Skills development and MNC embeddedness in the Costa Rican medical devices cluster

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Skills Development and MNC Embeddedness in the

Costa Rican Medical Devices Cluster

Alexander M.M. Morrison

University of Amsterdam

Submitted to the Graduate School of Social Sciences

Supervised by: Niels Beerepoot

Master of Science Thesis

Msc Research Masters International Development Studies Student Number: 11247460

August 2019

Word count: 31951

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Acknowledgements

Many thanks to my local supervisor, Alonso Alfaro Urena, without whom I would not have been able to conduct research. Furthermore, a special thanks to my supervisor, Niels Beerepoot for helping me along the way. Finally, thank you to Robert Kloosterman, for participating as second reader.

Tables, graphs, and figures

Table 1: operationalisation of core concepts ... 22

Figure 1: model representing insertion strategy for MNCs and development strategies between MNCs and local firms in the cluster. ... 23

Figure 2: a framework showing the phases of research, the research tasks, and which research questions will be addressed in each phase. ... 28

Table 2: Sampling list utilised through the research process ... 32

Figure 3: describing the institutional setting of EPZ policies. Altered from Monge-Gonzalez et al, 2010a. ... 47

Table 3: policy instruments utilised by governing institutions (Interview A-1, A-3, B-1, B-2, 2018)55 Graph 1: percentage change in the share of non-Zona Franca exports (BCCR, 2018) ... 57

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Chapter 1: Introduction

Cluster oriented, value chain insertion solutions began in Costa Rica in the early 1980s with the electronics sector. Costa Rica made agreements with Intel for them to set up within the national borders of Costa Rica. Throughout this time, Intel led the development of the electronics cluster in Costa Rica. While initially there were few activities which Costa Rican businesses could interact in with Intel, over time, more linkages were made between Intel and local firms. This inspired more multinational companies to enter Costa Rica. However, this is a rather simplistic image: of course, Costa Rica had to make concessions. It switched from import substituted industrialisation towards a more export oriented approaches. It made large tax concessions to attract companies into Costa Rica. It pushed the national education system to better work with english speaking companies, specifically from the US. A few years after the start of the cluster, the medical devices cluster was initiated. The success of the electronics components cluster could be mirrored, and as such an attempt was made. Much like with Intel, Boston Scientific was brought to Costa Rica to be its flagship company for the cluster, where they still reside in Costa Rica. In 2014, Intel pulled its business from Costa Rica, and the export share of electronics manufacturing in Costa Rica fell (PROCOMER, 2018). This highlights a dynamic not often discussed in development economics: Multinational corporations have something to offer those countries where they set up their production. Through careful mediation of relationships, MNCs can benefit from cheap(er) labour, less taxes, and reduced costs of production (Porter, 2000). Meanwhile, local firms can gain access to more buyers across a global market and access to knowledge and technology which can improve processes and functions (Schmitz, 1995; Porter, 2000; Gereffi, 2006). However, it is not an equal relationship between both local firms and MNCs. Government institutions must be in place in order to balance these relationships out, and to ensure a mutually beneficial development trajectory which satisfies MNCs and the development of both local firms engaging in higher value added forms of production, and for the labour force gaining more skills and knowledge which can also be passed on and proliferated (Schmitz, 1995; Gereffi, 2005). Furthermore, there has to be some advantage to keeping companies within the regional location.

In this thesis, the economic institutional makeup of Costa Rica is analysed with regards to how it governs the medical devices sector with the specific goal of engaging in higher skilled and less labour intensive production. The scope of this topic is the Medical Devices cluster of Costa Rica and its supporting institutions. The terms of study are to observe how firms and governing

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institutions have proliferated skills development initiatives throughout the cluster, aimed at improving and increasing the productive means of local firms. Additionally, the dynamic between local firms and MNCs is explored through governing institutions with a particular focus on the mechanistic dynamics which lead to the expected results of greater value chain integration within industrial clusters. This centres around the academic debate on institutional embeddedness within clusters, as well as the differences and similarities in insertion strategies between value chains and industrial clusters, particularly where skills development is concerned. Where it is usually viewed through a singular theoretical lens – either through value chain insertion or through cluster embeddedness – the reality of the Costa Rican context shows that both value chains and clusters exist in the same space.

Background

Costa Rica as a context for study has been a topic since the beginning of its cluster initiatives in the 1980s. However, there is an initial issue which was discovered during reviews of relevant documents; the policy making sphere of Costa Rica, there is a general conflation between the cluster and the value chain. This orientation is seen in the choice of literature, but is more obvious when considering the position MNCs as value chain lead firms residing within the cluster of local firms. Both value chain and cluster theories seemed to be used in similar ways, with little explanation as to its theoretical overlap. There exist clear theoretical distinctions between the two in academic literature, which need to be understood before they can be used in conjunction with one another. The first issue lies with units of analysis: the second lies with the scalar focus on clusters. Value chains tend to be global in nature, while clusters tend to be local or regional sized. Furthermore, while global clusters do exist - at least, in a theoretical and legal sense concerning global standards, certifications, and regulations. Worth noting is that local value chains also exist – though are less prominent in the era of fragmented production that is the 2nd unbundling. There needs to be some insight provided into the nature of combining both local and global value chains with global and local clusters.

This relationship is understood through Porterian value-chains, described as a set of related activities through which inputs are transformed into outputs through value-added processes and functions (Porter, 1985; Kogut, 1985). As described above, the national context of Costa Rica is

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viewed in a dual lens: the second of these lenses is through industrial clusters, agglomerations of businesses which share related activities and are usually subject to similar regulations. The difference between the two is scalar in nature: while value chains look at the value-added relationships between a lead firm outsourcing its production to other suppliers in a global context, clusters look at the national or regional connections between local and foreign firms. Therefore, the combination of these two theoretical lenses occupies two different scale orientations: one which is vertical in terms of a relationship between a foreign firm with a larger market share in comparison to local suppliers and producers, and one which is horizontally laid between local firms which tailor to the same sector of production. It is important to note the contextual role of governance in maintaining, organising, and managing these relationships. Institutions exist as a means of organising local firms, in order to improve the competitiveness between them. Lead firms are managed by institutions to ensure mutually beneficial linkages between lead and local firms.

