Het Paleis: the creative cluster of Groningen

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Het Paleis: the creative cluster of Groningen

The effects of policies on knowledge sourcing

Master thesis by

Yme Sake Boonstra

S1495836

y.s.boonstra@student.rug.nl

July 2012

University of Groningen, Faculty of Economics and Business Thesis supervisor: Dr. Rene van der Eijk

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Abstract

This research is aimed at investigating the effects of policies on the type of knowledge sourcing used by the creative individuals and companies that are settled in het Paleis. Het Paleis used to be a chemical laboratory but is now home to a diverse array of creative companies and individuals. It is a famous creative cluster and forms the heart of the creative industry of Groningen.

During recent years, several academic hypes with respect to clustering and the knowledge economy have forced local governments to revise their policies. Especially in the Netherlands there has been an extensive focus of local governments on developing clusters and facilitating the knowledge economy. These two concepts have been further explored in this research and applied to a case of het Paleis.

A qualitative research is used in order to explore and define the effects of policies of the municipality and the province of Groningen on the type of knowledge sourcing used by the companies in het Paleis. By using a case study that entails actors of het Paleis, the effects of policies are analyzed.

Three knowledge sourcing types are considered, namely collaborations, monitoring and labor mobility. They are affected by policies that focus on network promotion and support, supporting intermediaries and investments in educational institutions. The first has a positive influence on collaborations and monitoring. The second is mostly beneficial with respect to collaborations and monitoring as the intermediaries receive more support of the creative industry. The third increases labor mobility but is not affecting collaborations or monitoring to a great extent.

Further research should focus on taking a greater sample of the companies in and outside het Paleis. By using quantitative research one could further examine the direct relationships between the policies and the types of knowledge sourcing.

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Executive summary

Policy makers all over the world face a new challenge with respect to urban policy making. The knowledge economy now plays a pivotal role in the economy and the creative industry has been characterized by an excessive growth . The uprise of the knowledge economy and the growing importance of the creative industry have led to a new synergetic symbol in the form of creative clusters.

Almost every city in the world has initiated ambitious projects which are often aimed at serving as a flagship for the city and increasing the competitiveness of the city as a whole. Local governments try to influence the knowledge economy and the creative clusters by implenting new policy types. Nowadays, with the recent cutbacks caused by the crisis, there has been an increasing pressure on local governements to evaluate their policies and to demonstrate their effectiveness. Therefor, this research is focucessd on the effects of policies on the type of knowledge sourcing.

Three policies types are particular relevant when it comes to creative clusters. The first is aimed at network promotion and support. The formation of networks is quintessential with respect to knowledge sharing which makes network promotion and support even more prevalent. The local policies in Groningen are mainly effective with respect to collaborations, and monitoring.

The second type is aimed at supporting intermediaries. Intermediaries acts as go-between and create cross-industry linkages. They select new network member ex-ante and enhance the level of trust in a network. They effectively enforce new collaborations and monitoring but fail to increase labor moblity.

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Preface

The creative industry represents a fascinating but elusive subject in the world of business science. Its outputs are often intangible and its precise economic value is hard to define. Along with the emergence of the knowledge economy and the uprise of clusters, it has grasped the attention of many academics.

The challenges that the creative industry faces have become even more predominant during the crisis. Cuttbacks in govermental spendings has led to revised policies which have influenced the creative industry to a great extent. The uncertainty and intanglebility of the creative industry also aroused my attention which has resolved into writing my thesis about this subject.

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1. Introduction: The rise of creative clusters

During the last 20 years, there has been an increase of creative clusters. These creative clusters represent a new alternative asset for urban development. The clusters mix creative and cultural activities such as the production, presentation and consumption of theatre and visual arts. Especially new media has gained more attention with respect to clustering and they are bundled together in a wide array of spatial forms. Such spatial forms are for example large buildings, building complexes or sometimes include whole quarters of networks of locations. Some clustered companies are settled in old industrial complexes but several cities initiated the building of brand new locations (Chapain, 2010).

Several creative clusters primarily inhibit artistic/cultural activities but more and more of them offer a variety of leisure and entertainment elements such as restaurants, bars and fitness complexes. Some clusters are initiated after a building was left over, others were started in the minds of cultural managers who turned a building into a hotspot for creatives to strengthen their market position. Other examples of creative clusters are initiated on the drawing board of urban planners who try to strengthen the local creative economy or want to revive urban quarters (Chapain, 2010).

The clustering of creative companies represents a crucial turn in urban policy making and the organization of the urban creative field. In former days, policies did focus on the creative industries but in a more redistributive role within a more vertically organized public arts sector. Whereas today, urban policies operate on a much more comprehensive and longitudinal level which also includes horizontal linkages of thinking and acting. A more inclusive process-oriented and transverse perspective is necessary which also includes spatial effects and conditions to replace the former vertical perspective (Martin & Moodysson, 2010). Other stakeholders, such as economics development agencies, urban planners and private investors have started to mingle with, what was formerly regarded as an autonomous artistic field. The basic premise for this increasingly collaborative and developmental approach is the interactions between cultural activities that are embedded in their urban region, the related urban dynamics and the cultural value chain (Chapain, 2010).

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all major cities have developed their spectacular festival agendas, museums and theatre, we can find urban regions with a more sophisticated policy, aimed at creating spaces, quarters and milieus for cultural productions and creativity instead of mass consumption (Chapain, 2010).

1.1 Research aim and questions

Many academics agree on the fact that knowledge plays a vital role in the creative industry. Furthermore, they increasingly use a knowledge-based view to analyze clusters which makes it interesting to analyze the type of knowledge sourcing used by creative actor in a cluster. As the local government of Groningen tries to stimulate the creative industry and has high hopes for the knowledge economy, the effect of its policies on the type on knowledge sharing becomes crucial. As “het Paleis” represents a perfect example of a creative cluster, the research will focus on this cluster.

