Sborník příspěvků XVII. mezinárodní kolokvium o regionálních vědách Hustopeče 18.–20. 6. 2014
113
DOI: 10.5817/CZ.MUNI.P210-6840-2014-12
KEY DRIVERS IN LIFECYCLE OF CZECH MACHINERY
CLUSTER
HLAVNÍ HNACÍ SÍLY V ŽIVOTNÍM CYKLU STROJÍRENSKÉHO
KLASTRU
PROF. ING. KAREL SKOKAN, PH.D.
Ústav doktorských studií
Obchodně podnikatelská fakulta v Karviné
Slezská univerzita v Opavě
Institute of doctoral studies
School of Business Administration in Karvina
Silesian University in Opava
* Univerzitní nám. 1934/3 733 40 Karviná, Czech Republic
E-mail: skokan@opf.slu.cz
Annotation
Regional industry clusters as specific form of networked organisations in a given industry and
territory have become very popular tools of regional and economic policies mainly in the last
decades. In the Czech Republic their support is connected mainly with the EU structural funds since
2004. Clusters like many other entities come through their lifecycle and exhibit different development
phases of their development which are triggered by various factors and events. The objective of the
paper is to identify the main drivers which played the decisive role in the development of machinery
cluster based in Moravia Silesia region of the Czech Republic. Research methodology is based on
results of semi-structured interviews with regional key players accompanied by analysis of time series
data on cluster initiative development derived from cluster member´s annual reports. The paper
concludes there are both exogenous and endogenous factors and policies at regional and national
levels which play important role in cluster formation but at first still holds clusters are business
driven.
Key words
cluster lifecycle, main drivers, machinery
Anotace
Regionální průmyslové klastry jako specifická forma síťové organizace v konkrétním odvětví a území
se staly velmi populárním nástrojem regionální a hospodářské politiky zejména v posledních
desetiletích a v České republice je jejich podpora spojena od roku 2014 zejména se strukturálními
fondy EU. Klastry podobně jako mnoho dalších entit procházejí svým životním cyklem a vykazují
různé vývojové fáze, které jsou spouštěny konkrétními faktory a událostmi. Cílem článku je
identifikovat hlavní hnací síly, které sehrály rozhodující roli při formování strojírenského klastru
v Moravskoslezském regionu v České republice. Metodika výzkumu vychází z výsledků semistrukturovaných
rozhovorů s regionálními představiteli a zástupci firem v klastru doplněná o časové
řady vybraných ukazatelů. Článek dochází k závěru, že formování a vývoj klastru značně ovlivňují
endogenní a exogenní vlivy a zásahy národní i regionální politiky, avšak klíčovou roli sehrává
podnikatelský přístup jeho členů.
Klíčová slova
životní cyklus, hlavní hnací síly, strojírenství
JEL classification: L6, O25, R1
Sborník příspěvků XVII. mezinárodní kolokvium o regionálních vědách Hustopeče 18.–20. 6. 2014
114
Introduction
Theories of regional development and regional policies cover two principal issues of regional
disparities and regional performance or competitiveness. Regional disparities are examined in
different ways to find solution for proper instruments of regional policy (Viturka, 2011) which can
contribute to the solution of regional problems. In current approaches to finding the ways for the
growth of competitiveness very often innovation, innovation infrastructure and business clusters are
mentioned.
Innovations are generally considered a key factor of the socio-economic development and important
tool for productivity increase and growth of added value (Žítek, Klímová, 2012). By Klímová (2013)
innovation infrastructure (under which we mean business incubators, science and technology parks,
research centres, etc.) contributes to creation and diffusion of new knowledge, helps to cooperation of
science and business sphere and technology transfer and supports innovation enterprise.
In regional and economic policy the term „cluster“ is usually used to explain geographical
concentrations of economic and innovation activities which are organized and managed to achieve
pre-defined goals and objectives connected mainly with achievement of higher productivity of
companies and higher competitiveness. During last decades clusters gained more importance as an
element of regional economic development and innovation strategies in EU member states (Skokan,
Poledníková, 2011). The modern ages of clusters is closely connected with Michael Porter who
described in his work Competitive advantage of nations the tight relationship between cluster
participation and the competitiveness of firms and industries and proposed the first cluster definition,
very often criticized and improved later by many authors (Porter 2003). By him clusters are
geographic concentrations of interrelated companies, specialized suppliers, etc. in similar sector as
well as related institutions. Porter´s theory of clusters has become the standard concept and was
further elaborated by many followers. Clusters are usually managed by cluster organizations and are
connected with cluster initiatives defined by Lindqvist (2013) as organized efforts to increase the
growth and competitiveness of clusters within a region, involving cluster firms, government and/or the
research community.