Knowledge and technological proliferation is described by two theories: the first describes the improvement of skilled labour and access to technology and knowledge through the cluster by means of collective efficiency: as linkages are made between local firms, the distribution of skilled labour between local firms ensures knowledge proliferates, which enables more local firms to engage in more profitable forms of production. As this happens, the collective efficiency improves in the labour pool as these skills become more relevant in the sectoral production (Schmitz & Nadvi, 1999). Technical capability describes the process of engaging in backward linkages: where lead firms link with local firms, technical capability describes the growth in capabilities through the direct transfer of knowledge and technology directly through single linkages (Barrientos et al, 2010). This occurs in order to improve the efficiency of the linkage. In the combination of both approaches, the single linkage of Boston Scientific for the medical devices cluster led to a number of MNCs engaged in medical device production forming linkages of their own with local firms. Theoretically, these linkages provided technology and knowledge to local firms. The knowledge then proliferates across the cluster.

The current context

The current situation in Costa Rica is best described by the process of export oriented industrialisation. This describes the process of focusing economic interactions on supplying large

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multinational corporations (MNCs) with their needs and improving the national industrial capacity through this relationship. Prior, Costa Rica used an import substitution in order to promote national industries over import products. The change occurred in the 1980s, and the transition to export oriented industrialisation mirrors the relationship made with Intel. Since Intel moved its production out of Costa Rica, medical devices have taken over as the dominant export – though not nearly to the same scale as the electronics components cluster. Since the 1980s, Costa Rica has arranged two institutions which manage and organise the cluster and its value chain integration. In 2017, Costa Rica was the 2nd largest exporter of medical devices in Latin America, with medical devices being the largest industrial export good of Costa Rica (Interview B-3, 2018). Employing over 18, 000 people, and worth over 3 billion in terms of trade, the scope and scale of the Medical devices sector is beginning to grow larger and larger. More linkages are being created, as more MNCs enter the market.

In order to describe this, a sequential progression is used through the concept of critical mass. The concept of critical mass is utilised in the Costa Rican cluster context as a means of defining the process of the cluster transforming into a dominant productive sector. It entails the growth in number of agglomerated firms of related activities against the proliferation of skills necessary to reduce overhead costs of production. As critical mass of the cluster is reached, skills and knowledge are proliferated as more local firms are able to form more linkages with MNCs. Furthermore, MNCs generally have higher productive expectations, and will invest in knowledge proliferation and skills development in order to ensure expectations are met. Once this has occurred, functions and processes can begin to be changed within local firms. This allows local firms to take over more skill intensive, and more value-added production. The means by which this occurs can be viewed through two lenses; the first implies that this functional and processual upgrading only takes place once sufficient knowledge has proliferated across the cluster, which necessitates the improved functions and processes through the collective efficiency of the cluster. This implies the benefits of knowledge and skills proliferation is only viewed across the entire productive sector as a transitionary process. The other lens views it as the transfer of technology and knowledge which directly impacts a local firms technological capability.

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to wonder: How and by what means have skills proliferated throughout the cluster? How have the presence of key value chain actors affected this, and to what extent does this constitute a competitive advantage? These questions are subjected to answers throughout the thesis, and will be touched upon. None of these interactions occur in a vacuum. It required a robust institutional presence of support organisations at the national level, as well as informed knowledge about the problems and issued faced by local firms, small to medium enterprises (SMEs) and lead firms inserting into the production process. When observing the kind of skills required in the contemporary industrial workspace – particularly those skills which are specific to particular forms of production – a question arises: how have skills proliferated throughout the cluster, how have the presence of key value chain actors affected this, and to what extent does this consitute a competitive advantage?

Identifying importance

The underlying importance of this is that we recognise that, to some extent, social upgrading such as skills development have some impact on production: by improving the skills of one's labour force, one is able to introduce more efficient processes, or undertake greater value-added functions. However, a high presence of skills among labourers alone is not enough to qualify or justify competitive advantage. Furthermore, there are several mechanistic dynamics which have not been fully explored or entertained. For example: the proliferation of knowledge and skills and the means by which this occurs between different MNCs, local governing institutions, and local firms. By exploring this context, it may reveal to some extent how these different aspects inter-relate with one another.

The research problem

the research problem is as follows: technology is developing at a rapid pace in every high skilled area of production across the globe. However, the rate of technological development is not the same at every level of production, nor is it the same in every type of production. As the rate of technology increases, so too does the institutional burden on Costa Rican support institutions to ensure skills are up to an internationally recognised standard. In the absence of a strict transactional competitive or competitive advantage, there must also be some distinction regarding the benefits ensured for MNCs entering the market. Furthermore, the size of the cluster grows with more people are

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employed in the medical devices, and more local firms and MNCs joining the cluster. Should a similar event occur with the medical devices cluster as it did with the electronics cluster, it could have serious consequences on the state of its economy, and its own self-development trajectories. This leads us to a number of research aims and objectives: The first is to understand in a broader context why MNCs enter countries with relatively few advantages in production. To better understand how this came to be is to better understand the weight of different instruments and policies have played in ensuring the development, growth, and continued insertion of MNCs into the cluster. Additionally, to understand the role policy instruments play in maintaining these relationships helps unpack the different mechanisms by which skills, knowledge, and technology can proliferate across sectors of production. However, if we state that the rate at which technology improves is not equal across all levels, we can also further our understanding of which linkages can be both the most advantageous for MNCs, and which can better proliferate knowledge and skills. This leads to the primary research question: “How have policy instruments affected MNC embeddedness in the Costa Rican medical devices cluster from 2010-2017, and how has institutional embeddedness allowed for greater skills proliferation to occur across the medical devices cluster of Costa Rica?” Embeddedness was chosen because of its relationship with governance as a means of securing upgrading opportunities across the cluster. Furthermore, the temporal range of 2010-2017 was chosen out of necessity: the two statistical datasets collected throughout the research process began from 2010, and newer results from 2018 were not yet available. Furthermore, skills proliferation is an integral part of functional and processual upgrading as is explained in chapter 2. In order to answer this question, a sequential phase-based mixed methods approach was used. This process is used to ensure that each prior phase of research informs the basis of the next section of research. The first phase established a policy context for the cluster based on national policy released. This served as an initial data collection period, as well as a discovery period. Following, the second phase introduced support organisations as the primary institutional mechanisms by which the cluster is informed of change, and the means by which management and organisation takes place across the cluster and between value chain actors. The third phase sought to establish the position of SMEs and lead firms, as well as understand their growth trajectories and The final phase looked at aggregating quantitative data in order to better describe the economic context with regards to the qualitative data gathered. This ensured a degree of methodological triangulation enforced through the scheduling of research. This established the context, which is invaluable for the execution of the qualitative interviewing processes. Utilising 5

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expert interviews with members primarily from governance institutions PROCOMER and CINDE combined with interviews with local firms engaged with the medical devices sector (n=13) the initial discovery phase informed the context and of relevant policy related organisations and institutions. With these findings informing the interviewing process and enabling a selection of relevant institutions and firms. While the methodological outline supposes a strict linear progression, interviews also informed the context, and differences found between have two interviewing phases introduced new policy dimensions in the research process.

