Chapter 5
Do Clusters and Networks Make Small Places
tourism destinations, because of their ability to create new jobs, their capacity to stimulate competition and the higher multiplier effect. Globalization has led a growing pressure on this type of tourism enterprises, which are having difficulty to form a unique destination and to distribute their products widely. Traditional tourism destinations are also facing fierce competition. According to several authors (Inskeep, 1991; Mill & Morrison, 1992;
Murphy, 1985), tourism policies should take into consideration social, economic and phys- ical characteristics of destinations. In fact, it is through these characteristics, sometimes unique, that clusters of products emerge and create alternative forms of tourism in mature destinations.
On the other hand, globalization can also be seen as an opportunity to benefit from the open world market. In order to cope with the threats of global competition and develop strategic positioning, tourism destinations should encourage the emergence of tourism clusters, the establishment of networks and strong partnerships, among private sector oper- ators, but especially between the public and the private sector.
Indeed, new directions (paradigms) that are emerging in the tourism field suggest that the efficiency and effectiveness of tourism planning comprises not only advances in tourism planning theory and practices but also improvement in the organizational framework within which decisions are designed and put into practice (Costa, 2001). The socio-economic changes that have occurred in the world during the recent past (globalization, information and technology, the development of more flexible economic activities) have boosted research in an attempt to look for alternative ways of putting forward the planning and orga- nizational systems. Increasing interest and research studies on network, collaboration and partnership theory show how academics are becoming more sensitive on this matter.
Undoubtedly, an area which is pointed out in the literature as offering an alternative framework to adjusting organizations to the challenges brought about by recent events is that of networks. To Cook and Morgan (1993, cited in Costa, 1996) networks will acquire a new dominance in the field of industrial organization. In their view, this new paradigm seems to be flourishing on the basis of the shortcomings associated with markets and ver- tical hierarchies, primarily because of changing technologies, demands, products, etc.
According to Thorelli (1986, cited in Costa, 1996), networks are organizational struc- tures whose philosophy may be placed between markets and hierarchies. The term network refers to two or more organizations involved in long-term relationships. In addition to this, he also argues that the entire economy may be viewed as a network of organizations with a vast hierarchy of subordinate, criss-crossing networks.
Jarillo (1993, cited in Costa, 1996) defines network as a set of companies that work together toward a common goal, in which coordination is not achieved by mergers and acquisitions, but through the creation of a ‘strategic network’ of companies, working together toward the same goals.
Networks allow firms access to specialized services at lower cost, Clusters attract needed specialized services to a region. Networks have restricted membership, Clusters have open “membership”. Networks are based on contractual agreements, Clusters are based on social values that foster trust and encourage reciprocity. Networks make it easier for firms to engage in complex production, Clusters generate demand for more firms with similar 68 Zélia Breda et al.
and related capabilities. Networks are based on cooperation, Clusters require both cooperation and competition. Networks have common busi- ness goals, Clusters have collective visions. (Nordin, 2003, pp. 13, 14)
Interest in regional clusters and their role in economic development has grown substan- tially over the last years among academics, politics and professionals. “One reason for the enormous interest in regional clusters is the simple fact that ‘they are there’” (Enright, 2001).
Historical investigation suggests that economies tend to develop through the emergence of regional clusters. In fact, an industry emerges around some natural resource, market need, or local skill. As the industry develops, new firms in the industry are founded. Soon suppliers emerge to provide inputs and services, and new industries are formed through spillovers and transferred knowledge (Caniëls, 2000; Holbrook & Wolfe, 2002; Kim, 1999; Porter, 1990; Simmie, 1997).
According to Porter (1998), clusters are geographic concentrations of interconnected companies and institutions in a particular field, linked by commonalities and complemen- tarities. The difference between clusters and other forms of cooperation within a network is sometimes difficult to see.
The cluster concept focuses on the linkages and interdependencies among actors in the value chain in producing products and services and innovating.
Clusters differ from other forms of co-operation and networks in that the actors involved in a cluster are linked in a value chain. The cluster concept goes beyond ‘simple’ horizontal networks in which firms, operating on the same end-product market and belonging to the same industry group, co- operate on aspect such as R&D, demonstration programs, collective mar- keting or purchasing policy. Clusters are often cross-sectorial (vertical and/or lateral) networks, made up of dissimilar and complementary firms specializing around a specific link or knowledge base in the value chain.
(OECD, 1999, p. 12)
The diffuse and fragmented nature of tourism development has long been recognized.
In few situations does one company or organization control all the components, or all the stages and decision-making processes in the creation and delivery of the tourism product.
Vertical integration is not a hallmark of most tourism operations. Equally, horizontal inte- gration is relatively rare: single ownership of all the airlines, hotels or other forms of tourism product is unusual, even in one region.
The importance of involving diverse stakeholders in tourism planning and management is thus receiving growing recognition. This has led to increasing attention being directed to partnerships that bring a range of interests in order to develop and sometimes also imple- ment tourism policies. “The term partnership describes regular, cross-sectorial interactions between parties based on at least some agreed rules or norms, intended to address a com- mon issue or to achieve a specific policy goal or goals.” (Bramwell & Lane, 2000, p. 1).
A key reason for the growing interest in partnerships in tourism develop- ment is the belief that tourist destination areas and organizations may be
Do Clusters and Networks Make Small Places Beautiful? 69
able to gain competitive advantage by bringing together the knowledge, expertise, capital and other resources of several stakeholders (Kotler et al., 1993 cited in Bramwell & Lane, 2000, p. 2).
According to Costa (1996), the importance of networks and partnerships for tourism seems enormous. Firstly, they offer planners an organizational framework in which more comprehensive, inclusive, participatory, informed and democratic approaches may be put forward, because policies are not exclusively designed by planning agencies but are, instead, supported by a wider range of participants.
Furthermore, they bring destination areas the assurance that development is no longer viewed from a short-term economic approach; instead, the planning and development of resorts are viewed from a wider perspective, which comprises the surrounding natural, social and economic environment, and, therefore, takes into account notions such as uniqueness, carrying capacity and sustaining growth.
In addition, they bring the tourism industry the hope that economic growth is viewed not only in the short term but also in the medium and long terms. By conveying more sta- bility and competitiveness to the web, networks also bring more safety and profitability to private sector investments.
Finally, networks transmit governments the advantage that the development of tourism is viewed with respect the natural and social patrimony; that development takes into account the economic structure of every place; and also that, by stimulating the inter-organizational coordination of policies, the indirect and induced economic impact produced by tourism are maximized.