The Clustering of Technology-based Economic Development Organizations

The theory of spatial clustering has been very popular in the TBED field for many years, as researchers attempt to explain the transformation of places like Silicon Valley and the reasons various locales are economically competitive. Practitioners have utilized the theory as a method to describe their own state and regional economies and to support the development of specific industries. As an industry cluster grows, additional benefits of agglomeration are realized.

 

These benefits include the creation of a localized skilled pool of labor, saving funds from sharing infrastructure and reduced costs of transactions, and knowledge spillovers which create more rapid sharing of information across an industry. The geographic reach of clusters, a subject still under investigation by the research community, sometimes varies by size depending who is using the term. In some studies, clusters are at the state level, while others cluster studies are limited to the regional or even neighborhood level.

 

Depending on the industry, certain benefits to co-location exist. But can these benefits of co-location be applied to the various organizations that push TBED for a particular location? Are there substantial agglomeration benefits to placing many of a state’s or region’s TBED players into one building or within the same block?

 

SSTI has selected three case studies where a number of a geographical area’s TBED communities are physically coming together. And just like industrial clusters, as more and more organizations are drawn to a central point, the cluster becomes larger.

 

Georgia Tech’s mixed-use, multi-building Technology Square is a $400 million campus expansion that helps to fulfill the research, academic, continuing education and government needs for the university and the state of Georgia. Formally opened in October 2003, Technology Square contains the school’s College of Management, the Georgia Tech Hotel and Conference Center, the Georgia Electronic Design Center, and the Enterprise Innovation Institute – the parent organization of Georgia Tech’s industrial extension services, VentureLab, and ATDC, the university’s technology incubator. As start-up businesses graduate from Georgia Tech’s incubator, they relocate into Technology Square along with other technology firms, as interest exists in possible collaborations with faculty, other companies, and employable students. Equity investment firms and utility companies also are present in the development.

 

Besides having all of these components adding to the entrepreneurial environment, Technology Square contains the largest concentration of economic development agencies in the southeastern U.S. and possibly the nation, according to Georgia Tech’s Vice Provost, Wayne Hodges. Since its construction, the Georgia Department of Economic Development, the Georgia Department of Technical and Adult Education, the Georgia Economic Developers Association, and other technology associations have joined ATDC and its incubating and graduated companies inside a single building within Tech Square. The proximity allows for increased communication and collaboration between departments and organizations and is rapidly becoming the hub for the technology community of Atlanta, if not all of Georgia.

 

A similar project has taken root in the Discovery District of downtown Toronto. The MaRS Centre is a 700,000-square-foot complex home to 70 organizations, including several hospitals, venture capital and other equity financing organizations, provincial institutions, economic development organizations and start-up companies. Opened in May 2005, the MaRS Centre combines the renovated site of the Toronto General Hospital (where insulin was discovered in the early 1920s) with new buildings constructed for wetlab and office space. Designed as an “innovation convergence centre” where investment and capital, scientific research and entrepreneurship combine, the MaRS Centre deals primarily in biomedical and life science discoveries, but is quickly moving to new areas of research such as nanotechnology and materials science.

 

How does design factor into the success of MaRS? For an example, hallways connecting the office and laboratory space were constructed so that employees could be seen from public spaces such as an enclosed central atrium. Visually, this kinetic movement improves the sense that the complex is alive with activity. Furniture within the complex is set on wheels to allow mobility and flexibility, and within the incubator space, small rooms have been minimized which has the effect of more groups assembling in public spaces. Employees also cluster in a central food court area, which includes commercial space for banks and other services. Plans were released this year detailing the Phase II construction of the MaRS Centre, which will add 900,000 sq. ft. of office and laboratory space by 2010.

 

But not all TBED clusters have to be on the magnitude of Technology Square or MaRS. The Advance Colorado Center (ACC) has collocated eight entities within one floor in downtown Denver. Formed as a nonprofit incubator for economic development organizations in 2004, the ACC provides a common headquarters and logistical support for TBED groups and other organizations promoting growth in the state. Tenants include the Colorado BioScience Association, the Colorado Nanotechnology Alliance, the Colorado Association for Manufacturing and Technology, the Colorado Photonics Industry Association, Connected Organizations for a Responsible Economy, CSIA, the Colorado Film Commission, and CTEK. Funded by Colorado’s Economic Development Commission, the organizations within the ACC share office equipment and space and sponsor joint programs. The ACC has emerged as a one-stop shop for visitors and international delegations to receive information about various sectors of the Colorado economy.

 

So, is concentrating TBED organizations in a specific location an effective strategy? The answer cannot be a simple yes or no for all communities.

 

Concentration would seem to be effective only if the aggregation results in something better than is occurring through the individual parts. Cost efficiencies aside, certain benefits and interactions must take place that would not normally occur if the organizations were spread throughout a region. For example, increasing the opportunities for people to bump into each other all day might produce previously unrealized benefits. Addressing shared clients more efficiently and quickly could be another.

 

Travel convenience for shared clients is a possible advantage of co-location, but not always. It could be a disadvantage to prospective clients if they are diffused across the region and must spend more time traveling to every meeting, training session, workshop, or event. There are other potential drawbacks to consider as well. Competition for prime office or parking spaces and resources among the tenant service organizations, while often times quite petty, could hinder cooperation. Alternately, the possible encroachment of “group think” in addressing client issues could stifle creativity, customer service, and objective evaluation of the success and failure of particular approaches.

 

Design of TBED organization spaces – whether in shared locations or separate – may benefit from many of the same concepts discussed in the previous story about the design of research laboratories. In addition to creating informal social spaces and centralized eating places, large atriums or exterior courtyards could be used to get people from different organization to visually see each other. Minimizing hallways that lead to dead ends and building with transparent materials also may help to stimulate connectivity. Regardless of the specific design components, it will be interesting to follow how TBED organizations physically situate themselves within their communities in the years to come.

 

More information on Georgia Tech’s Technology Square is available at: http://www.gatech.edu/technology-square/

 

For more information on the MaRS Centre, including pictures of the existing and future design, visit: http://www.marsdd.com/MaRS-Centre.html

 

Additional details about all of the organizations that comprise the Advance Colorado Center can be found at: http://www.advancecoloradocenter.com/