Following this introduction, chapter two introduces the theoretical framework, where we discuss substantive content theories based on the relevant literature reviewed and look at the conceptual framework designed to understand the complex context of the cluster. Chapter three discusses the research design, defining the inquiry worldview and some insights on the epistemological and ontological positionality of the researcher involved. Chapter four further defines the research context as seen through the lens described in the previous chapter. Chapter five engages in analysis of supporting institutions, and looks to redefine the relationship between support institutions and local firms. Utilising embeddedness as a means of understanding the depth and breadth of the position of support institutions, the relational differences between those firms with secure and long lasting forward linkages against local firms engaged in related activities is defined. Chapter six compares and contrasts cluster structures, to look at the dominance of MNCs through their embeddedness in institutional governance and defining the directives of growth across the cluster. Furthermore, policy instruments are analysed with regards to the role played by support institutions. Chapter seven looks at the development of skills and the various avenues of training. Additionally, we look at innovation as the primary driver of innovation. Finally, chapter eight presents a discussion of the related findings, concluding statements, and recommendation both for the cluster and for areas of future research.

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Chapter 2 : Theoretical and Conceptual Framework

In this chapter, the theoretical frame work is broken down beginning with an extensive literature review. Substantive content theories are described, leading to an operationalisation of core concepts and the formulation of a conceptual scheme which can be utilised throughout the analysis. Finally, research questions are expanded upon.

Moving towards global trade

Baldwin states that the process of industrialisation follows two significant 'unbundlings' of the global economy. The 2nd_{unbundling began in the 1980s, and its significant feature is the ICT} revolution. This dramatically reduced transmission and transportation costs, shifting many trade strategies endorsed by institutions from import substitution to export oriented industrialisation (Baldwin, 2011; 2016). A significant development in the process of production, competition between firms across countries no longer occurred at the sectoral level, but at the production level (Treganna, 2011). Motivations moved from the production of a good, towards part of the production of a good. This allows for production risks to be spread among many stakeholders, allowing for greater diversification and specialisation between firms. Where transport costs decreased, it became increasingly easy to spatially separate distribution centres from production centres (Baldwin, 2011; Gereffi & Lee, 2012; Gereffi & Luo, 2015). When spatial separation was feasible, economies were able to scale production and specialise in particular activities. This took particular competitive advantages gained through technological access, low labour costs, large labour pools, or access to resources, leading to higher value-added processes (Gereffi et al, 2005; Treganna, 2011). It became cheaper to create a portion of a good opposed to the entire good. This changed how industrialisation (and manufacturing processes) functioned as a process of development. However, the importance of industrialisation through manufacturing as a means of development did not. The potential for manufacturing to create spillovers in other sectors lies with the high levels of capital accumulation possible.

Kaldor's law states that the faster the growth in the manufacturing sector of an economy, the faster the growth of GDP (Kaldor, 1967). Increases in manufacturing output creates greater productivity through direct production linkages (or more efficient production methods) and indirect multiplier effects (Kaldor, 1967). This occurs through the continuous expansion of the manufacturing sector,

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service and agriculture sectors (Lewis, 1954, Haraguchi et al, 2016). Providing a great potential for cumulative productivity increases, manufacturing output increases through economies of scale, so does manufacturing productivity by cyclical direct and indirect production linkages (Treganna, 2011; Haraguchi et al, 2016). However, there are major differences compared to advanced economies and the emerging economies of today: while manufacturing is still seen as an engine of growth for the whole economy – where improving productivity in a manufacturing sector was important to improve access in domestic markets – globalisation plays a greater role in the growth of manufacturing and industrialisation (Rodrik, 2015; Haraguchi et al, 2016). While the 2nd unbundling made it possible for firms to engage in the specific production of value-added processes on a global productive scale through production fragmentation, globalisation also created conditions for a great productive inequality to be unveiled at this level (Kaplinsky, 2000). For this reason an understanding of premature deindustrialisation important: as a form of contextualising the current global economic arena, and as a process by which countries lose their competitive advantage in production, and can no longer participate in manufacturing in a meaningful way within the global economy. Rodrik (2016) defines premature deindustrialisation as a sustained decline in the share of manufacturing in a countries total employment as well as GDP. As manufacturing and production of goods has a higher cost efficiency in another area, firms move to order to take advantage of the falling costs (Treganna, 2011; Rodrik, 2015; Grabowski, 2015). Where countries cannot support industrial manufacturing bases anymore, they structurally change from industrialisation towards services, raw resource gathering, or towards traditional or agricultural sectors. This leads to lower amount of industrial employment at all income levels (Greenstein and Anderson, 2017).

Value upgrading

Where economic development through manufacturing is considered the basis of development - as employment and output increases from traditional, agricultural sectors towards manufacturing – there follows an increase in productivity in labour and growth (Kaldor, 1967; Grabowski, 2015). If manufacturing creates more labour productivity – representing greater output and a greater share of GDP – sectoral change is dynamic, and cannot translate into other sectors despite linkage and multiplier effects associated by Kaldor to technological progress (OECD 2014, 2015; Grabowski, 2015). Additionally, a fall in manufacturing production could be the result of reduced economic activity rather than declines in the availability of domestically produced consumer goods against increasingly cheaper imports. Furthermore, the total share of manufacturing in terms of share of

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total employment of the labour pool has declined over time. Similarly, per capita income of employment in manufacturing over total employment has also declined (Treganna, 2011; Grabowski, 2015). This is contrasted with Haraguchi et al (2016) where they find that the share of manufacturing in developing countries has not changed since the 2nd_{unbundling. Furthermore, they} attribute premature deindustrialisation experienced by the developing world to the concentration of specific manufacturing activities where a higher competitive advantage is achieved, rather than sector specific factors.