The relevance of knowledge for the creative industry and the perceived importance of this industry for the city of Groningen lead to the following research question:

What are the effects of governmental policies on the type of knowledge sourcing used by creative actors in a cluster?

Sub questions:

1. Which types of knowledge sourcing are used by the creative actors in a cluster?

2. Which types of (governmental) policies are there to be found with respect to the creative industry and knowledge sharing?

3. What are the effects of (governmental) policies on the types of knowledge sourcing?

1.2 Boundaries of the study

This research will focus on the companies that are settled in het Paleis in de city of Groningen. Het Paleis used to be a chemical laboratory but now represents the heart of creative and cultural Groningen. It is an impressive building that covers 9000 square metres and has been rebuild for its current use. Artists, web developers and many other creative companies have their office or workshop in het Paleis and are sometimes offered a special price to rent their own place.

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often dependent on external parties for completing their work. This makes the sourcing of knowledge via external parties relevant and justifies the use of the knowledge based-view.

The focus of this research is on het Paleis but also considers companies in the province of Groningen as these are the companies with whom they share knowledge with. As the municipality and the provincial council make the policies with respect to the creative industry and the knowledge economy, there policies and their effects will be analyzed.

1.3 Organization of the paper

In the following chapter, an overview of the relevant literature will be provided. Chapter 2 defines the cluster, creative companies and its linkages. The relevance van knowledge and types of knowledge sourcing are further explained in chapter 3 and policies are further elaborated on in chapter 4. Subsequently, the methodology is presented which explains how research methods are used to gain data. Thereafter, the results are analyzed to build op a conclusion in chapter 6.

2. The Cluster defined

The most used concept with respect to clusters is the concept developed by Porter. He defines clusters as geographic concentrations of interconnected companies, specialized suppliers, service providers, firms in related industries, and associated institutions that can be universities, standards agencies or trade associations. The clustered companies can compete but can also co-operate which amplifies the flow of knowledge. The proximity of companies and institutions ensures that a certain sense of commonality and increases the frequency and impact of interactions (Martin & Moodysson, 2010).

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In reaction to Porter’s definition, multiple authors tried to redefine the cluster concept. It can be stated that there is no single unified definition, which can be used in every case. However, all definitions share certain similarities, either spatial based, industrial sector based or measured variables based definitions. In addition, certain themes are mentions time and again such as link to performance, geographical concentration, proximity, actors and linkages of interrelationships, which could lead to a more general definition of the cluster concept (Martin & Moodysson, 2010).

In this thesis the focal cluster is defined as:

• A set of actors belonging to the creative industry that have commonalities and complementariness

• A geographical concentration in of these actors that facilitate linkages and interactions through formal and informal setups between actors in either the cluster or the region. Which

• Perform various economic activities and where knowledge is transferred.

Each characteristic will be discussed into depth in the following writing.

2.1 Creative actors

Cluster actors form the center of a cluster. The relations between actors and their related activities are the quintessence that make and shape a cluster. Cluster actors are always embedded in the region as they interact with regional actors. Regional and cluster actors individually and collectively shape the performance of the cluster as a whole (Kesidou et al, 2009).

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• Advertising • Interactive leisure software

• Architecture • Music

• Arts and antique markets • Television and radio

• Crafts • Performing arts

• Design • Publishing

• Designer fashion • Software

• Film

Table 1: overview of divers companies in the creative industry (Jeffcutt, 2000)

All the cluster actors form a critical mass but other relevant concepts also apply to these actors. A key characteristic of a cluster and its actors is the concept of proximity. Proximity as such serves as a premise for face-to-face contacts, diffusion of knowledge and learning. However, proximity on itself is not enough (Martin & Moodysson, 2010). Otherwise each urban region could be considered a cluster. Actors in a cluster always have to relate to several other key concepts to be qualified as a cluster. Firstly, cluster actors are not always companies but can also be individuals, organizations, governmental organizations, standard agencies, trade associations, government bodies (regional and national), etc. Secondly, cluster actors are often connected vertically and horizontally. These relationships can be both formal and informal. Thirdly, the interacting actors can be in a cooperative and a competitive relationship. Clusters as a whole actually benefit from competitors that engage in collaborative activities (Ahedo, 2004).

2.1.1 Characteristics of creative actors

Caves (2000) has indicated that actors in the creative industries share common elements based upon economic properties and those that work in them. According to Caves (2000), these characteristics are:

1. Considerable uncertainty about the likely demand for creative product, due to the fact that creative products are ‘experience goods’, where buyers lack information prior to consumption, and where the satisfaction derived is largely subjective and intangible; 2. The ways in which creative producers derive non-economic forms of satisfaction from their

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activities (eg. basic accounting and product marketing) in order for such activities to be economically viable;

3. The frequently collective nature of creative production, and the need to develop and maintain creative teams with diverse skills, who often also possess diverse interests and expectations about the final product;

4. The almost infinite variety of creative products available, both within particular formats (eg. videos at a rental store), and between formats;

5. Vertically differentiated skills, or what Caves terms the ‘A list’/ ‘B list’ phenomenon, and the ways in which producers or other content aggregators rank and assess creative personnel;

6. The need to coordinate diverse creative activities within a relatively short and often finite time frame;

7. The durability of many cultural products, and the capacity of their producers to continue to extract economic rents (eg. copyright payments) long after the period of production.

These characteristics show the major risks and uncertainty about the economic outcomes of the creative actors. The uncertainty and risk intensify the urge to reduce these factors by sourcing knowledge and make the necessity for policies even more prevalent.

2.2 Linkages and interactions

Linkages and interactions form the arteries of a cluster. These linkages and interactions are represented by a form of market and non-market links. In this case, proximity is the perpetuator of the creation of links between companies. These links between companies can amplify regional competitiveness in local, regional or global markets and therefore increase growth and other beneficiaries (Ahedo, 2004). Proximity is a premise for generating dynamics that underpin competitiveness and is clearly related to actions that lead to linkages or interactions through formal and informal setups between clustered companies. It also gives rise to agglomeration economies and higher social capital which influences the success rate of linkages and interactions between actors (Jeffcut, 2000).