Clusters are expected to bring benefit not only to their business members but to the regions they
operate in and to universities as well. Firms in clusters can be more specialized and can better
cooperate than in isolation. They can also reach the higher level of innovation due to the knowledge
spill-over in a proximity, clusters also stimulate the new start-ups, etc. Cluster activities cover many
joint actions in areas of networking, human resources and training, research and development,
marketing, internationalization, financing and others (Blazek, Kuncová, 2011).
Clusters are not created from scratch but they develop gradually and they have their lifecycle. Cluster
evolution theory mainly deals with the emergence and the development of clusters. Evolutionary
approaches emphasize the unpredictability of future cluster trajectories but stress that they are
constrained by the past. Menzel and Fornahl (2010) propose the concept of cluster life cycles, a
concept that is derived from product- and industry life cycle approaches. The authors expect clusters
to move through a set of stages (emergence, growth, sustainment and maturity, decline or
transformation) all of which feature different factors that are relevant for cluster development.
Emerging clusters are usually difficult to identify because potential firms that might be part of a
cluster are scattered and the spatial and thematic boundaries are not yet defined (Menzel and Fornahl,
2010). The distinguished feature for cluster formation is the role of pre-existing economic, political
and institutional structures and the role of pioneering firms in particular regions. Firms are considered
to be attracted by the proximity to higher educational institutes and a pool of well-educated labour.
Growing clusters on the other hand are increasingly affected by demand and competition. With regard
to sustaining clusters the predominance of incremental innovations point to an increasing maturity of
the cluster. Also, the number of market entrants and the number of collaborations with higher
education institutes decline and clusters lock in (Rehak et al., 2013). Declining clusters exhibit rigid
Sborník příspěvků XVII. mezinárodní kolokvium o regionálních vědách Hustopeče 18.–20. 6. 2014
115
and homogeneous networks slowing down the innovation process. Cluster transformation and renewal
requires radical innovations, a change of the institutional setup, and networks, financial resources,
proximity to research institutions and a pool of skilled labour. These factors obviously resemble
factors that have been decisive for cluster emergence. The following sections analyse the main factors
that are relevant for cluster change.
2. Objectives and Methods
The paper deals with the main factors which influenced the development of machinery and
engineering industries in old traditional region of Moravia Silesia in the Czech Republic. The
restructuring of the region after 2000 is marked by huge inflow of foreign direct investment and by the
development of clusters in traditional industries such as engineering and wood industry and also in
new industries the most important being automotive, ICT and new energy sources. In fact, already
before 1989 under communist regime the main metallurgical, mining and heavy industries were
clustered in the region with their headquarters, main suppliers and also with a specific VŠB-Technical
University offering the education at faculties of mining, engineering, metallurgy and business and
economics. Many “traditional” companies in machinery industry which were established tens of years
ago were transformed during privatization, however this tradition and entrepreneurial spirit in industry
were important for organizing the cluster initiative which lead to establishment of engineering and
machinery cluster.
The main objective of the paper is to identify the main endogenous and exogenous drivers from the
view of the region which played the decisive role in the development of machinery cluster based in
Moravia Silesia region of the Czech Republic. Research strategy is based on researcher´s own
experience in region, the results of semi-structured interviews with key regional players in Regional
administration, Regional development agency, academics and managers of important firms. The
subsidiary objective is to show the basic characteristics of recent machinery cluster development
under the heading of Czech machinery cluster using time series data on cluster initiative development
derived from cluster member´s annual reports in the period 2005 – 2012 (later data are not available
yet).
3. Main drivers in the development of machinery and engineering industry in
Moravia Silesia
Current level and state of the art of regional machinery and engineering industry is the outcome of
previous development of metallurgy and engineering. The main stages understood from the view of
cluster lifecycle concepts are described in Table 1.