Treganna (2011) states that in analysing deindustrialisation it is important to not only look at the entire sector either shrinking or growing, but to also observe the growth and decline of particular activities. Following, while the share of manufacturing as a sector has not dropped in developing countries, the ability to form linkages of value-additive activities has decreased. To further understand how development through manufacturing can occur in a globalised economy at the production level, a Global Value Chain (GVC) framework is used to better understand growing and shrinking productivity in manufacturing. Kogut defines value-added chains as “the process by which technology is combined with material and labour inputs, and then process outputs are assembled, marketed, and distributed,” (1985: 15). Similarly, Porter (1985) describes it similarly, as an organised system transforming inputs into outputs. Following the rise of value-additive processes as a viable means of industrialisation in a global economy which prioritises cost reduction and efficiencies as competitive advantage, GVCs refer to a framework under which organised firms produce specific goods or engage in particular value-added processes through changing governance and institutional structures across global markets (Gereffi et al, 2005). Another framework by which to understand global production is that of the Global Production Networks (GPNs) – more relational than GVCs, GPNs aim to integrate all relevant actors in the production and distribution of a particular good or service (Gereffi, 2005). However, important to understand is the specific context under which manufacturing development is analysed; from the perspective of states interacting with corporations within national boundaries. While GPNs may be a more holistic approach, attempting to encompass all relevant actors across the globe, the specific interest is not territorial development within the global economy. Rather, associating the rise of GVCs as linked to the expansion of lead firms outsourcing in the Global North, countries can encourage growth in manufacturing by adjusting specific institutional governance policy aimed at encouraging particular firms to take advantage of niches created in value-added activities and processes (Barrientos et al, 2016). The

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result of which is a decrease in transaction costs across the GVC, while allowing a comparatively large amount of value to be attained by those countries newly engaged in the GVC (De Backer et al, 2017; Gereffi et al, 2005). This shows that building specific territorial and sectoral development – such as an automotive industry – to gain the benefits of manufacturing, particularly in instances where the development of particular sectors cannot be competitive, is not required for development. Instead, incentivising firms to join in specific value-added processes along GVCs in order to gain the benefits of manufacturing allows competitive advantages to be made apparent in manufacturing. However, specific differences exist between a typology of industrialisation and typologies of GVCs. While (de)industrialisation typologies stress employment and manufacturing over total share of employment and total output, Gereffi (2014) defines a GVC typology from the perspective of governance changes as industries mature. While industrialisation focuses on demand and linkage effects, and the multiplier and spillover effects these cause, a typology of GVCs focuses instead on the organisation of governance structures and processes of upgrading (Gereffi et al, 2005; Gereffi, 2014; Barrientos et al, 2016). This contends that a countries industrial and manufacturing growth cannot be more fully understood from the position of a countries sector. Rather, it is addressed through the intersection of firms and countries. Where firms trade through the value chain, engaging in value added processes using labour and raw materials as inputs, the role of government is to manage the competitive advantages of value-added processes through policy (Barrientos et al, 2010; OECD, 2014). Through the combination of macro-economic policy and investment aimed at governing and encouraging specific sectoral growth, governments are able to create and maintain competitive advantages in order to induce growth of manufacturing within its borders.

The relative importance of economic activities within supply chains change over time as both the chain develops and the economy (World Bank, 2017). Gereffi et al (2005) describe economic upgrading as moving into higher value activities in production in order to improve technologies, knowledge, skills, and to increase the benefits of participation in GVCs (Gereffi and Lee, 2012). Four types of upgrading were defined:

1. Product upgrading, the move into higher value production;

2. Process upgrading, the more efficient transformation of inputs into outputs through optimisation of organisation or greater technological progress;

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increasing the overall skill content of activities; and 4. chain upgrading, the move into related industries.

There are various degrees of 'lead firm capture', defined through the amount of control a leading firm has over the productive costs of the entire GVC (Gereffi et al, 2005; Grabs & Ponte, 2019). For example, technology transfer improves domestic firm productivity but requires backwards linkages from the lead firm (Görg and Seric, 2016). While this would create productivity spillovers - increasing productivity of value-added processes - backwards technological linkages may be less efficient than automated production (Brynjolfsson et al, 2014). In these instances, Barrientos et al (2010) further define two more types of chain upgrading as a means of moving competitive advantages in one value-additive activity into another:

1. intra-chain upgrading, or the exploitation of upgrading opportunities in a given value chain; and

2. inter-chain upgrading, or the specific application of chain-related skills from one sector to another.

This describes governance options which could counteract various forms of firm capture to improve the benefits of value-added activities within a particular GVC through processes of reorientation (Gereffi, 2014, 2015; Treganna, 2011). As an alternative approach to purely economic upgrading, Sen (1999) saw a fundamental connection between social opportunities and one's access to worker rights and entitlements as social actors as being integral to enhancing the quality of employment (Barrientos et al, 2010). Such that improved social opportunities – education and accessible health facilities – improves economic participation, where greater participation allows for a higher generation of personal well as well as public resources for more social facilities (Sen, 1999). In order to effectively upgrade along economic lines, the labour pool must have the capacity to engage in higher skilled labour. It is not clear which of these upgrading processes yields greater results in creating a sector based on export led growth. For example, process upgrading allows more cost-efficient processes to be undertaken within a GVC. Replacing low-skilled, labour intensive processes with higher skilled, labour unintensive work allows for greater value-added processes to take place. Without sufficient social upgrading, the new higher skilled labour will often lead to a smaller available pool of labourers (Cruces et al, 2017). While the cost of producing has become more efficient, the transaction between labourer and employer becomes more expensive leading to

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less value generated through that stage, and a smaller opportunity to benefit from the value generated from the competitive advantage.

Clusters and competitive advantage

Where clusters are groups of small producers making the same or similar things in close vincinity to each other, advantages are derived and captured through collective efficiency (Humphrey & Schmitz, 1998). External economies and joint action play a key role in this advantage, as the means by which knowledge can be shared across the cluster, thus improving the skills of the actors involved. Such concentration in itself brings few benefits. The benefits of clusters comes from the governance and organisation of their collective production power. (Schmitz & Nadvi, 1999). Through a similar means as technical capabilities, collective efficiency is directed and managed through policy. Governing specific macro-economic development strategies through explicitly designed frameworks used by firms within the country (De Backer et al, 2017). The economy of a country as a collection of activities, some of which involve manufacturing as part of a series of value-added activities within a GVC (Treganna, 2011). Additionally, different activities come with different competitive advantages, generating more or less value as per the activity (Barrientos et al, 2010, 2016). Although both strategic agendas ultimately involve upgrading and the deepening of links between sectors and activities, their starting points and outcomes are fundamentally different. This importance of this distinction lies in the difference in strategy when implementing different GVC strategies: usually denoted through policy support and corporate strategy. In particular, economic policy enacted by the state will likely be targeted towards a particular sector, or a particular activity which they have or are intending to specialise towards. However, Kaplinsky (2015) states that this distinction occurs at the point at which policy is not longer created as 'industrial' policy but is addressed as the 'productive sector'. Policy which effects the shape of the GVC does not only affect industrialisation or industrial activities, but also affects agriculture, services, and resource sectors. Linkages between inputs and export competitiveness show that trade policies have potential to change how firms participate within GVCs (De Backer, 2017).