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tasks at different times. Therefore, creative practitioners and companies often use their skills in several creative subsectors which makes it hard to define a value chain. Project work is a typical character of the creative industry and takes significant linkages across subsectors for a specific period of time (Jayne, 2005). Each project requires other linkages and interaction and thus changes constantly. These so called cross-sectorial exchanges inhibit knowledge and different career portfolios that are not easily captured by a cluster model (Cunningham, 2008).

To identify these cross-sectorial linkages, a model has been developed by CURDS (2001). The arrow in the model links the different actors in the creative industry and represent different interactions or relationships. These can be of financial nature, knowledge related, contracts and partnerships. The model is does not state the complexity of these linkages and relationships but does indicate the context of the creative industry. Some linkages are crucial, others are less relevant or sometimes even obsolete. The model displays four layers of linkages which are relevant to describe the intra-cluster and intra-regional dimension of the creative cluster. They are not specifically linked to a spatial scale and do not define the relevancy of the linkages or interactions but do show the different nature of the interactions of actors in the creative industry.

The model exists out of four layers (CURDS, 2001). Layer 1:

This layer represents the personal dimension of creative individuals and their relations. This is most often related to the place they live in. This place can be a source of inspiration, creativity and knowledge.

Layer 2:

The second layer shows the employment and work opportunities that a cluster or region can offer. It displays the actors from a business and employment perspective. At this level, the cluster approach where strategy, structure, rivalry as well as demand and factor conditions are key factor for the development of creative companies and the sourcing of knowledge. In this layer, the dynamics are especially important for temporary project-based and freelance work. One can find an increasing number of specialists at this level.

Layer 3:

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cluster. This layer is comparable to the concepts of “related and supporting industries” and “government” as described by Porter (1998). Often growth of a cluster is related to interactions between the second and the third layer.

Layer 4:

The fourth circle includes non-cultural structures, actors and organizations that have loose ties with the creative economy but do support important elements of the creative industry. Porter (1998) describes these as demand and factor conditions but in this case they also have effects on creative individuals. Especially, the third and fourth layers are essential with respect to policies.

Figure 1: Creative knowledge pool (Curds, 2001)

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2.3 Knowledge

In the midst of the knowledge-based view of cluster lies the focus on knowledge as the most relevant and significant asset of companies. As complex knowledge cannot only be understood and rendered by single individuals, the primary role of companies is coordinating dispersed knowledge (flows). In earlier periods, organizations were viewed upon as only influencing transactions cost but this view has been altered under the influence of sociology and management science (Bahlmann & Huysman, 2008). The knowledge based view and the transaction cost views are not always used in contrasting dialogues and are sometimes used in combination. But even though, the knowledge-based view is gaining in academic popularity. The knowledge-based perspective has reached organizational scholars and practitioners, which indicates the relevance of knowledge. Specifically, the urge to yield dispersed knowledge and to successfully combine this knowledge as to transfer individual to collective knowledge and vice versa (Döring, 2006).

In relation to the knowledge-based view, several authors have opted for the use of a knowledge pool model for studying the creative industries. This view is not in complete contradiction with the normal cluster approach but is more flexible and applicable in its way of understanding the role of creative individuals and companies in relationship to clusters

(Bahlmann & Huysman, 2008).Creative industries draw heavily on their internal and external

knowledge bases as they often produce intangible outcomes. Therefore, the sourcing of knowledge from the differential layers is quintessential for actors in a creative cluster (Jeffcutt, 2000).

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face-to-face interaction. Knowledge in symbolic industries draws on a different reasoning. The main goal of actors in symbolic industries is to trig reactions in the mind of consumers. Knowledge is not used for a product or a process but as an idea or an impression that it carries. This knowledge is applied to shape meaning and desire through an affecting sensuous (Martin et al, 2011).

As the focus of this thesis is on creative actors, symbolic knowledge will be further explained. Symbolic knowledge is related to the creation of meaning and desire as well as aesthetic attributes of products, design, images and symbols and to the economic use of forms of cultural artifacts. The importance of this kind of knowledge is emphasized by the upcoming development of cultural production by different sectors (see table 1). Knowledge in these industries is particular important because a crucial part lies within the creation of new ideas and images and less on the psychical production process. Competition in these industries is focused on the so called “sign value” and less on the “use value”. The input of aesthetics requires specialized abilities in symbol interpretation and creativity than sheer information processing (Martin, 2011). Knowledge is often incorporated in symbols, images, designs, artifacts, sounds and narratives with a strong cultural component. Therefore, the knowledge is often tied to a deeper understanding of habits and norms of specific social grouping. The embedded of interpretations leads to a knowledge base that characterized by a distinctive tacit component and is highly context specific. Acquiring creative, imaginative and interpretive skills is less related to formal ties and university degrees. The process of socialization is of the utmost importance because of the relevance of know how and even more know who. Knowledge of potential collaborators with complementary specialization through informal interpersonal allows creative actors to differentiate.

2.4 Summary

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symbolic knowledge. These three types, collaborations, monitoring and labor mobility are further discussed in the following chapter.

3. Knowledge sourcing in the creative industry

The following writing describes the types of knowledge sourcing that are most relevant for the creative industry. These are monitoring, mobility and collaboration with other actors. Monitoring occurs when knowledge is sourced from outside the boundaries of the creative individual or organization but without direct interaction with these external sources. Mobility refers to retrieving knowledge by the recruitment of workers from other organizations, such as companies and universities. Collaboration is the exchange of knowledge through direct interactions with other creative individuals or companies (Pechlaner, 2010).

