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Whether or not you buy into the hype surrounding the digital economy, there is no denying that information and communication technologies (ICT) are commanding an increasingly large slice of the economic pie. In 2001, total turnover for New Zealand I.C.T. related business was around $11 billion of which almost $1 billion was export sales. The growth in export value is currently around 10% per annum. So how can small or medium sized enterprises (SMEs), with limited resources, efficiently gain access to larger offshore markets, as well as pursuing local business? One way is to become involved in a business cluster.

A business cluster is a group of related enterprises, usually located

in geographic proximity and sharing common sources of inputs such as labour, capital and raw materials. Cluster members may be involved in direct competition at times, but they also benefit from their collaborative endeavours together.

There is usually an educational institution at the heart of the cluster, which acts as a source of industry research and skilled labour. Freiberg, in southern Germany, has formed a solar power industry grouping around research into chemistry, physics and materials carried out by a number of world-class universities and technical institutes found nearby. Clusters are not a new phenomenon, but may have been part of the European economic landscape for hundreds of years. Another example, often quoted by economists, is the historic grouping of textile and garment industries in northern Italy.

Closer to home, we see a marketing and research alliance between the Victoria University School of Architecture and the Wellington Earthquake Cluster. This group, of mostly smaller engineering consultancies, have recently signed a contract to advise on earthquake damage limitation in India. Another high profile cluster is the Creative Capital group of businesses. After successfully installing the multi-media displays into Te Papa, the museum of New Zealand, they went on to collectively win a number of contracts offshore, not to mention more than a few awards!

The previous two groups mentioned form part of a local government initiative to facilitate cluster development in high value industries. Smart Wellington is the organization that has helped to nurture the industry clusters of that city. Central government is also very keen to promote cluster formation in the regions. The Industry New Zealand website is a good starting point for finding out what has been established in particular areas. Incidentally, that site is also an excellent source of other information for small and medium businesses.

But although clustering has had some successes, it is not a panacea for businesses already struggling with problems in their local market. However, business enterprises of all sizes and stages are generally made welcome provided they are willing to participate in a collegial fashion. Some business people are, at first, suspicious of getting around a boardroom table with their competitors. But whilst no one is expected to reveal all of their well-kept business secrets, some very strong synergies have emerged from the partnerships already mentioned above.