Combining Clusters and Value chains

To understand how governance changes within GVC theory, a scalar differences must first be explained:

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underlying conventions – institutional and socio-cultural norms which regulate transactions between actors.

• The meso level observes how aspects found at the micro level travel within the value chain and between vlaue chain actors. Specifically, meso level analysis aims to understand that which operates between individaual actors, and those which are transmitted between actors.

• The macro level focuses the overall governance of GVCs and the specific issue of polarity. This level acknowledges that other actors and change and affect how governnce occurs accross the GVC (Ponte & Sturgeon, 2014).

What must be understood is the pivotal separation between countries, and businesses: businesses do not operate on a macro economic scale, in much the same way states do not operate in micro economic scales. Rather, the state's role to coordinate growth and development of specific sectors and activities by implementing policy create advantageous conditions for businesses. Furthermore, if approached from this intersect between business and government, we can see those who have the ability to overwhelmingly influence policy – represented by institutional support - giving way to dictate and frame development through their terms (Higley and Burton, 2007; Booth, 2008). Political stability is achieved through governmental support for institutions, allowing private business associations to be highly active in the financing of particular civic initiatives, and playing an active role in cooperating with the government through legitmising action (Dabéne, 1988). In this sense, policy is viewed as an effort to coordinate horizontally - to affect structural change – and by upgrading participation of its firms through GVCs (Pedilla Perez, 2014). However, participation in GVCs does not translate into a guaranteed benefit of value generated by competitive advantage. Instead, upgrading participation of firms in GVCs is one policy target to be achieved, as GVCs have transformed into specific platforms used by governments to coordinate manufacturing and economic development (De Backer, 2017). This positions policy as a means of improving costs associated with trade, and improving relationships between firms and countries first and foremost. Orientation and directionality

Policy orientation allows multinational firms to take advantage of competitive advantages throughout different locations within GVCs through incentives to corporations engaging in domestic trade (Gereffi et al, 2005). For example, economic and political liberalisation lowers trade costs which lower the barriers of entry, and subsidies lower the costs of development in the

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production of specific technologies (Rodrik, 2015a, b; 2016). Additionally, employment programmes can ensure steady labour supply for specific activities (Treganna, 2011). While keeping wages lower, further incentive for corporations to employ from this labour pool are created. The foundations of Export Processing Zones are based upon this principle, whereby lowering tax and other cost increases the incentive for corporations to do business there. From a corporate perspective, competitive advantage in GVCs is gained from the relative skill requirements for production, and the ease of access to resources (OECD, 2015). Passive horizontal policies are considered policies which enhance competitiveness, facilities to start new businesses, investment protection, infrastructural investments, specific bilateral and multilateral trade agreements, and FDI attraction policies (McCormick, 1998; Padilla Perez, 2014). Active horizontal policies correct market failures, such as the unoptimal allocation of resources (Bemelmans-Videc et al, 2011). These policies are often specifically aimed at small to medium firms, prioritising access to credit, networking mechanisms to improve relations between suppliers and purchasers, and business directories containing information on products and services supplied (Baum & Oliver, 1992; Padilla Perez, 2014). Above all, they require a government which plays an active role in the promotion of economic and social development. Structural change is defined as a transition towards higher-productivity and value-added activities and sectors that are more intensive in technological production (Padilla Perez, 2014). Structural change policies aim to strengthen existing competitive advantages. In order to enact such a change, there is a definite need for the government to actively shape and direct economic and social development through policy making (ECLAC, 2012). Consequently, policy needs to promote a production development strategy that makes the most of existing competitive advantages. To that end, governments can provide information to existing industries (consistent with competitive advantages), allowing for a greater coordination of investments in relating industries. Additionally, improvements to infrastructure allows for more linkages to be made throughout GVCs. Finally, governments can attract foreign direct investment through the promotion of new activities or industries, providing subsidisation to upgrading processes. In contrast to this, structural change policies seek to create new competitive advantages. Tending to look beyond market failures, recognizing that the government has an important role to play in creating and strengthening productive sectors and capacities. (ECLAC, 2012). However, policies cannot be seen as singular solutions or responses. Rather, to create the virtuous cycle of development through manufacturing within GVCs, production policies must be complemented and supplemented by macro-economic, social, and labour related policies. In this sense, while horizontal

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coordination occurs, there must also be structural change policies to create new competitive advantages, as well as policies oriented toward promoting economic and social forms of upgrading within the GVC. Where firms interact between each other within GVCs, governance policies direct the ease of access for certain value-added activities utilising existing competitive advantages (De Backer et al, 2017; Giuliani et al, 2019). As linkages within GVCs rely on competitive advantages in particular activities, this requires coordination of firms to increase participation in GVCs (Frederick & Cassill, 2009). Coordinating the participation of firms and orienting economic development through specific productive activities, policy balances economic and social upgrading along lines of thickening and thinning value chains in order to engage in economic and social upgrading. This requires a two part solution: microeconomic coordination from companies and firms connecting with each other to find the most efficient and productive linkages, and macroeconomic policies to direct investment towards specific activities within a sector.

Substantive content theories

There are two areas which are focused on within the realm of skills development: collective efficiency and technical capabilities. Collective efficiency is most easily defined as the action taken between producers and suppliers within a cluster. According to Schmitz (1995; 1999) is is defined through relational density – the number and amount of relationships formed between horizontal actors – and joint action, the combined effort towards improvement between different actors. Joint action does not necessarily have to be horizontal: can be vertical. Consider the exchange of information and dialogue between producers and suppliers which could lead to more efficiency exchanges across the market, or lead to some process or product improvements (Nadvi, 1997). Di Tommaso and Dubbini (2000) conceptualise a third dimension of collective efficiency according to two indicators: direct and indirect external economies. External economies (Or external economies of scale) are the benefits gained from others which makes it easier to produce and provide goods and services within the cluster. Technical capabilities is described by the three qualities: Technological absorption, process upgrading, functional upgrading, and the transfer of knowledge and technologies (Sen, 1999; Arifin & Frmanzah, 2015).