3.1 Monitoring

Monitoring refers to several sources of knowledge. These sources can be other creative individuals, companies and universities or every other actor from the previous describe layers. As monitoring involves no direct contact, the knowledge must be obtained from secondary sources such as scientific journals with results from academic research, surveys or questionnaires carried out by other support organizations, specialized magazines, fairs and exhibitions which focus on the creative industry and related fields (Kesidou et al, 2009).

Regarding monitoring, there is of course a range of possible sources of knowledge. The relevance of esthetics in the creative industry lowers the expected importance of scientific journals as a knowledge source. As the creative industry is informal and project-based, one would expect know-who to be considered more important than know-what which is associated with these journals. Fairs, exhibitions and other organized meetings are probably more relevant as they facilitate the exchange of know-who and inter-firm linkages. Specialized magazines can be important to stay up-to-date of current and new trends. The creative industry is focused on creating and affecting perception that is under the influence of socio-cultural context. Therefore, one might expect to magazines that cover these trends will be an important knowledge source (Martin et al, 2010).

3.2 Labor mobility

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importance of the source can be defined. In the creative industry it is expected that universities are less relevant but other educational institutes that primarily focus on aesthetics are quintessential as a source for skilled labor (Kesidou et al, 2009).

In most cases the intra-regional milieu plays an important role for supplying highly skilled labor. Competent employees are often recruited from companies in similar or related industries (Martin & Moodysson, 2010).

3.3 Collaboration

Bilateral collaboration is another important way of collecting knowledge for creative industries. It concerns different types of knowledge that are exchanged between actors in the clusters and the region. Some creative individuals and companies collaborate with a wide array of partners, but others heavily depend on small set of actors, which makes these actors an important live-line.

In some case national and international collaboration takes place but in the creative industry intra-cluster and intra-regional collaborations are most prevalent. Creative companies tend to cooperate with actors located in geographical proximity (Martin et al, 2010).

The growing popularity and awareness of the strategic importance of clusters combined with the knowledge-based view has implications on the way policy makers create policies and interventions. Some policy makers have not yet adopted a knowledge-based approach but several policy makers are already drawing lessons from the knowledge management field. 3.4 Summary

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4. Policies with respect to creative clusters

Recently, with respect to policies, the emergence of the creative industries has become the focus of governmental attention. The governmental attention has shifted from national to local government and creative industries are seen as an expression of competiveness and industry integrated into a globalized commercial culture (Raines, 2011). This policy shift can be attributed to the deindustrialization and the cutbacks of national governments. Therefore, local governments were forced to take a more entrepreneurial approach to creative industries and often linked it to urban regeneration and their welfare agenda in order to gain funds from national and European funding schemes. In the context of fiscal and social crisis, local governments have repositioned from subsidizing the creative sector to capitalizing on the creative sector which has been the starting point of a more entrepreneurial form of governance (Tödtling, 2011).

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4.1 Policies defined

Policies regarding clusters always focus on actions that can change the collective behavior of groups of firms, thereby promoting the emergence of self-sustaining networks/systems of innovation and commercial renewal. The competitive advantage of a region and a cluster lies mostly in the linkages between businesses and the knowledge that they share (Cooke 2011).

Cluster policies, as such, are an umbrella term that covers a diversity of approaches that support business networking. In the core, every cluster policy has one key feature: it targets public support at selected collective rather than individual agents, by mainly improving their innovation and knowledge sourcing capacities (Asheim, 2011).

It is said that clusters policies should not only be evaluated in the light of cluster effects based upon financial parameters but one should also adopt a wider analytical goal to understand the process by which policies can influence cluster development. By evaluating a policy, one can test specific measures and programs but also assess the general value of the cluster approach. With respect to regional development policies there are four groups of pressures to be found: 1. An increasing political need to determine the economic outcomes of such policies 2. Increasing demand on governments to account for all public spending and demonstrate added value 3. The operational interest of policy makers in improving implementation and delivery systems 4. And a desire to test assumptions regarding the relationship between policies and regional growth (Raines, 2002).

According to Raines (2002), one can evaluate a policy by summarizing a series of parallel critical tasks that form the policy process as a whole. The policy process is represented by a series of transformations that link:

1. Initial inputs into a measure of program (for example, resource dedicated to a measure 2. The actual activities generated by a measure of program

3. The direct outputs of policy support (for example, the number of direct training places supported by the measure)

4. The immediate effects of the policies which are regarded as changes in beneficiary performance as a result of policy outputs.

5. Finally, the wider impact of the policy, thereby taking indirect en direct positive effects into account.

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These are the transformation of outputs into results and the transformation of results into impacts (see previous mentioned point 4 and 5). The effects of policies are concerned with these two transformations and, in this case, focusing on the knowledge sourcing of creative actors which reside in the cluster (Raines, 2002). When further analyzing these processes, there are two broad roles to be distinguished. Firstly, the formative role which represents the development of the policy and how it transfers inputs into activities and eventually into outputs within the boundaries set by its designers. Secondly, the summative function of a policy deals with the effectiveness of a certain policy. Thereby measuring if it has a significant influence on the target group or on the wider economy. The output of these functions has a focus on its goals and effects which can eventually lead to a redesign of a specific policy.

Figure 2: Policy development and effects (Parrilli, 2009)

4.2 Specific policies

There are specific policies to be found with respect to enhancing the level of knowledge sourcing within the region of Groningen and specifically for het Paleis. Some have a general character, other are specifically focused on the creative industry. The following writing sheds light upon these policies and their effects.

Inputs Activities Outputs Results Impacts Policy development Formative phase

Effects on actors

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4.2.1. Network promotion and support

The government can create policies to promote and support networking. This can involve the network within the cluster or between cluster actors and other regional companies. Nowadays, local governments do not only subsidize the creative industry but also facilitate the development of its network (Nishimura et al, 2011).