Tab. 1: Main phases of industry lifecycle in machinery and engineering of Moravia Silesia
Emergence Phase Growth Phase Sustainment Phase Transformation Phase
Prior industry
structure
Entrepreneurial
environment
Pool of labour
Demand increase
Supportive
institutions and
organisations
Suppliers and
customers
Growing inflexibility
of institutional
structures
Isolation and lock in
Loss of markets
Change of political and
entrepreneurial environment
Change of cognitive
framework and firm routines
Phase 1:
Emergence of coal
mining, metal, heavy
machinery in the 19th
century
(until 1918)
Phase 2:
Gradual growth and
maturity
Breakdown due to
crisis and war
(1918 – 1945)
Phase 3:
Maturity and decline of
large state owned
companies in planned
economy
(1945-1989)
Phase 4:
Restructuring and dynamic
re-growth by privatisation
and FDIs establishment of
cluster initiative
(1989-2013)
Source: own processing
Sborník příspěvků XVII. mezinárodní kolokvium o regionálních vědách Hustopeče 18.–20. 6. 2014
116
Emergence phase is connected with the beginnings of coal mining in the region, the foundation of first
ironworks in Ostrava (Vítkovice company in 1828), fast growth of metallurgy, heavy machinery and
engineering. After establishment of Czechoslovakia in 1918 the region became national industrial
centre and we can speak of growth phase. Market economy developed until 1939. These favourite
conditions were interrupted by world crisis and Nazis occupation in 1939 – 1945, however fast
growing demand for the support of Germany in world war contributed to modernization and
performance of machinery industry.
Post war development was characterized by nationalization (1945), concentration (1955-1970) of
smaller firms into so called production-economic complexes similar to today´s clusters. The main
complexes in the region were e.g. Vítkovice metal-machinery complex, Steel and iron complex,
Ostrava-Karviná mining group within which machinery companies were included and other
enterprises. The growth was supported by state investment and Comecon division of labour for
communist countries at one hand, on the other hand centrally planned economy, isolation from world
and contemporary know-how and iron curtain lead to the loss of industrial dynamics in the 80th
,
which resulted in sustainment phase of machinery and engineering industry.
Transformation phase began after 1989 and at first included privatisation of companies with different
outcomes depending on method – voucher privatisation and direct management buy-out or foreign
buy-out. It resulted in vertical disintegration of former complexes and big companies, establishment of
new companies spinned-off from former parts of complexes. Attraction of FDIs and acquisitions,
again lead to new firms establishment. Growth of productivity and employment due to modernization
of production equipment, ICT, methods of management and focus to new markets in the EU and
operating globally was the response to these changes which resulted in the establishment of Moravian
Silesian engineering cluster initiative. After first years of fuzzy existence this first Czech cluster
expanded outside the region and now covers national-wide located companies in main value chains
operating under the heading of Czech machinery cluster. The main endogenous and exogenous drivers
in the industry development during lifecycle from the view of region are summarized in Table 2.
Tab.2: Endogenous and exogenous drivers of machinery cluster development
Development
phase
Endogenous drivers Exogenous drivers
Phase 1
Emergence
Presence of coal, related manufacturers and
supportive industrial structure (mining,
metallurgy and power production) in the
region. Location of region in the
neighbourhood of Poland and Slovakia. Good
traffic connection outside the region mainly
by rails.
The expansion of industrialization in
Central Europe and demand for steel.
The development of civil engineering,
growing demand for machinery.
Developing European market.
Phase 2
Gradual growth
Knowledge accumulation and growing local
market demand, Established industrial basis
and structure in the region with a long
tradition.
Economic recovery after world crises
(1929-1933), war impact since 1939,
demand of Germany, deliveries for the
German army.
Phase 3
Sustainment
Location of VSB Technical University
covering faculties of mining, metallurgy,
engineering, later electrical engineering.
Foundation of New metallurgical plant in
Ostrava and others and demand for machinery
products, establishment of research institutes
in the region.
Communist centrally planned economy
and spatial division of labour – huge
state investment into metallurgy and
machinery, state support and demand for
export to COMECON countries.
Sborník příspěvků XVII. mezinárodní kolokvium o regionálních vědách Hustopeče 18.–20. 6. 2014
117
Development
phase
Endogenous drivers Exogenous drivers
Phase 4
Transformation
Establishment of self-governing region
Moravia Silesia. Presence of semi-skilled
labour force. Expansion of Universities in the
region and growth of skilled academic staff.
Learning by doing and by interacting. First
regional development strategies. Re-directing
exports from East to the West.
Modernization of production equipment in
privatized and new established companies.
Emerging efforts by regional leaders to
improve the position of regional economy.