In order to understand how these two frames can combine, attention must be drawn to the 'glue' which brings it together: the role of governance. Where industrial clusters are organised, value chain linkages must be managed. The combination of theoretical lenses is justified as a means of

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furthering our understanding of how different productive development policies – as defined by their instrumentation within the eclectic landscape of governance – affect and provide different types of proliferation of skills across different economic scales and scopes. While the two are very close together, there are some different justifications between the two. This means we must disseminate both theoretical lenses to find a lens which fits into the context. Costa Rica usually conflates both industrial cluster and value chain terminology, which gives value in pushing for an understanding where both are combined into one holistic view. While this was most likely done because the mechanistic institutions between both lenses (or the practical results of combining clusters and value chains concepts) are easy to conflate together when we consider the aspect of governance, there exist issues in understanding how both can be combined with respect to how skills develop across clusters and between value chains.

Institutional embeddedness is interpreted by the degree of integration – either vertical or horizontal – of both managing and organising institutions and MNCs (Baum & Oliver, 1992). Interactions between MNCs, institutions, and local firms are taken as points of reference. The degree of diversification across production in a cluster and the relationships formed between local firms are paramount for distinguishing the directionality of embeddedness through the mobilisation of institutional resources (Oesch, 2006; Nadvi, 1999b). In particular, there is interest in the mobilisation of resources to alter the position of those affected, or the use of resources through an institutional setting to improve the position of a group. In this context (further described in chapter 4) the group is the labour pool relevant to the cluster, or those who would be engaged in the production, supply, and manufacturing of medical devices within Costa Rica.

Policy instruments are usually not taken in a single context, but rather are bundled together with other instruments, or for the purpose of developing other instruments (McCormick, 1998). In this sense, instruments tend to come in one of three packages: Horizontal packaging is where two or more instruments are directed towards the same target group. Vertical packaging shows one instruments pointed and directed towards the implementation of another. Finally, chronological packaging implies the time sensitive use of instruments, or the temporal use of instruments one after the other based on a chronological order. Packages are distinguished by the type of instrument, related instruments, and by target group.

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Operationalisation

Core concepts conceptions dimensions Indicators measures Technical

Capabilities Technological absorption Knowledge and technological transfer. Process upgrading Function upgrading Technological utilisation Production performance Firm capabilities Labour force organisation & management Construction cost, time, product quality, safety, productivity, profitability, and client satisfaction Collective

efficiency Joint action External economies Relational density Vertical cooperation Horizontal cooperation Bilateral cooperation Multilateral cooperation Availability and development of specialized workers Knowledge dissemination Cluster growth Ease of access to suppliers of specialized inputs Number of actors in the cluster by productive activities Rate of firms entering cluster Institutional

theory Institutional embeddedness Vertical integration Interactions between mncs and local firms Relationships formed between mncs and local firms Types of production rate of growth of types of production Horizontal

integration Diversification of production in Cluster growth Relationships formed between local firms

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Policy instruments Policy packaging Horizontal

packaging Type of instrument Related instruments Target group of instrument Vertical packaging Chronological packaging Table 1: operationalisation of core concepts

Conceptual framework

Through these methods of horizontal and vertical coordination, competitive advantages in specific activities are easier to direct and develop highlighting the importance of activity specificity over sectoral specificity in economic policy making. Furthermore, accepting that global actors can have an influence on governace and instituional norms across GVCs, it must also be accepted that some degree of meso or micro level governance and institutional norms have a baring on the insertion of GVC actors within their meso or micro level scales. This necessitates a slight restructuring of the directionality of governance. From bottom-up to top-down, the difference between the two is bidirectionality: bottom-up approaches coordinate governance horizontally between actors in a given spatial and temporal dimension. Top-down indicates mechanisms by which vertical coordination between governing institutions and MNCs can occur. Between the two, cluster governance resides, its norms and governance strategies dictated by socio-cultural norms expressed in the micro scale and international standards and norms expressed through MNC embeddedness at a macro scale. While the objective of this thesis is not to create a holistic and all emcompassing theoretical framework where power and actor agency can be followed at every degree and step of separation between other actors, understanding the role macro scale governance has on micro and meso scale governance is necessary to understand how value chain actors embed themselves in institutional governance of clusters.

In this model and context, verticality refers to the upwards directionality and positionality of some actors above others. Vertical actors tend to be MNCs. However, as described in chapter 4, relevant institutions are also vertical in nature given their position over the cluster. Horizontality refers to the position of actors across a similar stage – or the inclusion of a wide range of actors who function across a range of activities within the cluster. This refers to the agglomeration of these actors across the institutional setting, or in this case, those actions which strengthen the cluster and the

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connections between cluster actors. This mirrors the contextual use of clusters and MNC insertion strategies used in the Costa Rican medical devices cluster. The single line in the middle of the model represents the first vertical insertion of an MNC. This spreads outwards as more MNCs vertically align with the cluster. Doing so allows more local firms to be engaged.

Fig ure 1: mo del rep res enti ng ins erti on stra teg y for MN Cs and development strategies between MNCs and local firms in the cluster.

However, engagement from either MNCs or local firms can only be achieved through specific forms of governance – in this case value chain management and cluster organisation – which in turn relies on specific policy instruments to be effective. This is explored in more detail follow chapter 4, where a more contextual positioning of firms is explored.

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Where clusters are horizontal conglomerations and value chains vertically aligned from top to bottom, relationships between cluster actors and relationships between lead firms and individual firms differ. To understand and combine the cross-scalar differences, a significant focus should be placed on the analytic unit, and on the process of governance. Through this reasoning, the primary research question is defined as follows:

“How have policy instruments affected MNC embeddedness in the Costa Rican medical devices cluster from 2010-2017, and how has institutional embeddedness allowed for greater skills proliferation to occur across the medical devices cluster of Costa Rica?”

This question aims to further the understanding of the relationship between institutional governance and skills proliferation. To further understand these different qualities, we express the thesis through five ancillary questions.

1. Is Costa Rican development policy and policy instruments based more on approaches of collective efficiency, or technical capacity with regards to governance of the cluster and of MNCs?

2. How is cluster governance divided between the horizontal organisation of cluster actors and the vertical management of MNC engagement through policy instruments and embeddedness institutions and MNCs?

3. What are the main roles of MNCs in institutional governance, and does this occur in a horizontal or vertical manner?

4._{How are skills proliferating through the cluster, what kind of skills are being proliferated,} and to what extent are governing institutions playing a role in the proliferation of skills?

