Clusters and Competitive Advantage The Turkish Experience Özlem Öz Clusters and Competitive Advantage Also by Özlem Öz THE COMPETITIVE ADVANTAGE OF NATIONS: The Case of Turkey Clusters and Competitive Advantage The Turkish Experience Özlem Öz Department of Business Administration Middle East Technical University (METU) Ankara, Turkey © Özlem Öz 2004 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1T 4LP. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted her right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2004 by PALGRAVE MACMILLAN Houndmills, Basingstoke, Hampshire RG21 6XS and 175 Fifth Avenue, New York, N.Y. 10010 Companies and representatives throughout the world PALGRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St. Martin’s Press, LLC and of Palgrave Macmillan Ltd. Macmillan® is a registered trademark in the United States, United Kingdom and other countries. Palgrave is a registered trademark in the European Union and other countries. ISBN 1–4039–3613–7 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Öz, Özlem. Clusters and competitive advantage : the Turkish experience / Özlem Öz. p. cm. Includes bibliographical references and index. ISBN 1–4039–3613–7 1. Industrial location—Turkey. 2. Strategic planning—Turkey. 3. Competition—Turkey. 4. Turkey—Economic conditions—1960– I. Title. HC492.O9275 2004 338.6c042c09561—dc22 2004045426 10987654321 13 12 11 10 09 08 07 06 05 04 Printed and bound in Great Britain by Antony Rowe Ltd, Chippenham and Eastbourne To Kaya This page intentionally left blank vii Contents List of Tables ix List of Figures x Preface xi Acknowledgements xv List of Abbreviations xvi 1 Introduction: A Background to Clusters 1 Origins and milestones 1 Clusters in the world economy 5 Defining clusters: industrial districts, networks and clusters 8 Clusters and competitiveness 11 2 Clusters in the Management Literature 20 An overview 20 Porter-style geographic clusters 25 3 Industrial Clusters in Turkey 37 The Turkish business environment, past and present 37 Turkey’s position in international competition 41 Geographic concentration of Turkish industries 45 Geographic concentration and competitiveness 52 Finding a suitable methodology for the analysis of clusters 55 Geographic clusters and competitiveness: which cases to study? 57 4 The Furniture Cluster in Ankara 60 Origins and historical developments 62 Sources of international competitive advantage 67 Reasons for geographic concentration 74 Concluding remarks and future prospects 81 5 The Towel and Bathrobe Cluster in Denizli 84 Origins and historical developments 85 Sources of international competitive advantage 88 Reasons for geographic concentration 100 Concluding remarks and future prospects 109 viii Contents 6 The Carpet Cluster in Gaziantep 114 Origins and historical development 116 Sources of international competitive advantage 119 Reasons for geographic concentration 128 Concluding remarks and future prospects 132 7 The Leather Clothing Cluster in Istanbul 135 Origins and historical development 136 Sources of international competitive advantage 144 Reasons for geographic concentration 149 Future prospects for the leather clothing cluster in Istanbul: stuck in the middle? 155 8 Conclusions 158 Theoretical implications 158 Policy implications 168 Appendix 1 Top Five Industries in Terms of Location Quotient, by Province 172 Appendix 2 A Brief Description of Fuzzy-Set Analysis 183 Notes and References 184 Bibliography 197 Index 215 ix List of Tables 3.1 Percentage of Turkish exports by cluster and vertical position, 1992–2000 43 3.2 Top 100 Turkish industries, by C4EMP 49 3.3 The least concentrated Turkish industries, by C4EMP 51 3.4 The most populated Turkish provinces 52 3.5 Cumulative C4EMP totals for the industries examined 52 3.6 International competitiveness, fuzzy membership categories 54 3.7 Geographic concentration, fuzzy membership categories 55 4.1 Market shares of the leading furniture exporting countries 61 4.2 Provincial shares of employment in the Turkish furniture industry 62 4.3 Employment in Ankara, by economic activity 65 4.4 Concentration of furniture firms in Siteler, by street 75 4.5 Concentration of carpenters in Siteler, by street 75 4.6 Concentration of upholsterers in Siteler, by street 76 4.7 Concentration of polishers and varnishers in Siteler, by street 77 5.1 Employment in Denizli, by economic activity 89 5.2 Denizli exports of towels, bathrobes and closely-related items, 2002 98 6.1 Employment in the Turkish carpet industry 115 6.2 Employment in Gaziantep, by economic activity 120 7.1 Employment in Istanbul, by economic activity 139 [...]