Future Cluster Based Strategies of the Science and Technology Parks: Combining Environmental and Economic Development Aims in Practice

Being the proven instrument of the regional and innovation development in the last decades, many countries all over the world experience a tremendous growth of the Science and Technology Parks (STPs). According to the statistics provided by UNESCO, today there are over 400 science parks worldwide and their number is still growing. At the top of the list comes the USA, which is reported to have more than 150 science parks. Japan comes next with 111 science parks. China began developing science parks in the mid-1980s and now has around 100, 52 of which were approved by the national government and the remainder by local governments [1]

The growth of the STPs in different countries is very much influenced by the international fashion and the trends in the field. This fact applies not only to the initiatives of starting the construction of the STPs, but also to the sectors that are chosen as a core focus of the STPs. In the last years among those trends were bio-technologies, nano-technologies as well as information and telecommunication technologies (ICT).

In the last decade the green technologies have joined the list of the favourites of the STPs. Unfortunately in many cases the reason for that is not a pursue of the regional economic development, but rather a tribute to fashion and a result of the international attention and promotion of the climate change problem. In these cases, environmentally focused STPs create oasis of green focused high-tech companies and do not contribute to the regional development as much as they could.

What is a role of STPs in green movement and how to exploit this opportunity for the benefit of economic development?

Today the growth of the green market is often compared to the information technologies. In recent years the world have experienced an uprise of the ICT companies, connected both to big opportunities and risks, showing the appearance of such companies as Google, Nokia, Microsoft, generating the dotcom bubble. In spite of strong turbulence of the market, ICT became an integral part to many solutions and there are still millions of the innovations to come from the application of ICT to existing products and services. ICT, as enabling technologies, helped to increase productivity and efficiency of existing companies.

Most of the STPs all over the world integrated the ICT sector to the core activities. For example, from the member of the Finnish Science Park Association, TEKEL, 82% of STPs identify the ICT sector as one of their focus knowledge clusters [2]

There are many reasons for the long-term cooperation between the STPs and ICT companies. The ICT sector employs highly qualified specialists. Requirements of the ICT companies to the premises are general all over the world and do not require big investments from the STPs, comparing to other more research intensive sectors. Flexible office, fast internet connection, reliable electricity supply and secured access, are the main requests of the ICT companies to the STPs. Besides that, ICT is a very strongly outsourcing industry, where companies collaborate with each other, generate new ideas and spin-offs. The commercialisation process of new ideas is comparatively fast, which allows the STPs to grow many SMEs and show good result to the local authorities.

Will the green sector follow the success of ICT and become a main customer for most of the STPs?

According to the Energy Enviro Finland, the whole environmental technology market is forecast to double by 2020 to some EUR 2,300 billion. And that the current EU turnover is EUR 227 billion, accounting for 2.2% of GDP and generating 3.4 million jobs [3].

Alongside with huge opportunities, the world economic crisis has shown that investments into environmental technologies pay back. It has been found out by AT Kearney that in 16 of the 18 industries studied, companies committed to sustainability outperformed the industry in average by 15% over the six months from May through November 2008. Among the reasons for success it was mentioned that the green measures produce immediate cost-savings, such as reducing packaging material and decreasing fuel use. The companies investing into environmental technologies usually focus on long-term strategy, not just short-term gains, have strong corporate governance and sound risk-management practices. The conclusion to be done from the financial crisis is that investing in sustainability for the long term may be the best way to protect a company's value through the months - and years – ahead [4].

Recently, a policy report for the OECD innovation strategy has been produces in Nordic countries. The report has stressed a new nature of innovations. The two most important conclusions that Nordic countries are experiencing and most of the other countries to face soon are: market driven nature of innovations and global challenges as a driver of innovation. And the latter is of course related to climate change, the supply of clean water, environment friendly energy. All of those are to be solved by environmental technologies. The report also outlines, that environmental cluster becomes a business cluster. “Today companies’ behaviour is changing as they become involved in solving challenges which previously were thought as the responsibility of government. There is an increasingly visible blurring in the sharing of responsibilities between companies and governments” [5].

Naturally more and more STPs all over the world have stronger focus to the green innovative companies. The field offers perfect role to the STPs, which are perceived as pioneers, able to foresight new business opportunities, support innovations and connect interest of companies and the public sector.

In Finland already over 50% of the STPs focus on environmental companies. The share will grow even more if we add up to this number the STPs dealing with environmentally friendly energy solutions, for example in the energy sector.

Among the first challenges the STPs’ managers face, is the attitude to the green technologies from traditional industries, especially in the developing countries, where environmental solutions are still often seen as unaffordable luxury and not viewed as a business solution and a way to increase own competitiveness.

