Economic Clusters and Policies In Turkey

Transcription

1. Erkan Erdil METU-TEKPOL Research center and Department of Economics Middle East Technical University INSME Ninth Annual Meeting İzmir May 21-24, 2013 1
2. OUTLINE 1 . 2. 3. 4. 5. 6. Introduction General Overview of Clusters and RIS A Snapshot on Turkish Clusters Inter-Firm Relations in Turkish Clusters Internationalization of Clusters Conclusions 2
3. INTRODUCTION The presentation addresses two key questions for Turkish case : 1. Are SMEs’ global linkages facilitated by the combination of local interactions with the influence of regional networks? 2. How do regional networks embedded to global value chains in such a way that supports organizational learning and strengthens the linkages among SMEs? 3
4. GENERAL OVERVIEW OF CLUSTERS AND RIS  RIS focuses localized learning advantage of regions.  Capabilities competitive business environment.  To support the creation of interactions between different innovative actors 4
5. GENERAL OVERVIEW OF CLUSTERS AND RIS  supplier-buyer relationships core competencies  To sustain continuous learning and differing levels of production efficiency.  Combined competencies networking advantage  To access to critical resources  To enable the creation of superior value even in the international marketplace. 5
6. A SNAPSHOT ON TURKISH CLUSTERS  Turkish national policies sector firms. formation of agglomerations of similar-  “small industrial estates" (KSS) and "organized industry zones" (OSB).  To encourage appropriate firms to locate and operate in these areas.  The basic aim is to provide firms with an effective business environment  to contribute their competitiveness and  to eliminate the drawbacks related to infrastructure, bureaucracy etc. 6
7. A SNAPSHOT ON TURKISH CLUSTERS  The industrial agglomerations (spatial transformations) started at the beginning of 1980s (Eraydın and Armatlı, 2005) enforced by  the economic transformations,  the new competitive environment and  the loss of protectionist policies  Developed manufacturing capacities for the cores of export activities. 7
8. A SNAPSHOT ON TURKISH CLUSTERS  As SME locations they form an environment that the clusters are likely to emerge (or exist) such related to Marshallian districts (Özcan, 1995).  SMEs in Turkish Economy is attributed great importance with various technological and financial support instruments.  The importance of SMEs the triple challenge of  more growth,  greater competitiveness, and  more jobs.  Need for an effective global value chain (GVC) approach to increase the competitiveness of the Turkish SMEs to compete globally.  Still the desired levels of competitiveness could not be achieved. 8
9. A SNAPSHOT ON TURKISH CLUSTERS  As Akgüngör (2003) notes, the research should be expanded in order to explore the clusters at the micro level and further explore formal and informal ties across the industries and institutions.  What is striking during this spatial economic transformation is the increasing importance of some industrial agglomerations that are located far from the earlier manufacturing cores, in terms of production and exports.  Obviously, these new industrial agglomerations are located in the different parts of Turkey and at the different stages of evolution. 9
10. Source : Eraydin 1998, 2002a; Erendil 1998; Özelçi, 2002; Armatlı-Köroğlu and Beyhan 2003; Reyhan 1990; Eraydin 1992; 1995, Öz, 2004; Ersoy 1993; Saraçaoğlu 1993; Tekeli 1994; Dede 1999; Erdil and Göksidan, 2006; Erdil and Çetin, 2008; Özkanlı, Erdil and Akdeve, 2008; Erdil 2009; World Bank, 2010. For a recent map see http://www.clusterturkey.com/TR/Map/ClusterMap.aspx 10
11. A SNAPSHOT ON TURKISH CLUSTERS  Each cluster formation have different features  How productions networks can be supported under different structural aspects of business relations that are strictly important in the formation of networking patterns of relations for a firm located in these areas.  Different regional even local policies.  Too much complicated policy framework. 11
12. INTER-FIRM RELATIONS IN TURKISH CLUSTERS Turkish subcontracting supplier – buyer relationships have three main characteristics: 1. Some of the networked relationships are long-term and duration is determined by the product-life cycles. 2. Some of the Turkish networked relationships are institutionalized and hierarchical. 3. Some of Turkish networked relationships are contractual and characterised by specific procedures. 12
13. INTER-FIRM RELATIONS IN TURKISH CLUSTERS  The relationship between the networked firm and its suppliers can be characterized by the coexistence of cooperation and competition.  Here, competition among rivals and other actors in the network prevail in the suppliers' selection phase, but also after the contract has been signed.  The performance of suppliers in terms of quality and costs are indeed assessed and compared with other suppliers in the network.  However, the firm has also interest in cooperating with the supplier to avoid switching and associated costs (time to learn the specification of the product and production, time required to set up trust, etc.) which is a very typical case in the Turkish manufacturing industry.  In Turkey, such contractual mechanisms does rarely work but this is especially critical when suppliers need to contribute on new processes and share tacit knowledge to make an investment in a new technology. 13