Transformation of economy and
restructuring of regional economy by
central government policies. Low road
strategy – attraction of FDIs. Accession
to European Union. Impact of world
crisis. Political instability in the Czech
Republic, lack of national economic
strategies, unclear governmental policies.
Dependence of external decisions by
HQs of MNEs. EU strategies for R&D,
clusters and innovation
Source: own processing
4. Development of Czech Machinery Cluster initiative
The leader in implementing cluster initiatives in the Czech Republic has become Moravian-Silesian
Region, an old industrial region which restructuring after 2000 is marked by huge inflow of foreign
direct investment and by the development of clusters in traditional industries such as machinery and
wood industry and also in new industries of which the most important being automotive, ICT and new
energy sources. As follows from the previous analysis the machinery and engineering basis of so
called anchor firms for machinery cluster was created in the last century and the linkages among them
were already set up in the past and only the processes of transformation and privatisation interrupted
and restructured them. In fact, already before 1989 under communist regime the main metallurgical,
mining and heavy industries were clustered in the region with their headquarters, main suppliers and
also with a specific VŠB-Technical University offering the education at faculties of mining,
engineering, metallurgy, electrical engineering and informatics and business and economics.
The new era of clusters development started in the region as a joint initiative of Czech Investment
agency CzechInvest and VSB-Technical University of Ostrava supported by the Moravian Silesian
Regional Authority. The region was the first Czech region to carry out a study identifying clusters
(2002), and then established the first cluster in the country – the Moravian-Silesian Engineering
Cluster (2003) which was later transformed into national Czech machinery cluster. Main stages and
events of this development which was strongly influenced and supported by regional authorities and
by the financial aid from EU Structural funds are given in Table 3.
Tab. 3: Main events affecting cluster development in Moravia Silesia
Year Action
2002
Pilot project “Identification of industry grouping for state aid support in North Moravia
Silesia”
2003 Establishment of first Czech cluster “Moravian Silesian Engineering cluster”
2004–2005 Search for clusters in Moravia-Silesia (identification phase)
2006 Regional initiative ClusterNet in Morava-Silesia
2005–2008 Establishment of eight regional clusters in Moravia Silesia (CLUSTER Programme)
2008 Czech National Cluster Association
2009–2014 Development of established regional clusters (COOPERATION Programme)
Source: Own processing
In the Pilot study (see Table 3) the metal-engineering cluster was identified as the cluster of highest
potential in the region. The establishment of cluster was initiated at the regional level by Union for the
Development of the Moravian Silesian Region with additional support of Moravian Silesian Regional
Administration, and VŠB-Technical University of Ostrava (VŠB-TU) which is also the member of the
majority of MS clusters.
Sborník příspěvků XVII. mezinárodní kolokvium o regionálních vědách Hustopeče 18.–20. 6. 2014
118
Originally cluster was designed as a horizontal platform for the whole engineering sector in the region
with a tendency to quit metallurgy and heavy machinery in the future. These broad objectives, weak
management under the head of Union for the Development of the Moravian Silesian region and
unclear financing of its activities lead to crisis in financing, concept, specialisation and membership,
when the member base turned down from 35 to 18 members in two years. The strong impetus for
cluster development came in 2005 when the leadership took over the leading machinery company in
the region, Vítkovice machinery group.
The main activities of cluster are focused to supply chains – enabling smaller cluster members to
participate in big contracts for power industry, nuclear power and ecological engineering; purchase
alliances - cost reduction of joint purchasing based on quantity discounts; internalisation through
export and investment; cooperative projects in innovation and training engineers for nuclear power;
energy resources of the 21st century; innovation in professional training at secondary schools; HRD
for R&D teams, new talents for science and research. What is important, all these outcomes stem from
business and requests from companies and not from public sphere, they are business driven.
The development of pilot Czech cluster was not straightforward and is documented at Figure1 where
the time series of number of cluster firms and total clusters values for turnover and value added are
depicted.
Fig. 1: Demonstration of Machinery cluster development
Source: Own processing
The gradual growth of number of cluster firms is based on value chain related companies and was
interrupted in the years of financial crises. Surprisingly the volume of sales and total value added of
cluster companies did not followed the growing trend of cluster members as not all new member are
manufacturing firms with their own production.