The network evolves through interaction of at least three partners. To realize these interactions effectively, incentives are needed. These incentives are generated by the network itself and are distributed through the network. For a network to create benefits, it requires common values and standard norms. This is necessary for a network to become stable and essential for coordination. The government can facilitate this by organizing collective meetings for cluster actors and related companies. Face-to-face meeting enable companies to become familiar with each other and breeds trust (Mukalla, 2010). Companies can decide to collectively search for financing, new markets or start new joint projects. Face-to-face meetings can be exchange meetings, joint meetings for announcing result, symposiums, seminars or workshops. Meetings increase a company’s visibility and recognition within their region. Some of these meetings are free of charge, other require the payment of an entrance fee. Aside from face-to-face meetings, the government can facilitate the contact between actors through websites, e-mail magazines or databases (Parrilli et al, 2010).

The so-called “soft infrastructure” is another important facet within the governmental policy that facilitates networking. The soft infrastructure is represented by a system of ongoing interactions among social networks, connections and human interactions that underpins and encourages the flow of ideas between individuals and institutions. The nighttime activities are an important factor for the development of a sustainable creative infrastructure that encourages networking. The city is increasingly a site of consumption and of cultural, creative and services production rather than of industrial production or “9-5” work. Leisure, entertainment, hospitality and tourism are important factors of the nighttime economy (Jayne, 2005).

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the city itself. By providing the labor force with an appropriate and durable means of living, the government will draw a significant amount of creative actors and connects them with each other. This can have an effect on the regional culture and stimulate linkages between companies. It also attracts new talent, immigrants and remigrants which can be of added value of the regional culture. The end goal of this policy type is to create a more open regional culture supported by a high quality of place. Attractive living conditions, high quality of city life, cultural activities and attracting more creative actors will eventually lead to regional images of openness (Cooke, 2011).

This economy can be seen as a source of new opportunities with respect to networking. As a part of the “creative” milieu, it gives a city and its region a dynamic image, and function as a signal to the creative industry. This requires the local government to view the nightlife as chance instead of a problem and an approach that involves various public and private actors. It is usually assigned to a regional promotion officer, coordinator or cluster manager who is capable of creating support across organizational boundaries and integrating various instruments and interest (Chapain, 2010).

4.2.2. Supporting intermediaries

The key actors in a governmental policy regarding creative actors concern private or semi-public intermediaries. These intermediaries have the appropriate social, technical, organizational, historical and institutional knowledge about entrepreneurs, firms, business activities and the relevant market and technology context. The input of the policy concerns recruitment, training and provision of funding, and monitoring these intermediaries. By raising awareness about possible gaps in the organizational and cognitive routines and providing points of improvement, intermediaries can initiate changes in the structure of networks (Asheim, 2011). Furthermore, they assist in determining ex ante the quality of new potential partners. Thereby reducing relational risks, unwanted spillovers and ensuring that prospective partners will develop. Intermediaries emerge especially in clusters as they provide actors with an abundant and cheap supply of variety of business services (Bahlmann, 2008).

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Next to agencies, industry associations can also be of value with respect to knowledge sourcing. As they have specific knowledge regarding their specific industries and are able to organize collective action. They can influence external relations in order to obtain knowledge but can also organize internal relations between members, thereby enhancing the cohesion amongst members (Nishimura, 2011).

The core activities of the goverment does not lie in the governance tasks itself but in recruiting, training, the provision of funding and monitoring the intermediaries. Potential candidates are persons who worked for pioneering companies in the industry, training institutes, consultancy companies, business associations or semi-public agencies. The best way to find these candidates is by setting up a recruitment procedure (Scott, 2010). Another important activity is training candidates because although candidates may have relevant experience and know-how, they can lack the knowledge which is needed to excute the previous described tasks. After training, monitoring becomes essential as they occoupy central positions which allow they to give certain actors preferential treatments by giving them funds or by making plain mistakes. Continious or initial funding is also important as the trust between creative actors and intermediaries is unlikely to be sufficient to garantee private funding.

4.2.3. Training and Education

Policies with respect to training and education entail investments in research institutions, specialized training systems, the broad education and its related physical infrastucture.

Clusters in itself offer specific advantages to their company by providing them with specialized and experienced employees. The cluster can function as a magnet for skilled labour. Policies can offer training to these employees to enhance their skill level and by investing in educational institutions that in return provide the cluster with highly qualified labour to the companies in the cluster (Rainer, 2010).

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and attracts more networks in comparisons to less well-endowed regions because actors prefer exploiting knowledge source in that are close by (Bahlmann et al, 2008) .

4.3 The effects of policies

Every policy is aimed at creating economical benefits on the long-term. This can be done either directly or indirectly. The specific effect and the intentions of the policies are further discussed in the following paragrahps.

4.3.1. Effects of network promotion and support

By organizing face-to-face meetings, the government is actively bringing clustered actors and other regional companies together. This contributes to the creation of cooperative relationships between clustered actors that are looking to expand their network. Face-to-face meetings give creative actors a chance to enhance their external visibility and recognition of their region. This allows companies to find new labor as well because they have more contact with related companies that have talented workers. Apart from forming a business network and finding new employees, meetings also lay the groundwork for new social network that are the basis of new collaborations (Martin, 2011). Several authors have indicated that these meetings not only enhance social networks but also facilitate entrepreneurial collaborations for the future. As often all attendees of these meetings use the same (symbolic) knowledge, it becomes easier to find new relevant actors for collaborations. Knowledge sharing becomes even easier because often, actors are located within the region that fosters reciprocal trust and follow-up face-to-face contacts (Doring, 2006)). This trust stabilizes the network between clustered and regional actors that leads to more knowledge sharing.

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Aside from networking, one can easily monitor other actors at meetings. This is one of the most effective ways for gathering new knowledge, especially with respect to competitors. Identifying leading competitors and subsequently monitoring them through the Internet is one effective way to stay in close contact with your competitive environment and gaining new knowledge (Martin et al, 2011).