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In this chapter, methodological approaches used through the research period are described and explained. Beginning by defining mixed methods, the design utilised is described as the exploratory and sequential process taken through research. The research sampling is discussed, as is the positionality of the researcher in conjunction with the research context. Finally, ethical obligations of the researcher, the validity of the research done, and the reliability is discussed.

Mixed Methods

Mixed methods are defined as a mixture of quantitative and qualitative forms of data collection and analytical frames. (Sayer, 1999). The benefits of combining methods and analytic frames in such a way is the flexibility by which the direction of research can change. By accepting that judgements are informed by social position and our knowledge of a situation informed by pre-conceived notions, more consistent methodological triangulation can occur all the while acknowledging the upper limits of research - that the 'real' is unknown (Sayer, 1999; McEvoy and Richards, 2006). The process of research is to understand the empirical, which is informed by how we understand the world around us. In utilising a critical realist perspective as an inquiry worldview, we assume a mechanistic model for policy orientation across GVCs. However, individual positionality with regards to the subject dictates how one interacts and perceives it. Furthermore, interacting with actors in different positions means different ways of perceiving these interactions, by virtue that many of the things we are attempting to observe are not real, but can be empirically observed (Babbie, 2008; Sayer, 1999). This implies different medical manufacturing and assembly activities will interact differently and won't always perceive the problem from the same positionality as myself. A mixed methods design functions well for describing both the empirical (that which can be observed) and the positionality of those involved in medical manufacturing and assembly activities. While justifying the use of both qualitative and quantitative methods, utilising both also allows a more in depth and clear picture to arise, and will allow opportunities to contest either strand of data with the perspectives of quantifiable differences and qualitative perspectives, allowing an overall deeper understanding of the context being observed. There is a practical aspect to undertaking qualitative data collection before quantitative data collection. As this is my first time researching in Costa Rica, qualitative research allows better networking and trust building to take place between myself as a researcher, and businesses and policy makers. In utilising a critical realist perspective as an inquiry worldview, we assume there is a fundamental model for developing competitive

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advantages in manufacturing. However, we contend that individual positionality with regards to this model depends on how one interacts and perceives it. Interacting with actors in different positions means different ways of perceiving these interactions, by virtue that many of the things we are attempting to observe are not real, but can be empirically observed (Babbie, 2008; Sayer, 1999). Furthermore, this implies businesses interact with policy differently, and won't always perceive from the same positionality. As such, mixed methods are viewed from the perspective of mixed methods and methodological approaches. While also combining axiological and epistemological views of critical realism and pragmatism for the purpose of research flexibility, this can complicate my own positionality as an outsider. However, by viewing my rational for using mixed methods as a means of better triangulating results, it neatly fits into the inquiry worldview.

Mixed methods design

An exploratory and sequential phase-based design was utilised throughout the research process. This design was chosen for its practicality; the emphasis on qualitative data gathering will allow an opportunity to create research orented network. While creating imbalances between qualitative and quantitative data – though justified by the divide of quantitative and qualitative indicators – quantitative data gathering exists in this setting to contextualise the qualitative information gathered, and to better understand upgrading choices between different businesses.

Figure 2 outlines the basic strands of research and which research questions they intend to answer. The first phase of research revolves around policy-oriented research. This phase helps better understand how policy has been constructed to influence value creation, sectoral growth, and the growth of value-additive production, and to understand what relevant and major actors exist within an institutional framework. Furthermore, the analysis of policy better contextualises the questions asked in the following phase: semi-structured in-depth interviews with medical manufacturing and assembly business leaders and expert interviews with policy makers engaged in the creation of policy. The second phase will help understand the scope of activity specificity in GVC coordination, and allow for an understanding of how businesses manage different upgrading processes. Additionally, interviews will allow for a better understanding of the interaction between businesses and policy makers for greater coordination. However, this phase is problematised by bilateral and multilateral agreements. This means there are potential differences between Costa Rican companies

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and transnational producers within Costa Rica. This is a point of focus in the first phase of research, and will help conceptualise how to approach different participants based on their governance and institutional situations.

The third phase of research is characterised by quantitative data collection and analysis. Using a nested sample of those businesses interviewed in the second phase, this phase focuses mainly on collecting information to contextually understand the first and second phases. This allows an economic sectoral analysis of macro-economic structural change activity analysis of the specific share of manufacturing activities. Additionally, the information gathered in this phase allows an understanding of the importance of activity specificity for GVC coordination and the effect of various types of upgrading across the GVC. Each phase of research is informed by the data analysis of the last, in order to understand and better inform approaches taken in later phases. Nested sampling was used to better understand differing perspectives and experiences. Furthermore, data collection will be both staggered and informed through participants and data analysis. Staggering will occur through the nature of an exploratory sequential design: with each phase of data collection informing the next (De Cuir-Gunby, 2016).

Mixed methods was chosen as the means of disseminating data as it is the authors belief that purely quantitative or qualitative data cannot fully represent the world as it provides a representation of only one part of the world. For example, evaluations and impact assessments done by the Costa Rican government tend towards quantitative methods: whether by statistical analysis or by descriptive statistics. While this is useful in understanding the correlations which arise, and as a means of understanding the statistical significance of results, it does little to understand interactions within the policy mechanisms itself. Furthermore, a pure qualitative study would fail to fully understand the intricate mechanistic relationships between different factors of growth. However, the following section will go into further detail as to why these single source data sets can give inaccurate representations of the world.

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Figur e 2: a fram ewor k show ing the phas es of resea rch, the resea rch tasks, and whic h resea rch questions will be addressed in each phase.

Research Design

The basis for the research was planned through a mixed methods sequential and phase based design (see figure 2) wherein each last stage of research is informing the next stage of research. This design ensures the collection of information necessary to assert claims made by the end of this paper. With each inter-phase period involving preliminary analysis of findings, it informs the next stage.

