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Carlo Pietrobelli 1 Carlo Pietrobelli Roberta Rabellotti Working Paper Cepal -Desarrollo Productivo No.13.

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Presentation on theme: "Carlo Pietrobelli 1 Carlo Pietrobelli Roberta Rabellotti Working Paper Cepal -Desarrollo Productivo No.13."— Presentation transcript:

1 Carlo Pietrobelli 1 Carlo Pietrobelli Roberta Rabellotti Working Paper Cepal -Desarrollo Productivo No.13 bin/getProd.asp?xml=/publicaciones/xml/4/11094/P11094.xml&xsl=/ddpe/tpl- i/p9f.xsl&base=/tpl/top-bottom.xslt bin/getProd.asp?xml=/publicaciones/xml/4/11094/P11094.xml&xsl=/ddpe/tpl- i/p9f.xsl&base=/tpl/top-bottom.xslt Business Development Service Centres in Italy: An empirical analysis of three regional experiences: Emilia Romagna, Lombardia and Veneto

2 Carlo Pietrobelli 2 The notion of Business Development Service (BDS) is quickly gaining popularity Similar concepts: industrial extension services, support services, advisory services, business services. real services, to indicate their impact on structural features of company behavior, and competitiveness the provision of these services may transfer knowledge and technology, and facilitate learning, thereby modifying in a structural, non-transitory way their organization of production and their relation with the market (Bellini, 2000). BDS in developing countries: promotion of a wide range of business skills, even of a simpler and routinary kind.

3 Carlo Pietrobelli 3 Make vs. Buy: in-house costs vs. transaction costs; need of a flexible organisation, focusing on strategic activities rising technological and organisational complexity; binding international technical and quality standards. localized nature of knowledge creation and utilisation, and the need for user-producer interactions explain the existence of local providers of BDS. Why a Market for BDS ? Why a Demand for BDS Centres ?

4 Carlo Pietrobelli 4 Market failures in information and innovation Dynamic considerations: public sector may help underwriting the risks associated with technical uncertainties, and the costs of aggregating and creating markets, that private agents would not be ready to bear otherwise. BDS tend to have positive externalities of consumption: Thye may induce imitative mechanisms The Rationale for Subsidising Service Promotion

5 Carlo Pietrobelli 5 Analysis of the experience of BDS Centres in three Northern Italian regions Evaluation of their performance and contribution to the regions industrial, and SME, development Implications for public policies Lessons for Latin America. Objective of the paper

6 Carlo Pietrobelli 6 In 1988 first census (Nomisma): 75 BDS centres, mainly in Northern Italy (40%); only 24% in the South. In 1997 (Ceris-CNR): 161 institutions supplying technological services to firms (including business innovation centres, science parks, business incubators, national research agencies) : but only 80 proper BDS centres. In 2000 (Agitec) 691 institutions supporting and contributing to technological innovation; proper BDS centres are 90. The Universe of BDS Centres in Italy

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8 8 Fieldwork from January to June 2001. Questionnaire to a sample of 30 BDS centres and in-depth interviews with key informants Current sample selected from the largest list of BDS centres available Selection on the basis of the definition of a BDS Centre as an institution which can be private, public or mixed and which offers also technological services. It should also target SMEs, develop and transfer applied research and technology, and offer services directly usable by the enterprises. The Methodology

9 Carlo Pietrobelli 9 Why these regions? Large Industrial Employment (and Production)

10 Carlo Pietrobelli 10 Why these regions? Remarkable (Manufacturing) Export Dynamism

11 Carlo Pietrobelli 11 Dense Localization of Industrial Districts

12 Carlo Pietrobelli 12 Geographical Distribution of the Sample Reflects the Presence of Ind. Districts

13 Carlo Pietrobelli 13 Laboratory tests & quality certification centers: 9 centres (30% of the sample). 5 of them devote at least 70% of their human resources to supply laboratory tests and quality certification; Territorial development centers: 10 centres (33%) located in areas that are not sector specialised. All supply a variety of services; District development centers: 7 centres (23%) with a clear sector specialisation. All supply a variety of services Innovative technological centers: 3 centres (10%): at least 65% of their human resources devoted to provide this type of services. Training centres: only one centre devoting to training 70% of its human resources. What are they? A classification of BDS centers

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15 Carlo Pietrobelli 15 Avg. number of customers of BDS centres depends on the type of services supplied: with standardised services the number of clients can be very high (e.g. laboratory tests and quality certification); with customised services, they have a smaller number of clients; Small firms are their main customers; They have mainly local or regional customers They make a great deal of efforts to collaborate with their clients in the definition of their activity and in their self- evaluation; Active promotion of their services. Stylized facts on Centres Clients

16 Carlo Pietrobelli 16 Stylized facts on Centres Clients Most Centres (76%) collaborate with their clients in several ways

17 Carlo Pietrobelli 17 A large variety of services: very heterogeneous phenomenon; Laboratory tests and quality certification the most profitable; Public initiative and majority of public equity characterise centres aimed at territorial development; Instead, the private sector is more involved in the creation of sector-specific centres, and especially in centres located in industrial districts; Wide agreement on the need to subsidise the price of some services in order to stimulate firms demand. Stylized facts on Centres Services