The positive effects of networking events on knowledge sourcing can be summarized as follows:

• Enhanced visibility

• Better contact with related companies • Easier to find new relevant actors • Reciprocal trust

• The right mix is created

By investing in the soft infrastructure of the city, the local government can create an entrepreneurial atmosphere and positive attitude towards collaborations. By providing leisure, entertainment, hospitality and tourism the nighttime economy can flourish. This evolves into a vibrant city life, openness and tolerance that will promote diversity and stimulates making use of external parties for collaborations. It also draws more creative actors to form a critical mass and this in return helps clustered actors to find more potential actors to collaborate with. Actively influencing social-cultural aspects, such as the nightlife and the regional culture, stimulate creative actors to engage in new networks. Florida (2002) emphasizes that a creative environment promotes the flow of knowledge and contributes to the diversity of a city and its dynamic image. Knowledge sourcing will benefit from such characteristics, because it helps in building connections to other actors with knowledge and talents, and helps in understanding diverse perspectives on innovation issues related to different cultural backgrounds and will stimulate making use of external knowledge.

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The effects of investments in the soft-infrastructure can be summarized as follows: • Entrepreneurial atmosphere and positive attitude towards collaboration • Critical mass

• Quality of life which attracts new talent

4.3.2. Effects of intermediaries

Intermediaries enable interactions among creative actors and promote the connection between companies in the region. In the case of smaller creative actors, this can help them integrate into new networks which foster collaborations between the creative actors and other companies. Intermediaries thus play a vital role in stimulating and enabling timely transitions in the structure of inter-firm networks. Intermediaries sometimes also provide financial support to cooperative projects, thereby reducing the risk of failure of collaborations and increasing the level of collaborations. Furthermore, they select ex ante network ties which reduces the searching costs of cluster actors. Rather than having many contact with different network ties, a creative actor can maintain a single connection with the intermediary which consequently allows the actor to find new network ties for collaborations with complementary knowledge which would otherwise remain unconnected (Ahedo, 2004).

Especially with respect to public-private collaboration, intermediaries have a wide range of possibilities as they often have strong ties with the local government. Intermediaries also effectively link the external and often dispersed network relations with internal network of the cluster. Thereby feeding the cluster actors with new knowledge (Cooke, 2011).

The focus on creating network ties between amongst clusters actors and its region also has an effect on the labour mobility. Employees are often found amongst friends, relatives or other strong en weak ties. By increasing the network of a creative actor, an actor has a broader network to chose from and get better access to new talent. Social networks are an important factor of labour market inclusion and exclusion. Influencing the social structure of a network can therefore be more efficient than the formal structure of job centres and employment agencies (Jeffcutt, 2000).

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competitor and search for new knowledge regarding their specialization and to find potential collaborators (Döring, 2006).

In summary, intermediaries connect creative actors with other companies for collaboration, which facilitates the exchange, combination or acquisition of new knowledge. Furthermore, they provide creative actors with their own knowledge and foster monitoring of their environment by organizing events.

4.3.3. Effects of training and education

On the of the most important of effect of training and education is developing talent in the labour force. Local talent is the most important asset of a region. Investments in educations institutions also lead to retention and attractions of highly educated and potentially mobile workers which give companies access to new talent and thus increase labour mobility (Ibrahim, 2009).

Furthermore, it creates a critical mass which means that there is a sustainable amount a new labour available. This is particular important for local companies as they will otherwise constantly fight for retaining and attracting new skilled talent. Once a region has a critical mass of highly educated workers, a self-reinforcing circle erects which attracts even more skilled workers. Especially investments in post-secondary institutions can play a central role in providing the cluster with qualified labour. Graduates of these institutions often flow to the cluster or start companies with who actors can collaborate (Kesidou, 2009).

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Policies and effects Input Activities Outputs Effect on Network support and promotion Funding and labor Facilitating networking Developing soft infrastructure Organizing face-to-face meetings Enhanced quality of life Collaborations Labor mobility Monitoring Supporting intermediaries Funding Recruitment, training and provision and monitoring Intermediaries Collaborations Labour Mobility Training and education Funding Investing in education and training

Skilled labour Labor mobility

Table 2: policies and their effects 4.4 Summary

Every policy has diverse output and effects on one or multiple types of knowledge sourcing. Network support and promotion affect all three types. It can either entail the organization of netwerk events or enhancing the quality of life. The support of intermediaries mainly effects collaborations and labor mobility. Training and educations increases the skill level of the labor forces and enhances labor mobility.

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5. Conceptual model

The conceptual model depicts the interrelationships between the variables. The conceptual model clarifies a rather complex situation and can be used to derive the propositions. Although propositions are similar to a hypothesis, its use is quite different. The main goal of using propositions is to suggest a link between two different concepts that cannot be clearly verified by an experiment. By using propositions, one can suggest new areas for further research.

Figure 3: conceptual model

The first element of the model considers network promotion and support. It is assumed that by organizing networking events and supporting the soft-infrastructure of the city (Nishimura, 2011), the municipality and the Province of Groningen can create a favorable atmosphere with respect to collaborations, monitoring and labor mobility. This has led to the following proposition:

P1: network promotion and support by the policies of the municipality and the province have a positive impact on the level of knowledge sourcing.

Level of knowledge sourcing Network promotion and

support

Supporting Intermediaries

Training and education

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The second element considers the support of intermediaries. Intermediaries could play an important role with in the creative landscape of Groningen and especially for the creative actors in het Paleis. Nooteboom (1999) states that intermediaries act as go-between and govern bilateral relationships, such as collaborations and labor mobility. Intermediaries create durable linkages that can be used for new entry and exit in networks. This has lead to the following proposition:

P2: supporting intermediaries by the policies of the municipality and the province have a positive impact on the level of knowledge sourcing.

