The concept of “Business Clusters” is new in Palestine even though it has been in common usage in the business development community. Such clusters have been implemented years ago and have flourished since the 1990s in European countries such as Spain, France and Italy. For decades, they have been the subject of research that has been tackled by many scholars, among which most prominent is Michael Porter who wrote The Competitive Advantage of Nations (1990). Hence, the concept is called the “Porterian Cluster” and defined as “a geographically proximate group of interconnected companies and associated institutions in a particular field, linked by commonalities and externalities.”[i] In simple terms, clusters are groups of companies in a defined geographical area which are involved in the same/similar/complementary businesses which produce the same/similar/complementary products for the same/similar/complementary markets. Many today still consider this to be the best definition.
Blurb 1: Recently, Palestine has started the development of seven business clusters, but none of them in the IT sector – as of yet.
So why are IT Clusters needed in Palestine? In the Palestinian context and its “doing-business” environment, which includes the local geopolitical and socioeconomic circumstances as well as the impact and consequences of globalization and of international competition, clusters specialized in IT subsectors such as software industry, animation, mobile applications, gaming etc. are highly needed and could perform very successfully. They constitute a tool and provide one of the best international models to enhance the competitiveness of High Tech small and medium sized enterprises (SMEs), enabling as well the transfer of research and technology through true partnerships and fruitful interaction between universities and the industry. Such clusters could and will play a critical role in building a dynamic knowledge-based economy and will enhance micro and small start-up companies in the IT sector.
Cluster development is a process that does not happen overnight; it typically takes place over a period of up to ten years. To move forward in a desired direction, a long-term vision is needed. However, one can expect that an IT cluster in Palestine should take less time, because we are not starting from scratch due to the efforts and programs that have been developed over the past years. Building an IT cluster involves changing the mindset of enterprises so that they collaborate and cooperate at a high level, aiming to improve their competitiveness as a whole, rather than enterprises trying to make their way in the world at all levels individually. As the Palestinian economy is dominated by micro, small, and medium enterprises (MSME), and most of the enterprises are in fact micro and small (MSE), this is a huge and sometimes difficult mission. It can be thought of as collaboration for competition (co-petition). Therefore, persons charged with developing such economies must understand that cluster development is a strategic step and will take time; it is not a quick fix for resolving economic problems. However, it’s easier and will take less time in the technology field in general and in the IT sector in specific, due to the already existing communication channels and the best usage and utilization of telecommunications and other networks over the cloud. A few years ago, Spain started version 2.0 of clustering, “cross-sectoral clusters,” in which the cluster is not limited to geography, as is the case of the Silicon Valley. By the way, this model is the best scenario for an IT cluster in Palestine: develop a Software Industry Cluster for the whole of Palestine (West Bank and Gaza). With such a small country this is doable due to the nature of the IT industry, its players and value chain.
For example, the linkages that have been initiated recently by the Private Sector Development Cluster Project are a promising starting point, where one cluster was forged between the Furniture Cluster of Salfit and An Najah National University of Nablus, and another one between the Leather and Shoe Cluster in Hebron and the Palestine Polytechnic University of Hebron. The innovation cycle will contribute to the development of the firms in both clusters not only within their geographical area but in Palestine as a whole and in terms of exports, jobs created, and R&D projects developed. This cooperation will also affect the development of related policies and regulations through a healthy and productive public-private dialogue. In the last few years, clusters have become the focal point of many new policy initiatives and the bottom-up approach is the most suitable one for Palestine.
A proposed model of partnership and interaction is based on tri-integration and cooperation between the cluster, the university, and the chamber of commerce. Other related stakeholders, including the government, should also be involved. It is expected that such a model will provide more employment opportunities, increase the competitiveness of the clusters’ members through product differentiation, thus strengthening the cluster position in the domestic market and providing more opportunities to penetrate new export markets that are aligned with the local National Export Strategy.
Figure 1: Clusters involve a number of partner entities. Courtesy of SOURCE, please.
There is a strong link between IT Clusters and Academia. Academia is a key driver of cluster development and not limited only to universities, but includes all stages of education. To develop IT Clusters effectively, collaboration between academia and industry is essential, and academia needs to move towards tailoring its activities to support specific, identified clusters. As leaders in research and development, universities should look for possibilities to exchange information and technology with clusters, i.e. university students and staff should be placed as members in the companies that belong to a cluster, study tours should be organized to international research centers, and selected cluster firms should be invited to participate. Business ideas, such as software and mobile applications, should be pulled from the industry and developed through graduation projects. Joint research and development projects with clusters should be formed in order to participate in the establishment of innovation centers, patenting offices, technology transfer offices, business parks and techno parks.
Hasan Omar is a serial entrepreneur, economic empowerment expert, business enabler, and SMEs consultant. He is the executive co-founder of the first business incubator in Palestine as well as of Glow Innovations, the first private business accelerator. Mr. Omar is a public speaker, a public-private dialogue and clusters development expert, a Global Business Incubation Management certified trainer by the World Bank and entrepreneurship & innovation trainer. He is a Computer Engineer with a Master Degree in International Cooperation and Development.
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By: Hasan Omar – 2016
[i] Michael E. Porter, On Competition, 1998
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