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19 Carlo Pietrobelli 19 Identify cause-effect relationships Attach a monetary value to changes within firms and agencies Extreme diversity of services provided Short-run effects (easier to quantify) may be less important than long-run effects What time-frame should the evaluation cover? (political cycles) Quality of evaluation studies often constrained by poor demand for high quality independent evaluations. Evaluation of the BDS Centres Difficulties in the Evaluation

20 Carlo Pietrobelli 20 relevance - to objectives and to in-country (in- region) needs efficiency - in providing inputs promptly and at least cost effectiveness - in achieving planned outputs and immediate results impact - on high-level objectives to which the results should contribute sustainability - over time, usually after the inputs have all been provided and external support stops CRITERIA for an Evaluation (EC)

21 Carlo Pietrobelli 21 VARIABLES for an Evaluation

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24 Carlo Pietrobelli 24 Should a financially sustainable Centre be considered a success? Some authors argue that by targeting self-sufficiency, BDS centres may end up neglecting the more innovative services...

25 Carlo Pietrobelli 25 Centres Efficiency

26 Carlo Pietrobelli 26 Centres Efficiency (and Economies of Scale) Labs. & Quality Certification Centres 0 2 4 6 8 10 12 14 16 010002000300040005000 N° of clients Cost per client Territorial Development Centres 0 5 10 15 20 25 30 0500100015002000 N° of clients Cost per client

27 Carlo Pietrobelli 27 the specific features of each case should be contemplated, such as: The Centres specific objectives, which may differ The local context, and whether a market for BDS exists or should be created Stage of industrial development and historical considerations Budget constraint considerations, often tighter in developing countries Words of WARNING after an evaluation

28 Carlo Pietrobelli 28 Wide heterogeneity of the BDS centres in terms of size, specialisation, original initiative, turnover composition, dependence on public subsidies and linkages with firms and other institutions Five categories identified This variety is the coherent manifestation of the economic environment from which they originated, in a context characterised by a notable absence of a national policy in this field: not established within a national policy framework. They are rather the result of very decentralised, bottom-up approaches, and of the collaboration among regional and local public institutions, very often jointly with the private sector: the expression of local specific needs. CONCLUSIONS (1/2)

29 Carlo Pietrobelli 29 Strengths local availability of specialised services is definitely one of the competitive assets. Financial self-sufficiency. As they supply services demanded by firms, these in turn consider them useful and are therefore often willing to pay a price Weaknesses they play a limited role to promote technologic innovation and management changes in the firms serviced: the really innovative firms do not search for assistance in their innovation efforts from BDS centres Most of them do not help in creating new dynamic competitive advantages. In sum, different from the ideal pattern of BDS centres acting as co-ordinators of networks of innovative specialised institutions CONCLUSIONS (2/2)

30 Carlo Pietrobelli 30 BDS centres clearly have a role in supporting the development of a supply of services whenever this is inadequate. However, the market may do a lot without public subsidies, which should rather focus on specialised functions, considering the specific features and the historical itinerary of each region. The capability of BDS centres to provide services demanded by firms depends on their embeddedness in the local business environment. Three key conditions: * a deep involvement of the private sector in both the Centre creation and operation; * a specific sector specialisation, and * a location close to potential customers. The density of their presence matters (path-dependent nature of local industrial development) IMPLICATIONS for Latin America (1/2)

31 Carlo Pietrobelli 31 Localisation close to local enterprises needs to go together with reaching out distant service providers. BDS centres need to stimulate demand of new services from firms. Anticipate tacit needs and convince firms of their relevance. BDS Centres as network-facilitators insofar as local institutions exist. Instead, where industry is still incipient a Centre is often bound to operate on its own. This requires a different strategy: (1) improve its management and technical skills, (2) improve the quality of the services provided, (3) Once established its presence in the local economy, (4) create linkages. Evaluation is difficult but necessary. It should be repeated on a regular basis IMPLICATIONS for Latin America (2/2)

32 Carlo Pietrobelli 32 LINTERNAZIONALIZZAZIONE DELLE PMI: STRUMENTI NORMATIVI Ricerca di nuovi mercati o L. 227/77 (Ossola) Finanziamenti agevolati allesportazione e Assicurazione del Credito o L. 394/81 Finanziamento dei programmi di Penetrazione commerciale allestero o L. 83/89 Interventi di sostegno per i Consorzi fra PMI o L. 304/90 Finanziamento per la Partecipazione a gare internazionali o L. 212/92 Collaborazione con i Peco Creazione di Società Miste o L. 49/87 (art. 7) Credito agevolato per investimenti nei Pvs o L. 100/90 Interventi per la promozione della partecipazione a joint venture allestero (Istituzione della Simest) o L. 19/91 Istituzione della Finest o Programmi comunitari (Ecip e Jop) oltre a partecipazione anche studi di fattibilità (facility 2) e addestramento del personale (facility 4)

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