Unfortunately not all the STPs are ready to work hard in changing the attitudes of local traditional industries. Sometimes they find solution in creating an oasis for high-tech green companies, where they struggle to commercialise radical innovations. The STPs managers work hard to develop international networks with other high-tech companies and technology parks in order to promote their innovative companies abroad.

In this situation the STPs might contribute to the economic development by providing internationalization support to the green SMEs, helping them to the markets which are better prepared and more receptive to the environmental technologies. But such activities of the STPs are not beneficial enough to local economic development and local markets.

Another practical challenge of the STPs focusing on the environmental companies, comparing to the ICT companies, is connected to the provision of the premises and services specific to the sector. Unlike ICT companies, to support commercialisation of green technologies, an one man office with computer and internet connection might be not enough. The companies of green sector are versatile and require tailor made research and testing facilities, assistance with the intellectual property rights, certification or sometimes licensing and other legislation barriers.

Hardly any STP has enough financial and human resources to support the growth and innovativeness of critical mass of the green companies, even though some still strive to do so.

Clear priorities in environmental technologies, decision about so called “spearhead sectors”, is the only way for the STPs to generate sizable critical mass and commercially successful companies.

But prioritising and focusing are not often favoured, as they generate a big risk of choosing wrong “champions”, betting the wrong horse. Still, only the clear focus allows regions and the STPs to allocate their limited resources in order to get higher outcome and generate greater impact. The risk of spearhead sectors can be decreased by careful analysis of existing local strengths and opportunities.

The STPs should make a choice of spearhead sectors inside the green sector, based on local strengths and existing industries in order to influence local economic development.

It is the time for the STPs to put forward as an aim supporting competiveness, innovativeness, changing the mindset of local and traditional companies. The STPs should change their attitude to the green technologies and perceive them not as a political order, the climate change issue, future technologies, but rather as existing business opportunity offered by the growth of the green market.

The first practical step to be done by the STPs is to analyze and to identify local strong sectors, which can develop future opportunities by application of green technologies. A clear big picture, based on cluster approach will be helpful for the STPs to select spearhead sectors inside the environmental sector and develop synergies between the different companies.

To find new hi-tech spearhead clusters that can connect existing sectors, requires from the STP managers a lot of creativity, good knowledge of the business and global trends.

For the STPs’ managers this would mean answering questions:

• What kind of companies should form the core of the cluster model?
• From what areas are they?
• What kind of companies can attract other players, so that the STP would grow, attract new companies, foster innovations and regenerate networks?

For example, in case of the forest industry, Finnish companies went through the stages of a timber production, paper manufacturing, production of pulp and paper machines, turn-key and maintenance services. The first biggest driver of the industry was a development of ICT, supporting automation, logistics and security. And the second is related to the energy efficiency and environmental technologies. The STPs located in the core of a forestry region of Finland, especially in the Eastern part of the country e.g. in Lappeenranta and Kouvola, are strongly supportive to this sector. Of course they do not have huge pulp and paper factories on their territory, but they do support innovative activities of the SMEs developing IT solutions and green technologies to be consumed by the sector, helping them to network with such big companies as StoraEnso, UPM and others and even developing international activities, especially in cross-border cooperation with Russian companies.

Nordic countries, and Finland especially, have been always following a very practical approach, which is maybe partly stimulated by the small size and limited resources. The innovations in the traditional industries have been used as a driver for economic development. Now Finland is perceived as one of the most environmentally friendly and innovative country in Europe. Finnish companies and the STPs managed to combine international and high-tech orientation with strength of traditional industries. According to the Minister of Trade and Industry of Finland, Mauri Pekkarinen, “it is important to find strengths in our natural background” [6].

The role of the STPs should be in promoting new innovations in the field of environmental sector that would support competiveness of local companies. Thus the STPs would contribute to the local economic development, not just by promoting high-tech companies, but through uplifting traditional low-tech companies to high-tech companies, motivating them to use the green technologies to increase own competitiveness on the international markets.

Having strong roots in the local economies would make the STPs more influential and economically beneficial to the regions.

At the same time, based on local strengths it is easier to generate innovative solutions that are faster to commercialize and harder to copy. The main innovative opportunity to be explored by the STPs’ managers is in finding synergies between clusters, for example between mining and tourism, ICT and Green Technologies, Mobile and Medical Technologies.

It means that there is no need in reinventing the wheel or the combustion engine. Many of the most successful dotcom businesses just delivered or charged for services or solutions in a more efficient way. Few revolutionised the nuts and bolts of technology itself. Similarly, the green business revolution will generate interesting new service businesses and business models using existing technologies. [7]

Main recognised role of the STPs is to support innovations and “host” their commercialization, because latter result into competitiveness and economic growth. It is much easier to commercialize innovations that are developed in collaboration of people from different sectors, as new applications for existing technologies, rather than finding opportunities inside of one area. Even the Internet and mobile phones have been originally created for military purposes, but now keep on exploring their application in civil life.