... assume that studying successful clusters is sufficient to understand sustainable competitiveness Thus fundamental questions such as whether all clusters are competitive and which characteristics of competitive clusters differentiate them from uncompetitive ones have not received the attention they required It is by no means guaranteed that clustering will automatically bring competitiveness, or that the... in Germany, Italy, Japan, Switzerland, the United Kingdom and the United States.8 Porter 6 Clusters and Competitive Advantage Seattle-Bellevue-Event Fishing and fishing products Aerospace vehicles and defence Analytical instruments Denver Oil and gas Power generation Processed foods Chicago Processed foods Lighting and electrical equipment Plastics Boston Education and knowledge creation Analytical... the structure and competitiveness of clusters Accordingly the foundations of success might be rather different in, say, the clusters in Baden-Württemburg where there is ‘Darwinian competitive pressure’ than in the clusters of ‘Third Italy’, where non-economic factors play a significant role (Staber, 1998) Distinct explanations of why a cluster might become competitive and sustain its competitiveness... for instance, there are competitive clusters that are not flexibly specialized and flexibly specialized clusters that are not competitive (Amin and Robins, 1990) Likewise, although the parts played by historical circumstances, the social and political context and strong collaboration among cluster participants might have contributed substantially to the success achieved by some clusters, such as those... that sources of advantage are local, and the impact of local conditions on the international competitiveness of clusters has become more pronounced, despite the increasing trend towards globalization Understanding the competitiveness of clusters, according to Porter (1998, p 208), requires embedding clusters in a dynamic theory of competition Accordingly the basis of competitive advantage has shifted... of xi xii Preface flexibly specialized small and medium-sized enterprises – Piore and Sabel, 1984), the social and political context (the role of tacit knowledge, institutions, the nature of work, trust and social capital – Putnam, 1993; Becattini and Rullani, 1996; Brusco, 1996) and relations within the cluster that pave the way for innovation, learning and untraded interdependencies (Camagni, 1991;... related institutions and sectors The Istanbul leather industry, production and sales sites Leading centres of leather production and trade, Turkey, sixteenth and seventeenth centuries Products made in the leather clothing cluster in Istanbul, plus related institutions and sectors x 6 7 8 39 40 53 56 72 78 97 101 115 126 136 137 146 Preface Economic and business life is conducted in space, and this geographic... another shortcoming in the literature: evidence on the competitiveness of clusters has mainly been derived from analyses of clusters in developed countries, so very little is known about the competitiveness of clusters in the developing world (Nadvi, 1994), including whether the conditions that lead to the emergence and subsequent upgrading/ loss of competitive advantage are any different from those in... of literature on clusters Chapter 3 provides an overview of the Turkish economy and analyses industry and trade data to identify patterns of international competitive advantage and geographic concentration in Turkey Chapters 4 to 7 are devoted to four in-depth cluster case studies: a furniture cluster in Ankara, a towel and bathrobe cluster in Denizli, a carpet cluster in Gaziantep and a leather clothing... examples of clusters in developed and developing countries are then provided in the second section This is followed by a discussion on the definition of clusters, concentrating on their distinguishing characteristics compared with industrial districts and networks The final section is devoted to the central issue of this study, that is, the link between clustering and competitiveness Origins and milestones1 . Clusters and Competitive Advantage The Turkish Experience Özlem Öz Clusters and Competitive Advantage Also by Özlem Öz THE COMPETITIVE ADVANTAGE OF NATIONS: The Case of Turkey Clusters and. Abbreviations xvi 1 Introduction: A Background to Clusters 1 Origins and milestones 1 Clusters in the world economy 5 Defining clusters: industrial districts, networks and clusters 8 Clusters and competitiveness. Gaziantep 11 4 Origins and historical development 11 6 Sources of international competitive advantage 11 9 Reasons for geographic concentration 12 8 Concluding remarks and future prospects 13 2 7 The