Creating Global Hubs of

Excellence: The Foundations

of High Tech Hub Success

March 20, 2008

Shyam J. Kamath, Ph.D.
Professor of Global Business & Economics
Saint Mary’s College of California
And
Professor Emeritus of International
Business and Economics
California State University
 Some Paradoxes to Ponder
 With the “world becoming flat” and
“the death of distance”, why do places
(hubs) and the proximity of people
matter for firm, business and national
economic success?
 Even with favorable government
support and government investment
incentives why do some
locations/hubs fail?
 Examples of Hi-Tech Hubs
 Focused Hi-Tech Hubs: Virginia Biotechnology
Research Park, USA; National Digital Park, Ireland;
Multimedia Super Corridor, Malaysia;
Zhongguancun Software Park, China; Software
Technology Parks, India; Sapiens Parque, Brazil

 Hybrid Hi-Tech Hubs: Silicon Valley and Route

128, USA; Sophia Antipolis, France; Cambridge
Corridor, UK; Hsinchu, Taiwan; Pudong Zone,
China; Bengaluroo, India; Hyderabad, India
 What Makes Some Hubs
Successful and Not Others?
 Successful Hubs: Silicon Valley, Route 128,
Hong Kong, Hsinchu Region, Singapore,
Ireland, Munich/Bavaria Region

 Unsuccessful Hubs: Akademgorodok, Russia;

Taedok, South Korea; Tsukuba Science City,
Japan

 “Intermediate Case” Regions: Kansai City,

Japan; Cambridge Corridor, UK; Sophia-
Antipolis, France

;
 The Global Hi-Tech Hubs

Source: Masboungi, 2004

Started at Silicon Valley in 1900s and spread West & East

 US Hi Tech Hubs

Source: Harvard Business Review, Nov-Dec 1998 article updated

– “hubs and the New Economics of Competition” by Michael E. Porter.
Hi-Tech Hubs in Asia-Pacific

TSUKUBA, JAPAN

TAEDOK, KOREA
Asia

XIAMEN, CHINA
HSINCHU, TAIWAN
PENANG, MALAYSIA

KUALA LUMPUR,
HYDEREBAD, MALAYSIA
INDIA
Aust ralia and Oceania

BANGALORE, CANBERRA,
INDIA AUSTRALIA
AUCKLAND,
NEW ZEALAND
SINGAPORE
 GEMS Analytical Hub Model
 Alfred Marshall’s (1890) localization analysis based on
labor pooling, specialized inputs/services & spillovers

 Michael Porter’s (1990) cluster analysis model focuses on

economic factors

 Identified several significant factors not in Porter’s model

 Global Economic Management System (GEMS) model

includes institutional, historical and regulatory factors

 Developed analytical framework to test conceptual

model

Model considers several factors previously overlooked

 Analytical Model – The Twelve GEMS
Framework
Element of Anchor
Chance Effect

Historical Business
Factors Climate
Firms
Strategy
Source: Structure
& Rivalry
Michael E. Porter,
Four-Diamond
Competitive
Advantage Model and Factor Demand
TEMBA GEMS Model Conditions Conditions

Related and
Supporting
Innovation & Industry Industry
Entrepreneurship Networks

Concentration Public
of firms Policy
 Firms’ Choice Criteria to Locate in a
Hub/Park
Choice Criteria Tenants %

Location of hub/park 41 80%

Industry focus of hub/park 25 49%
Company’s goals 22 43%
Quality of park management 21 41%
Incentive package 15 29%
Government support 14 28%
Services offered 14 28%
Quality/nature of tenants 14 28%
Nature of customer service 11 22%
Funding availability 11 22%
Comparative investment costs 11 22%

Source: Survey of Management of Technology Parks Worldwide, 2006

 Relative Success of Hubs
(Indicated by Hub/Park Managers)

4. Very successful (48%)

3. Somewhat successful (46%)
2. Less successful (5%)
1. Not successful at all (1%)

Why are some hubs more successful than others?

Source: Survey of Management of Technology Parks Worldwide, 2006

Derivation of 4 Dimensions from 15 Factors
Relative Presence of: D1 D2 D3 D4
Socio-political Climate .83
Government/Public Policy .75
Business Climate .64
Availability of Labor .56
Inter-firm Linkages/Networks .77
Historical Factors .73
Innovation & Entrepreneurship .56
Leading Anchor Firms .56
Concentration of Firms .53
Availability of Capital .74
Availability of Infrastructure .66
Availability of Suppliers .51
Presence of Competitors/Collab. .80
Element of Chance .69
Presence of Market Demand .54
Source: Survey of Management of Technology Parks Worldwide, 2006
 Relative Importance of KSFs
Success of a Park = f (Factor Scores on 4 Dimensions)

Four Factors/Dimensions Relative Importance

Business Environment, Public Policy & Labor 27.5%

Input Pre-requisites Factor 26.5%

Park Specific Endowment Factor 25.0%

Supply & Demand Factor 21.0%

Total 100%

Source: Survey of Management of Technology Parks Worldwide, 2006

 Key Failure Factors
KFF’s Management Tenants
High cost of entry and 48% 59%
operation
Infrastructure & facilities 14% 66%
Improper location 30% 27%
Lack of skilled labor 19% 20%
Limited funding 13% 7%
Bureaucratic/regulation 23% 5%
Lack of affiliation with 19% 0%
research universities
Lack of support services 18% 12%
Source: Survey of Management of Technology Parks Worldwide, 2006
 Implications of Findings
 Role of Government
– Role as facilitator, deregulator & catalyst
– Provision of stable and business-friendly commercial
and socio-political environment
– NOT BE creator or micro-manager of hubs
eschewing industrial policy
– Favorable regional and local public policy is key
– Key role in sustenance of effective education
system, infrastructure and favorable business
climate
– Encourage business-to-business and private-public
cooperation and partnerships
 Implications of Findings
 Role of Firms
– Take the lead in cluster formation
– Focus on hubs as ecosystems for improvement,
innovation and growth
– Embrace competition and rivalry
– Actively build networks and constellations of
suppliers, complementors and service firms
– Participate in “networks of practice” and
“communities of practice”
– Nurture and join business and other associations
– Enhance the entrepreneurship and innovation
through spin-offs and spin-ins, inter-company
projects, seeding new ventures and productivity
enhancement partnerships
– Actively pursue local & international linkages
Thank You,
for
Listening !

High achievement comes from high aims.

King Ching of Chou (1100 B.C.)