It is also easier for the STPs’ managers to create inter-disciplinary research projects as participating companies are less likely to see themselves as competitors, but rather as partners.

Moreover cluster synergies can generate new internationally successful companies which strength is based on a unique environment.
One famous example of synergies is offered by McDonough in Cradle to Cradle, when his “team decided to design a fabric that would be safe enough to eat” for the Swiss firm Rohner Textil AG [8]. The results of the projects were much higher than expected. After the successful project implementation Rohner’s plant material were not anymore regarded as toxic waste, requiring expensive exportation to Spain for disposal. In addition the costs for waste water treatment and electricity dropped. In fact, the waste water from their process was as clean as Swiss drinking water. And developed green materials could be used in agriculture. And a new solution has appeared to the market under name of Climatex Lifecycle. This example shows a success story of complex vision, and benefits several sectors, such as chemistry, textile manufacturing, agriculture and, of course, an environmental cluster.

A more recent practical example is given by FORA in 2009. It is a success story based on strong collaboration of ICT, financial, construction and environmental companies, resulting into an integrated water system with a mobile payment method using water cards (smart cards). By sending a text message from a mobile phone, a user can transfer money onto a water card which in turn can be connected to the pump to pay for using it. When the user arrives at the water station, the water card is inserted into a slot where the credit amount on the card is updated. Thereafter the user can insert the updated water card into a slot next to the water faucet allowing the water to flow [9].

All those cases represent solutions based on exiting companies and exiting technologies. Still, a case by case approach is not enough for the STPs’ managers willing to influence the economic development. Only a joint vision and systematic approach could make a difference.

Once the vision is clear, priorities are set, the STPs can start implementing the strategy of bridging clusters and utilizing new connections for the economic development. Few practical instruments worth of mentioning are: Collaboration platforms, joint trainings as well as joint research programs supported by the easy access to the testing and piloting facilities.

First of all, among the practical ways of implementation it is good to start with developing the inter-disciplinary platforms for collaboration, which can be realized in form of an on-going forum of companies, including face to face seminars and discussions and supported by the online platforms with blogs, matchmaking possibilities and good collection of information on available collaboration opportunities.

Secondly, launching the training programs with an interdisciplinary approach for the STPs’ client companies. Such trainings can cover matters of environmental management, certification, innovation management or specific technical topics. Often the STPs can also offer good facilities for organization of trainings and forums.

Thirdly, testing and piloting facilities for environmental companies, often referred as special premises. As Finnish experience shows, many STP’s client companies, especially the SMEs, value a lot easy access to such facilities. When based on local needs, the STPs’ managers have more argumentation to receive financing for construction of expensive testing facilities not only from public sources, but also from traditional companies.

It should be not forgotten that any testing or piloting facilities are risky and very expensive investments for the STPs. They require special buildings, with stronger floors and better alarm systems. The equipment of the special premises is very costly and needs to be renewed regularly. The personnel servicing the premises should possess professional technical knowledge. Still special premises are an important part of each STP focusing on innovations. And in some countries the STP is the only provider of the research and development opportunities to local companies. Therefore to decrease the risk of investments and to give high-tech companies the opportunities to develop their ideas, development of the testing and piloting facilities should be based on cluster based approach and priorities identified as spearhead sectors.

By providing interaction, training, testing and piloting opportunities to the local companies STPs can help local green companies to make their inventions a commercially successful product or service. This would generate establishing of new companies and new work places.

But sizable economic result to the region can been seen only when these new technologies are being used by local traditional companies, improving their competiveness.

Using the proposed approach aims to help the new technologies, including green technologies, the STPs itself to change the situation of being a burden to the local budgets into the engine of productivity and competitiveness increase for the local companies.

Clear STP’s profile based on the local strengths is also viewed as an opportunity for better regional marketing. High-tech orientation based on the local businesses would make it easier for STPs’ managers to attract clients by offering them unique business environment.

Cluster based strategy, and especially with environmental technologies in core, would contribute to market positioning of the STPs globally and more effective matchmaking.

The conclusions to be made from this paper can be viewed as the practical recommendations for the future managers of the STPs. So far many STPs were seen as pioneers of new technologies, mediators between public sector, business and academia. The present environment adds a new role to the STPs – they should become mediators between new technologies and existing sectors. This not only involves connecting stakeholders, but also past and future, being able to have a critical look and find opportunities in both. This role requires from the STPs a better understanding of business and refocusing from technology development to economic development. In other words the STPs should focus on listening to business needs and economic trends as well as generate and find new innovations and technologies that would meet open demands. 

This article has been presented at the annual conference of International Association of Science Parks in South Korea in May 2010. About conference you can read here or from conference website.