other Stakeholders  Interview with respect to interactions with principal firms  Focus on areas of direct relevance to principal firms  Interview only those that have high (existing or likely) inter-connectivity with principal firms  At times complete enumeration is required  Done both for AOBO and cluster structure

Reducing poverty through sustainable industrial growth Content of a Diagnostic Study  Defining the cluster, product and location  National/international industry/cluster scenarios  History of the cluster and its turning points  Present status of the cluster  Analysis of business operations (AOBO) of principal stakeholders  Intra and inter stakeholder dynamics  SWOT  Cluster map  Vision, target and implementable Strategy  Tentative action plan

Reducing poverty through sustainable industrial growth Characteristics of a Diagnostic Study  Not just an information gathering tool. Part of the process  It is an ongoing process  Those involved and not temporary outsiders for study – long term stakes  Validators are the cluster stakeholders themselves  Focus is on strategic action, not just finding problems  Focus not on individual firms, but groups of firms, institutions, other actors and their inter-relationships  From firm to cluster  Focus is to study the dynamic process: what works