Recent Research: Knowledge Spillover: Automatic or Cultivated?

Academics and policymakers should "be more careful with the assumption that technological knowledge spillovers and networks occur automatically in innovative clusters," according to a recent article on the Cambridge IT cluster. The report, Do Clusters Really Matter for Innovation Practices in Information Technology? Questioning the Significance of Technological Knowledge Spillovers, examines the impact that a cluster has on R&D workers in IT field with an emphasis on territorial learning and knowledge spillovers. Over 100 IT professionals in various R&D job positions — junior developers, Chief Technology Officers to Managing Directors at small firms — from Cambridge, United Kingdom (UK) were surveyed or interviewed. The region's IT cluster is widely considered "one of most innovative and successful high-technology region in the UK and the EU." Author Franz Huber found that 49.1% R&D workers did not find clustering to be "beneficial for their work." However, Huber quickly points out that Cambridge's "guarded culture" may reduce the amount of formal and informal diffusions of knowledge.

Respondents reported three reasons the Cambridge IT cluster is not beneficial — disadvantages of the cluster for small firms, no need to interact within the local region and no opportunities to benefit from other members of the cluster. Upper management at small firms routinely listed disadvantages of the cluster including local competition for labor, high costs of labor/facilities and proximity to customers is poor. These respondents believed that high costs and competition for top talent make it difficult for small companies to thrive in the Cambridge cluster. Many respondents also cited little need for contact with local companies because the company's internal talent is sufficient for achieving. The Internet also limits formal local collaborations due to the ability to collaborate globally. Client-driven projects limit the relevancy of some firms benefiting from Cambridge's research-intensive culture.

The report highlights several benefits of working in proximity to related businesses and resources. These include:

• Labor market advantages - Many R&D workers were drawn to the cluster due to career prospective and private dimensions (e.g., proximity to other potential future employers);
• The "Cambridge brand" - Individuals and companies benefit from being related to Cambridge as a global brand (e.g., attraction of international customers, marketing, increased availability of venture capital);
• Formal business links - Some respondents indicated formal business relationships (e.g., local suppliers and buyers, research collaborations with the University of Cambridge, business partnerships) do occur within the cluster;
• Infrastructure to support entrepreneurship - The availability of infrastructure, institutional support and venture capital make clusters excellent for cultivating entrepreneurs; and,
• Knowledge activities - Respondents found knowledge activities unrelated to R&D (e.g., personal networks for managerial/business knowledge, professional organizations and conferences) to be a strength of working in the Cambridge cluster.

These benefits indicate that there are possible opportunities for knowledge spillover and network development. Firms have successfully developed formal business links and informal knowledge activities do occur. However, Huber proposes the "guarded culture" of Cambridge's IT cluster creates barriers limiting the diffusion of R&D knowledge. Traditionally, Cambridge IT firms have not collaborated closely due to intrafirm competition. The regional also has limited professional and social opportunities for IT professionals to interact with other R&D workers according to some interviews.

The report's findings challenge the assumption that knowledge spillovers and networks automatically occur within clusters. However, policymakers and regional development economic development practitioners can cultivate formal and informal networks to increase diffusion of knowledge through well-crafted innovation policies. These policies should focus on developing formal and informal networks between R&D workers, creating incentives for collaboration between firms and increasing business-university relationships.