An exploratory - not explanatory – logic was used for analysis. This highlights the specific inquiry worldview used. To ignore the assertions, assumptions, and limitations made before, during and

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after the research period is to deny the objectivity of the researcher themselves. Additionally, it pushes these assumptions to the forefront and confronts that as an essential part of the research process. What is derived is how generalised concepts can be applied into different political and economic contexts. A sequential design was chosen opposed to a concurrent design as to undertake research sequentially would help with scheduling the research process. Additionally, a sequential design helps in cases of a new network of people unfamiliar with the researcher. There is a significant need to build trust within the network, particularly between interviewer and interviewee. A sequential design helped with these limitations, and allowed better scheduling of time and work flow to prioritise the gathering of information and the expansion of the network at a steady rate. Methodological approach

Critical realism was utilised as the primary inquiry worldview. Pragmatism played its role as the means by which decisions could be justified in the time crunch. Where critical realism allowed for better focus on underlying mechanisms by which policy instruments have secured their goal, pragmatism allowed for more flexible adjustments to new challenges on the field, while also allowing creative solutions to theoretical and analytical issues which arose through the data gathering process. One example of this stems from the flexible adjustments made to theoretical frameworks as the complexity of policy instruments and their underlying mechanics became more clearly understood. While critical realism played a larger role in the design of the theoretical basis upon which this paper rests, pragmatism directed decisions made in the field. Furthermore, concepts of critical realism allowed a more closely aligned theoretical framework with critical realist models. This is important as it allowed the opportunity to observe what aspects of the data gathered fall into the three different scalar levels of critical realism: while no aspect is likely to fall into the category of the real (as we cannot know what the real is) we can distribute data gathered into a model which reflects the actual and the empirical. By doing so, we can understand what aspects of the research gathered fall into mechanistic underpinning of the context, and that which is observed as a result of this. Additionally, pragmatism acts as a means by which limitations can be asserted, more easily honing in on useful areas of data collection by discarding sources of information which did not closely align with the area and scope of the study.

Mixed methods are defined as the combination of quantitative and qualitative methods, used in tandem to methodologically triangulate the results of analysis. While mixed methods can be

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described under a wide range of different descriptors, it was the authors opinion that by creating avenues of different analytic outputs and finding similarities through which meaning can be interpreted, we are more able to create relevant observations over a wider area of knowledge. Semi-structured interviews and expert interviews were used to further understand the institutional mechanisms at work, and to understand the decision making process involved in the management and organisation of policy concerning the Costa Rican medical devices cluster. Furthermore, policy analysis and evaluation is utilised to further a contextual understanding of how different policy instruments worked. It is important to understand the specific positionality of those organisations which gave their own policy recommendations to policy makers and the effects felt by different policy instruments. In particular, it is important to understand their justifications for success and failure.

It was intended to use firm level statistics to develop a broader and more explanatory set of statistical findings. However, a major limitation faced in the field was the availability of firm-level statistics. While it may have been possible to access this information with a greater or more inclusive network, aggregate statistics were used as a means of further contextualising the cluster. This allowed conceptualisation of the relative developmental success of the cluster despite the relegated nature of aggregate statistics. The majority of data was found through the combination of statistics available through COMEX, PROCOMER, and CINDE. The unit of analysis which was focused on throughout the research process was the relationship formed between cluster and value chain actors. This also includes governance organisations. However, this is done so through the specific scope of the research, being the development and proliferation of skills related to the field and sector of production. Therefore, those relationships which reinforced, damaged, or otherwise affected these relationship were the subject of analysis.

Positionality

The positionality of the author in this research as being defined as separate from the context from which is being studied means that the perspective of the author must be at once taken this position of objective separation, while also focusing on including as much contextual information as possible. This is reflected in the phase based research design. In order to more fully understand the complexity of context, a combination of methods are used to balance the depiction of the political and economic context as understood through analysis and the context as it has been displayed.

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Following this, the author dedicated the first stage of research to building a robust enough contextual understanding through the policy phase as a means of better representing the position of Costa Rican local firms an policy instruments through research. Reflexivity of research is represented in the tempering of this contextual representation through the gathering of qualitative information. Triangulation of results was achieved through the analytic combination of results both qualitative and quantitative. The importance of methodological triangulation lies in improving reliability of results by checking against different sources of information. Additionally, it allows validity of results to be checked against different sets and types of data.

Through three strands of analysis, the analysis of data began with an initial coding process distinguished through policy. This creates connections through policy to expert interviews, which was used to create a basis for a secondary axial coding process used for the qualitative data, where in the basis of the conceptual scheme was used to align interviews which the rest of the data. Policy was analysed as a means of starting the initial coding, wherein policy was described by their intentions (as described by the policy in question), and by what means they are carried out. Following this, quantitative data was used as a means to verify conclusions drawn from policy, and as a means of further understanding a numerical context by which a broader understanding may be reached.

Sampling

A nested sample of firms within the Costa Rican medical devices cluster was used. Furthermore, interviews with institutional actors such as CINDE, PROCOMER, and CAANTEC for expert interviews were utilised. 18 interviews were made with 13 respondents. Firms were chosen from the pool of available firms from the cluster. While a randomised selection may have improved the impartiality of results, the specification of the research period did not allow for such luxuries as the scope of the network available to the author was limited from the beginning of the research period. Furthermore, those firms which were interviewed are those which responded to calls to join the research process. This selection represents ~2% of the total cluster, which must be taken into account when gauging the validity of results – discussed in the following section.

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Table 2: Sampling list utilised through the research process

Expert interviews with members of governing institutions were used to understand their specific positionality with regards to the cluster. Questions asked revolved around their role with regards to local firms and MNCs, how certain policy instruments were executed, the duties and responsibilities of institutions. The goal of policy review was to engage related policy and establish a local policy context, highlighting dominant policy instruments utilised by governing institutions. The core of the data collection occurred through semi-structured interviews with MNCs and local firms alike. Interviews were structured around three core groups of questions. The first group of questions related to the structuring of the company itself. Descriptive information regarding the firm, when the firm entered the cluster, and changes to employment. The second group regarded its growth and development trajectory. Specifically, the second group looked to further understand the linkages formed with other firms, changes in processes in functions over time – specifically from when the firm joined the cluster – and the third group of questions dealt with skills development and other interactions with governing institutions. All groups of questions were asked with regards and in relation to the respondents firm, and governing institutions: specifically CINDE and PROCOMER. Interviews lasted roughly 60 to 120 minutes. Semi structured interviews were chosen as the context between different firms and their relation to the cluster is defined by their activities. Furthermore, it emphasised a flexible approach, allowing for a more rigourous interviewing process to occur.

VC and cluster governance

A-1 CINDE A-2 CINDE A-3 CINDE B-1 PROCOMER B-2 PROCOMER C-1 CAANTEC D-1 WTO E-1 Nelipak E-2 Nelipak F-1 Etipres G-1 Creativa H-1 Tico Electronics H-2 Tico Electronics I-1 UTItec Medical J-1 MicroVention K-1 Micro Technologies

Skills development and MNC embeddedness in the Costa Rican medical devices cluster