Lastly, many authors indicate that training and education are essential with respect to regional knowledge economy and in particular for the creative industry. Universities create a critical mass and provide access to new talent (Wu, 2005). Accordingly, the third and last proposition is stated:

P3: investments in training and education by the municipality and the province have a positive impact on the level of knowledge sourcing.

Three propositon will be verified and the outcomes are displayed in the result section. The following chapter will describe how the propositions will be tested.

6. Research methodology

When answering an empirical question, one must conduct empirical research. The goal is to verify the conceptual model and the assumed effects. As this research focuses on several companies within het Paleis and the context is not exactly clear, it will be best to use a case study to test the conceptual model. The conceptual model has led to specific propositions which makes the use of a case study even more relevant as it allows the researcher to qualify the proposition true or false.

6.1 Research Aim

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6.2. Research strategy

A single case study with multiple units of analysis is used because this research invovles an unique case, namely het Paleis, and the goal is not to compare diverse outcomes of multiple cases but to present valid and reliable findings for this idiosyncratic case. Het Paleis involves a highly localized context in the middle of Groningen which makes qualitative research even more relevant. A case study, in its true essence, explores and investigates contemporary real-life phenomenon through detailed contextual analysis of a limited number of events/conditions and their relationships.

A case study can be performed either by using qualitative or quantitative data. Quantitative research is said to be more accurate but qualitative has a higher richness with respect to the results. As het Paleis and the policies of Groningen are highly unique, it is hard to compare quantitative data of other groups/clusters or research which makes the choice for qualitative research logical.

As this research involves a case study and an exploratory research, one can best use the technique of in-depth interviews. These in-depth interviews aid to reveal the opinions and perceptions of the involved actor. These interviews will be semi-structured with actors in the cluster but also with policy makers of the government. Semi-structured interviews are a perfect method to create a balance between the explanatory and exploratory research. The interviews guide interviewees through certain topics but leave enough verbal space for the interviewee to add additional information about the topic. It is quintessential to touch upon the core of the research but not to restrain the interviewee in their process of answering (Yin, 2009).

6.3 Variables

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Dependent variable Independent variable Control variable Network promotion and

support

Level of knowledge sourcing Importance of networking

Supporting intermediaries Level of knowledge sourcing Importance of networking

Training and education Level of knowledge sourcing Number of employees

Table 3: overview of variables

Network promotion and support are analyzed by looking at the network events supported by policies and the soft- infrastructure of the city of Groningen. The support of intermediaries is looked upon from a networking perspective. Traning and education are touched upon by looking at the skills of the labor force and so on.

6.3.1 Interviews

The questions for the municipality and the province of Groningen will mainly concern the policy side of the research and will demonstrate their goals and achieved results regarding the knowledge sourcing of the creative actors. The results will shed light upon effect of the policies from the perspective of the municipality and the province. The questions for the creative actors will primarily consider collaboration, monitoring, labor mobility and the effects of the policies with respect to knowledge sourcing. Each creative actor will indicate which type knowledge sourcing it uses, from whom they source knowledge and what the effect has been of the diverse policies.

6.3.2. Interviewees

Selecting the right interviewees is particular important as they form the only reliable source of information. The founder of het Paleis, Petra Koonstra, had to be interviewed as she is the only person which was there at the beginning and is still present. She has recommended several other actors of het Paleis and a further selection was made based upon the background of these persons. Diversity in the backgrounds of the interviewees grants richer data, which enhances validity and reliability.

The list with the interviewees can be found in the following table:

Occupation Name Duration Date

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19-06-proffesional artist. 2012

2. Project Manager of the

municipality of Groningen.

Tjerd van Riemsdijk 0:52

20-06-2012

3. Director of the Innovatielab

Groningen

Thea Warringa (resides in het Paleis) 1:45

21-06-2012

4. Coordinator Cultural clusters & Coordinator Economic affairs.

Monique Antonis & Robert Postma 0:57

26-06-2012

5. Owner of volle zalen Harry Hummel (resides in het Paleis) 1:36

05-07-2012 6. Professional artist and film

editor Regina Broersma (resides in het Paleis) 0:58 09-07-2012

Table 4: overview of interviewees

6.3.3. Structure and analysis of interviews

The interviews are all semi-structured and recorded with a computer. This allows for an easy transcription of the interviews. The interviews are not transcribed into detail but analyzed with a data-matrix, which means that only the most important citations are labeled and are divided into themes for better qualification of the data. The most important reason for using a data-matrix is data reduction. By reducing the mass of data, it will become easier to interpret and to draw valid conclusions. Aside from organizing the data, displaying it is also facilitated by the use of a data matrix. It thereby shows systematic patterns and interrelationships (Yin, 2009).

6.4 Data Limitations and quality

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Primarily, the data from the interviews has been analyzed to present valid results. To enhance the level of validity, diverse data sources have been used in addition. To verify the outcomes, in several cases documents of the municipality and the province of Groningen have been used to negiotate and discuss the outcomes of the interviews.

Interview bias is another factor that influences reliability and validity. The personal circumstances of the interviewee, his ability to recall specific effects and the subjectivity with respect to interpreting certain questions are always opposing a threat to validity. By using additional sources of data, interviewing actors from het Paleis and interviewing employees of the municipality and the province, these risk has been reduced to an acceptable level.

7. Results and analysis

The municipality of Groningen and the Province of Groningen have developed several policies with respect to the creative industry of Groningen. All of them are (partly) focused on steering and monitoring the creative industry and het Paleis. The most important policies that were mentioned are:

1. Cultuurnota 2009-2012

The most important policy with respect to the creative industry. The municipality acknowledges the importance of the knowledge in the creative industry and tries to create conditions that allow creative companies to collaborate. Reinforcing the cohesion in the creative industry and creating crossovers with other industries are said to be important aspects of this policy.