14. INTER-FIRM RELATIONS IN TURKISH CLUSTERS  Consequently, manufacturers in Turkey seek suppliers who can help them to sustain their own product design capability and managerial skills.  The know-how generated by such a relationship is twofold.  Technical, regarding the product and production system.  “relational”, due to the incentives and knowledge creation generated by simultaneous co-operation and competition.  However, the historical development of buyer–supplier relations may also be analyzed better within the context of the national culture. Turkish culture to be relatively high in power distance and collectivism.  Turkish organizations are distinguished by centralized decision-making, highly personalized, strong leadership, and limited delegation. Turkish managers are known for their autocratic and paternalistic styles. 14
15. BENEFITS OF A SUPPLY NETWORK : TURKISH CASE Critical Element Source of Advantage Product Design and Innovation Regional cooperation and collaborations between supplier and buyers is encouraged in order to sustain competitive advantages and innovative aspects; if there are fewer suppliers, they must have complementary capabilities for buyers. Manufacturing Scale Higher volumes of demand from global customers in a GVC perspective may enable manufacturers (and suppliers) to achieve the optimal production scale. Manufacturing Factor Costs It is convenient to exert strategies to develop some certain competitive advantages from industrial locations (for example, low-cost countries in a GVC). Design for Manufacturability Earlier supplier selection increases the level of strategic knowledge transfer in order to create designs that are faster, easier, and less costly to manufacture. Lean Flow Cooperation among a supplier and a buyer may simply reduce production and logistics costs. Transaction Costs Fewer transactions with fewer suppliers and more common terms of contracts significantly reduce cost 15
16. INTER-FIRM RELATIONS IN TURKISH CLUSTERS  To sum up, the presence of raw material suppliers and input manufacturers within the regional networks was cited to be a key locational advantage by Turkish manufactures.  Moreover, most of the large firms in these districts have also reported to be relying upon local and global input suppliers.  Among some of them, large firms are vertically integrating the production; in contrast, most of the SMEs in the regional networks (or clusters) remained reliant on the local supplier and subcontracting networks.  Furthermore, subcontracting and the local presence of input suppliers are examined in the case of specific literature on lower costs, generate externalities as playing an important role in the process of diffusing knowledge throughout the production network. 16
17. INTER-FIRM RELATIONS IN TURKISH CLUSTERS  On the other hand, buyers, particularly those representing international retailers, have an important role in Turkish industrial districts.  Moreover, some firms are bounded (and embedded into) to several global value chains providing further opportunities for linking other local enterprises that are in any kind of economic relation with them.  Such firms are termed to be focal firms acting as the leading firms in the local innovation network, generating new knowledge and technologies, spinning out innovative companies, attracting researchers, investments and research facilities, enhancing others firms R&D activities, stimulating demand for new knowledge and creating and capturing externalities. 17
18. INTER-FIRM RELATIONS IN TURKISH CLUSTERS  As a preliminary draft to understand the business structure of Turkey, Turkey achieved a high rank of 39 in the business sophistication pillar of the Global Competitiveness Index (GCI), particularly for the quality and quantity of networks and supporting industries,  While Turkey does have a large agricultural sector with rather low productivity, it does have sophisticated industrial and service sectors which are already operating at high levels of efficiency, adopting advanced technologies, efficient production processes, and exploiting economies of scale with respect to their competitors elsewhere in Europe, particularly the new members in central and Eastern Europe.  In this respect, the larger the scale of exploitation is, the larger the impact that the social structure among agents (individuals and/or firms) creates the preconditions for innovation by building up relational networks. 18
19. INTER-FIRM RELATIONS IN TURKISH CLUSTERS  In this manner, Turkish SMEs' business activities are strongly influenced by the social structure.  As when a different variety of firms from different sectors were embedded in the Turkish regional manufacturing systems, firms develop new inter-organizational relationships for the knowledge spillover in the industrial district.  Turkish manufacturing firms are embedded in the regional business networks. Trust and informal relations are important in the context of business relations. 19
20. INTER-FIRM RELATIONS IN TURKISH CLUSTERS  Family-dominated management of firms of all sizes is a common phenomenon in Turkey as there is a lack of confidence in salaried managerial personnel.  Educating young members of the family in top universities, integrating a professional manager into the family via marriage, and strong relationships established over the years between family members and professional managers, making the latter 'part of the family', appear to be common ways of achieving a delicate balance between professionalization and family control. 20
