cluster governance originators: foundation for msme clusters (fmc), unido
TRANSCRIPT
CLUSTER GOVERNANCE
Originators: Foundation for MSME Clusters (FMC), UNIDO
Reducing poverty through sustainable industrial growth
Government and Governance
Governance is management of relations among entities
Government is one well known form of governance
It manages through rules and norms and via institutions
It manages at macro and micro level
Here rules predominate norms
Reducing poverty through sustainable industrial growth
Cluster Governance
A cluster does not generally have such formal governance mechanism
Here needs of diverse interest groups need to be managed
Typical cluster issues are of prime importance
Various agreements evolve through processes for different issues
Government is not enough to handle these
Hence cluster level intermediaries play a major role
Reducing poverty through sustainable industrial growth
Components of Cluster Governance
Local government
Associations
Networks
Institutions
Large firms
NGOs
Across the relevant value chain
Generally within the cluster
Reducing poverty through sustainable industrial growth
Intervention in Governance Structure
Case study: Leather Cluster of Ambur / India
Reducing poverty through sustainable industrial growth
Cluster Map of Ambur (2000)
KAR
KARAMBURTEC
Export Market
International Fair
Indian Market
ChennaiMarket
Export Agent of buying houses
Merchant Tanners in Chennai
Local Agent
Integrated Export Oriented Leather (22)
& Shoe Units (21)
Shoe Upper Units (40)
ATA
Tanneries (80)
Hides & skins’ Commission
Agent
Machinery Supplier
Chemicals Supplier
Shoe material Supplier
ASSMA
Tiny Shoe units (120)
Specialised Job-Working
Technocrats (30)
Local Market
Irregular Buyers
Women workforce form villages (unskilled)
Reducing poverty through sustainable industrial growth
Ambur Governance Capacity (2000)
Analysis of cluster map:
Types of units: semi-finished leather, shoe upper units, tiny shoe making units, integrated export oriented firms
Associations: ATA of tanning units, tiny shoe units have a dead association ASSMA, no other associations
Two technical institutions KAR polytechnic and AMBURTEC, operating from outside are CLRI, CLE, and NSIC
Raw material procurement and selling of products by tiny shoe making units are sub-optimal market conditions
Large units dominate shoe upper and tanners
More issues may be revealed during implementation
Reducing poverty through sustainable industrial growth
Status Prior to Intervention
Absence of appropriate intermediaries – large units
Dormant association – tiny shoe units, tanners
Dormant support institution - KAR
Low linkage among intermediaries
Conflict among intermediaries – shoe upper and large units
Sub-optimal market phenomenon for tiny shoe units
Reducing poverty through sustainable industrial growth
Governance Capacity (2002)
One association of tiny shoe manufacturers (TASSSMA), one umbrella organisation (AEDOL), two export consortia (ALTECO and CSM), an NGO (ACCESS) involved in empowerment of women (fresh issue)
AEDOL has emerged as the lead organisation for growth and development of the cluster
KAR polytechnic has become proactive in running training programmes
Creation of step-c and common sales outlet of TASSMA
There are deficiencies in intermediaries
Further scope exists
Reducing poverty through sustainable industrial growth
Ambur Cluster Map (2002)
KAR
KARAMBURTEC
Export Market
International Fair
Indian Market
ChennaiMarket
Export Agent of buying houses
Merchant Tanners in Chennai
Local Agent
Integrated Export Oriented Leather (22)
& Shoe Units (21)
Shoe Upper Units (40)
ATA
Tanneries (80)
Hides & skins’ Commission
Agent
Machinery Supplier
Chemicals Supplier
Shoe material Supplier
Tiny Shoe units (120)
Specialized Job-Working
Technocrats (30)
Local Market
Irregular Buyers
Women workforce form villages (unskilled)
Reducing poverty through sustainable industrial growth
Need for Better Governance
Existing deficiencies in infrastructure to be pursued vigorously
Implementation capacity of ATA needs to be enhanced
Problems of shoe uppers job-working segment needs to be perused
There is a greater scope for the empowerment of women. Specialised institution need to be called in
New issues do emerge
Reducing poverty through sustainable industrial growth
Features of Good Institutional Gov.
Full financial sustainability
Established working relationship (norms) with other institutions - public or private
Active participation in coordinating cluster-wide activities
Professional functioning
Reducing poverty through sustainable industrial growth
Various Governance Structures
Purely market driven – no intermediary
Representative intermediary of all stakeholders
Several intermediaries
A mix of the above
One or two intermediaries take lead
None an imposed entity - they evolve
Reducing poverty through sustainable industrial growth
Governance Structures - Examples
FEKTAA and various associations in Ludhiana
Association(s) – IMTMA and ABMTC in Bangalore
NGO – Bunkar Vikas Sansthan in Chanderi or KDHF in Kota - information
LIRD: NGO from outside the cluster
Institution – CHI in Ahmedabad
Reducing poverty through sustainable industrial growth
Steps towards Governance Structure
Understand the institutional gaps (through cluster map)
Promote a vision
Promote business through ideal business intervention for targeted intermediaries
Initiate, demonstrate and pass natural responsibilities
Create linkages through interaction and develop norms for interaction
Link vision to intermediaries as capacity develops