2. Het Akkoord van Groningen

This agreement specifically focuses on the knowledge economy and intensifying collaborations between the educational institutions (Hanze Hogeschool Groningen and Rijksuniversiteit Groningen), Universitair Medisch Centrum Groningen (UMCG) and the rest of Groningen. Faciliting knowledge sharing and thereby enlarging the innovative capacity of Groningen are touched upon.

3. Innovatief actieprogramma Groningen (IAG).

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7.1 Effects on networking promotion and support

Both the Province of Groningen and the municipality acknowledge that promoting and supporting networking is of the utmost importance for forming collaborations in companies in het Paleis.

Both C & D support a diverse array of networks in Groningen. All interviewees state that Noordermatch, a network event during Eurosonic, is the most important event with respect to networking in the creative industry of Groningen. The event is not only focused on the music industry but “everybody who is anybody is here” is stated by A. Both C & D also state that the networking is initiated between diverse parties, such as universities, creatives, creative companies, the municipality and the province of Groningen which implies that actors from all layers are present.

This event and some others smaller scale events are primarily supported by providing subsidies. D supports that they can only facilitate these networks but it hard to steer them. “We can merely stimulate networking but we can see that collaborations actually are formed here”, according to D. Several new start-ups are derived from Noordermatch and are monitored after the event. All interviewees state that the right people are here at the right time and it is important to attend Noordermatch for their network. “There is a sense of openness and trust”, states A. “I have to attend Noordermatch, otherwise I would fall behind”, indicates E.

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All interviewees state that Noordermatch has a positive effect their network and acknowledge the importance of municipality and the province of Groningen with respect to subsidizing the event. Noordermatch forms an important hotspot with respect to networking and the collaborations that are created here. Furthermore, with respect to monitoring it seems to be crucial to attend this event as the whole creative industry of Groningen attends this event.

All interviewees of the cluster state that they use their personal network find new employees. “If someone is looking for a new employee, I just use Facebook or twitter. Nowadays, creative can mobilize their network much easier by using social media”, states A and also says “Noordermatch and policies are not relevant”. C & D also think that the creative industry is more inclined to use their own network with respect to finding new employees. B also uses de vrijwilligersbank to find volunteers and E sometimes has Wajong-jongeren that helps him out. The municipality and the province of Groningen do not support both. “Some initiatives were launched online by the municipality to stimulate labor mobility and networking but it always lacks support from the creative industry”, states A. All the interviewees support this. B indicates that they always start with something but is never continued by actors from the Paleis or the creative industry. A also states that even for the website of het Paleis people are not interested to participate. “I have to remind everybody continuously to update their part of the website”.

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influence on these positive aspects of Groningen. The creative actors all indicate that this is caused by the creative industry itself. “It actually has a negative effect on the creative sector due to the cut-backs of subsidies”, it said by A. All creative actors support this.

7.2 Effects of supporting intermediaries

During the interviews several intermediaries were mentioned and the following are considered to be the most important and are subsidized:

1. Open Lab Ebbingen (OLE)

2. Stichting creatieve industrie Groningen (SCIG) 3. COB10

4. The municipality

All intermediaries are supported by subsidies which are part of policy 1, 2 and 3 . The tasks of these intermediaries are diverse but there share common grounds. First of all, they are all (partly) focused on actors of het Paleis or the creative sector of Groningen. Secondly, they are focused on networking and facilitating the creative actor in diverse ways. The most important tasks lies in connecting creative actors and organizing networking events.

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Aside from networking events, intermediaries connect creative actors in several ways with other parties. “As they receive subsidies of the municipality, they have often stronger ties with this institute”, says B. When I want certain things to happen, I know people of OLE can help me out, says E. The intermediaries thereby ease collaborations with the municipality and the Province of Groningen. It also shows that these intermediaries are already integrated into specific networks that are beneficial to the creative actors in het Paleis. All interviewees have indicated in some way that these intermediaries have a positive effect on collaborations amongst the creative actors and with other layers such as the municipality, the Province of Groningen and supporting actors.

The network of these intermediaries is also said to be far more extensive because they often are staffed with people who have a long track record in the creative industry of Groningen. This makes them respectable and grants them better access to new and existing networks. The municipality also functions as an intermediary according to C. “We try to connect the right people with each other and we are always open to new ideas”. The creative actors support this but also indicate that follow-up actions of the municipality are relatively slow which hampers the formation of new collaborations via the municipality.

7.3 Effects of training and education institutions

All interviewees emphasize the importance of the Rijkuniversiteit Groningen, Hanze Hogeschool and Minerva (art school). A lot of new talent flows to the creative cluster and other sectors that are important to the creative industry of Groningen. All interviewees came from outside Groningen en stayed here after they finished which already indicates that the educational institutions are an important source a new skilled labor.

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influential with respect to further strengthening the educational institutions. Policy 1 is specifically focused on enhancing educational infrastructure with respect to art and culture. It is aimed on offering more art and culture related subjects at the RUG, Hanze and Minerva to facilitate the demand of the creative industry in Groningen.

7.4 Discussion

The interviewees provided mostly consistent replies with respect to the dependent and independent variables that were researched. In conclusion it can be said that the network events, which are supported by the policies of the municipality and the province, have a positive effect on forming collaborations and monitoring. Mostly because the right mix is created and the there is high level of reciprocal trust which facilitates the formation of collaborations. The fact that the right companies are invited eases monitoring of their counterparts. Labor mobility isn’t facilitated and actors of het Paleis primarily use twitter and Facebook to find new talent.

All interviewees agree that Groningen and its soft infrastructure facilitate networking and the formation of new collaborations. The creative actors think that this is due to the creative actors themselves. The interviewees of the municipality and the province think that this is partly caused by policies. The outcomes are thus unclear and this proposition cannot be qualified as true. Furthermore all interviewees of het Paleis state that collaboration with the educational institutions is important but is not facilitated. Creating a crossover between het Paleis and de Rijksuniverisiteit Groningen should be considered.

Het Paleis: the creative cluster of Groningen