21. INTER-FIRM RELATIONS IN TURKISH CLUSTERS All Turkish business tycoons have certain characteristics in common , including 1. family support in commercial activities at the start of their life-cycle, 2. the arbitrary choice of their initial area of activity, 3. heavy engagement in unrelated diversification as the business grows, and 4. good business relations especially in state circles.  Moreover, the high degree of state involvement in business activity (in the form of subsidized credits input supply or output demand) has been detrimental to the Turkish business environment.  Given the key role of government in the economy, good connections in governmental approaches have contributed significantly to business success. The slow bureaucracy and unexpected changes in key policies, on the other hand, have caused problems for Turkish business people. 21
22. INTER-FIRM RELATIONS IN TURKISH CLUSTERS  Another aspect is that the public funding from governmental bodies like TÜBİTAK (The Scientific and Technological Research Council of Turkey) and MoD (Ministry of Development) is to be effectively translated into marketable products and services.  The articulation of some specific (focal linkages) firm-centric production networks may be deeply influenced by the socio-political contexts within which they are embedded.  Governments and their manifestations in local and regional institutions also play a very important role for the sustainability of regional development goals.  Moreover, in territorial regions; and in a variety of different industries; focal firms embedded in global production networks can better exploit the effect of economies of scale through technology-specific or expertise-specific production systems. 22
23. INTER-FIRM RELATIONS IN TURKISH CLUSTERS  Hence, with respect to global research and development activities; with the contribution to service facilities of global firms (like marketing, distribution, and sales); the GVC perspective might possess the sustainability of organizational learning and core competencies for SMEs facilitated by the combination of global interactions through pipelines with the influence of local networks promoting knowledge transfer among agglomerated industries. 23
24. INTER-FIRM RELATIONS IN TURKISH CLUSTERS  Consequently, in order to develop new technologies and to shorten product development cycles, many globally leading firms began to consolidate their global production networks, and began to outsource their semi-manufactured products in the forms of specialized components and integrated modules.  This process of vertical integration leads to the fragmentation of production processes creating an important and favourable context for organizational learning.  In this respect, we may underline that the GVC activities linking many local SMEs from different sectors engender the learning, enhancement and specialization of core technological innovations by the transfer, acquisition and codification of industry-specific (or tacit) knowledge. 24
25. INTER-FIRM RELATIONS IN TURKISH CLUSTERS  Knowledge transfer requires the right economic environment to support and stimulate business to link with suppliers, customers and the research base. These linkages will primarily be created and financed by industry.  There is a key role for Turkish Government to help managing the business markets in particular activities or regions, and investing strategically in new strands of science and technology. In this regard, the private sector must also overlap with university research.  Hence, in this generic scheme, Turkey is favored by its large internal markets, but also shows the benefits of the recent microeconomic reforms promoting global competition. 25
26. INTER-FIRM RELATIONS IN TURKISH CLUSTERS : OPPORTUNITIES AND OBSTACLES Existing schemes and infrastructures in Turkey supporting SME Opportunity to carry out more R&D, exchange knowledge actors and resources for innovation Presence of high-quality universities supported by techno-parks High interest in clusters and clustering and there are dynamic groups who can lead the process Important domestic market size - Turkey is the 17th biggest economy in the world) Lack of coordination between different schemes and existing institutions Inefficient functioning of the “triple helix” (companies, public institutions, universities) Severe lack of trust in the business environment Lack of public and private awareness Expectation of companies related to direct and individual pecuniary incentives Young well-educated population Source: White Paper, DCP Project, EuropeAid/122687/D/SER/TR 26
27. INTER-FIRM RELATIONS IN TURKISH CLUSTERS : LESSONS LEARNED STATISTICAL MAPS DEMONSTRATE CONCENTRATIONS Agricultural products & processed food Automotive and motor driven products  A geographical concentration of Apparel Aerospace Engines, and Defense businesses operating in related fields does not necessarily imply that there is a cluster  Should not be used to pick (select) clusters,  Statistical analyses must be complemented with field studies. Source: White Paper, DCP Project, EuropeAid/122687/D/SER/TR 27