Conclusion
Establishment of clusters in the Czech Republic became very fashionable in the last decades and was
driven mainly by the availability of EU structural funds which financed feasibility studies for their
identification and supported their projects after co called cluster establishment. The emergence of
clusters takes many forms. One example is based on companies which are already located in industry
and the region for many years. This is the case of machinery cluster in Moravia Silesia region.
Another example follows from coming or establishment of new firms in industry and regions, this is
the case of ICT or new energy sources clusters where the firms are young. However in both cases it
must be the firms which are established and operate in given industry and region at first, gradually
develop the linkages and networks and pass through various phases of their lifecycle. The existence of
these firms is the fundamental condition for cluster development. The issue is if we call them industry
groupings or clusters depending on the existence of cluster initiatives and cluster organization.
35
30
18
36
51
44
48 48
55
65 68
0
10
20
30
40
50
60
70
80
No. of firms
Sborník příspěvků XVII. mezinárodní kolokvium o regionálních vědách Hustopeče 18.–20. 6. 2014
119
In majority of clusters their member firms existed and cooperated within industry and the region
before cluster initiative was organized and declared. There are many drivers, events or policy
measures of endogenous and exogenous nature at regional, national and global levels which have
strong influence upon industry and cluster lifecycle. They affect the level of performance and
competitiveness of companies both in industry and cluster. The paper identified main these factors and
drivers in machinery and engineering industry in Moravia Silesia region which played decisive role in
this industry and cluster development during their lifecycle in old industrial region. The case of Czech
machinery cluster showed the creation of cluster initiative does not guarantee the future cluster
success without involvement of key business players. Clusters were originally defined in theory as
industry driven and this fact still holds even under specific Czech conditions regardless the cluster
funding.
Literature
[1] BLAŽEK, J., KUNCOVÁ, I., (2011,). Clusters: Fashionable Term or a Real Source of Competitiveness?
Ekonomický časopis, vol. 59, iss. 3, pp. 225-242. ISSN 0013-3035.
[2] KLÍMOVÁ, V., (2013). Innovation infrastructure in Moravian regions. In 16th International Colloquium
on Regional Sciences. Conference Proceedings. Brno: Masarykova univerzita. ISBN 978-80-210-6257-3.
DOI 10.5817/CZ.MUNI.P210-6257-2013-24. DOI 10.5817/CZ.MUNI.P210-6257-2013-24.
[3] LINDQVIST, G., KETELS, C., SÖLVELL, Ö., (2013). The Cluster Initiative Greenbook 2.0. Stockholm:
Ivory Tower AB. ISBN 978-91-974783-5-9.
[4] MENZEL, M. P., FORNAHL, D. (2010). Cluster life cycles – dimensions and rationales of cluster
evolution. Industrial and Corporate Change, vol. 19, iss. 1, pp. 205-238. ISSN 0960-6491. DOI
10.1093/icc/dtp036.
[5] PORTER, M. E., (2003). The Economic Performance of Regions. Regional Studies, vol. 37, iss. 6-7, pp.
549-578. DOI 10.1080/0034340032000.108688.
[6] REHAK, S. HUDEC. O, BUCEK, M., (2013). Path dependency and path plasticity in emerging industries
Two cases from Slovakia. Zeitschrift fur Wirtschaftsgeographie, vol. 57, iss. 1-2, pp. 52-66, ISSN 0044-
3751.
[7] SKOKAN, K.; POLEDNÍKOVÁ, E., (2011). Public Aid for Clustering Firms in the Czech Regions. In
Finance and the performance of firms in science, education, and practice. Proceedings of the 5th
International Scientific Conference. Zlín: Tomáš Baťa Univerzity. pp. 423-432. ISBN 978-80-7454-020-2.
[8] VITURKA, M., ŽÍTEK, V., KLÍMOVÁ, V., TONEV, P., (2011). Application of Microeconomic and
Macroeconomic Approach to Evaluating Disparities in the Regional development. Ekonomický časopis,
vol. 59, iss. 7, pp. 71-90. ISSN 0013-3035.
[9] ŽITEK, V., KLÍMOVÁ, V., (2012). Non-technological innovations as a criterion for definition of
innovative firm. In 15th International Colloquium on Regional Sciences. Conference Proceedings. Brno:
Masarykova univerzita. pp. 331-341. ISBN 978-80-210-5875-0.
This article was supported by Eurocores GAČR project CRP/11/E025 titled Cluster life cycles –
the role of actors, networks and institutions in emerging, growing, declining and renewing
clusters.