28. Internationalization of Clusters : Why clusters look for more international cooperation today? Excellence - Open innovation - Strengthen their international position - Strategic alliances - Framework conditions - less barriers, more ICT, easier transport - Facilitate firms’ access to international markets - SMEs - International Cluster Cooperation 28
29. Internationalization of Clusters  Only about 10% of cluster initiatives and cluster programmes have currently a concrete strategy for internationalisation;  promotion will certainly help  need for policy incentives  Internationalisation is not easy, especially for SMEs  cluster organisations can certainly help;  need for appropriate skills  Not easy to find suitable information on clusters outside EU to start with:  gathering such information can certainly be done jointly;  need for having it at one place  Regional and local policy makers have supported the development of clusters that were seen as innovation enablers. However the vast majority of these networks were/are not outward-looking. 29
30. INTERNATIONALIZATION OF CLUSTERS Main Barriers to SME Internationalisation :  Informal trade barriers (lack of information on business opportunities, weak contract enforcement)  Financial burden (exchange rate risk, political risk, credit risk)  Foreign regulatory environment  Lack of domestic support structure (financial support, advice)  Cultural and linguistic barriers  Geographic distance between cluster members  Communication among cluster members  Spread of knowledge and innovation  Establishment and upkeep of cluster identity  Absence of common pool of specialised labour 30
31. INTERNATIONALIZATION OF CLUSTERS Plane Perspective Bird ‘s eye perspective Ground perspective • Identification of main objectives and activities of cluster programmes • Special focus on the internationalisation issues in the cluster programmes • The role cluster organisations play in the process of international cluster cooperation 31
32. CONCLUSIONS 1 . Since the 1980s, the liberalization of the Turkish economy stimulated the creation of regional production networks centered on internationally competitive manufacturers. 2. In response to these developments, the government has activated a number of instruments to foster the ability of SMEs to participate in global markets. 3. Global conditions in the aftermath of the crisis highlight the need to further improve the international competitiveness of smaller local firms in order to achieve sustainable and broad-based growth. 4. Analysis of the case of Turkish production networks indicates that the absorptive capacity – i.e. the ability to adopt and use knowledge – of local suppliers, especially SMEs, is key for successful participation in global markets. 32
33. CONCLUSIONS 5 . Turkey offers an interesting case study to analyze knowledge flows within production networks.  First, the increasing presence of firms, both domestic and multinational, linked to different global value chains has provided learning opportunities for local Turkish enterprises.  Second, networks of firms, with the knowledge flows that characterize them, have proved to be a valid alternative to vertical integration in a number of sectors. 33
34. CONCLUSIONS : POLICY MIX Policy Domain Connection with Clustering Policies Regional Development Policies “Value creation” from geographical (regional) industrial concentrations. Development based on local dynamics and internal potential Industrial Policies “Clustering” as a tool for strengthening inter-organizational collaboration in the value chain Science and Technology Policies Technological innovation through collaborative interactions and “regional innovation systems” SMEs Development Policies Strengthening the linkages and collaboration between SMEs and strengthening the competitiveness of SMEs on an individual enterprise level Foreign Trade Policies Necessity of export-oriented policies in order to increase the competitiveness of the economy by shifting to a high value-added production structure. Agriculture Policies Within the framework of sustainability, establishing Unions of Agricultural Manufacturers so that a clustering approach that addresses competitiveness may be adopted Tourism Policies Establishment of Infrastructure Unions; supporting R&D in the sector through collaboration among public, private sector, and universities. Labor Policies Increasing registered employment and the quality of workforce, creation of a skilled workforce as required by the economy Education Enhancing vocational training and thus, the quality of workforce and skilled labor for SMEs located within a cluster. Source: White Paper, DCP Project, EuropeAid/122687/D/SER/TR 34
35. CONCLUSIONS : POLICY MIX  Proposal: Further decentralize the management model of existing SME support programs in order to better serve local needs and increase the reach beyond micro firms to cater to the needs of larger SMEs. 1. Advance the implementation of a flexible and decentralized management model. 2. Ensure that the services on offer are not already available on market terms to SMEs in order not to crowd out private providers of such services. 3. Create a single entry-point which could help SMEs better understand their business needs and opportunities. 4. Expand the reach of support programs beyond micro-enterprises, to better serve the needs of small (10-49 employees) and medium (50-249 employees) firms. 5. Establish structures for international cluster cooperation. 35
36. Thank you for your attention & patience For questions erdil@metu.edu.tr