TCI -2008, Cape Town FACTORS REDUCING CLUSTERS’ DEVELOPMENT IN POLAND IN THE LIGHT OF NEW ECONOMY Eulalia Skawińska, Poznań University of Technology, Poland Romuald I. Zalewski, Poznań University of Economics, Poland

TCI -2008, Cape Town The aim of the paper Investigation of factors decreasing cluster’s formation and development in Poland in the view of new economy. Presentation of determinants for improvement in future.

TCI -2008, Cape Town Prerequisites Our investigation is based on a state of the knowledge and intensity of factors that impact clusters’ development in Poland – as it is explained by theory of institutional and behavioural economy.

TCI -2008, Cape Town Scope The investigation focuses on ten factors which were selected through literature review and our previous research. Such research was conducted last year using a questionnaire and/or an interview that were directed to managers in Poznań district and in other parts of Poland.

TCI -2008, Cape Town Prerequisites (2/2) Poznań district occupies the 4th position in the entreprenurial activity and number of clusters among 16 districts in Poland. According to Ketels 1 3 4

TCI -2008, Cape Town Assumptions Institutions in market economy impact: behaviours of enterprises (selection of goals, strategies, preferences), creation of a common platform of co-operation between enterprises. Enterprises increase economical efficiency through local concentration (proximity) which: increases the activity scale, reduces the transaction costs, decreases the external costs (effects).

TCI -2008, Cape Town Assumptions Enterprises tend to maximize usefulness and profit what is explained and supported by psychology. Human activity is influenced by emotions and intuition thus unstable or impulsive. Standards, values, culture, tradition, habits, rules of thinking form (influence on) preferences of enterprises. Social and relation bonds are unstable.

TCI -2008, Cape Town Hypothesis Factors that limit cluster’s development in Poland are on the border-line between economy and psychology. They belong to institutions influenced by social capital.

TCI -2008, Cape Town Definition of a institution Social institutions: Human attitude, thinking patterns, habits, Rules of law, social rules Value systems Tradition, culture Ways of acting Economic institutions Property rights Price system Models of market organization Financial institutions Organizational institutions Trade unions Political organizations State authority

TCI -2008, Cape Town Methods Type / year ProblemTargetNo. of respondents No. of questions Q / 2007 Social capital in Wielkopolska region SME48 managers27 Q/ On-line 2008 Poland’s accession to EMU and Euro SME 15 managers 21 I / 2006 Impact of boat-building cluster on local competitive advantage SME18 managers 18 I / 2007 The success factors in high- tech clusters in Poland SME and large 6 managers in clusters 22

TCI -2008, Cape Town List of factors 1. Institutions. 2. Social capital. 3. Entrepreneurship. 4. Complementarity of structures and knowledge. 5. Innovativeness. 6. Information. 7. Research and development. 8. Ethical standards. 9. Role of state. 10. Exchange rate.

TCI -2008, Cape Town Preliminary results There are many factors which reduce co- operation and activity of business clusters in Poland. The most important factor is the lack of social capital which decreases entrepreneurship of managers and employees and results in low quality of local environment e.g. organizational, legal, social, infrastructural, institutional. Therefore institutions are underdeveloped. Competitions for European Union’s funds are delayed.

TCI -2008, Cape Town Preliminary results Poland’s accession to EMU and introduction of euro will: improve formal component of institutions, decrease the impact of state on economy.

TCI -2008, Cape Town Preliminary results Appreciation of Polish currency decreases the competitiveness of export; perhaps this factor will strengthen co-operation in near future before entering the EURO zone. Expected decrease of economic growth in 2009 could strengthen this co-operation that will be beneficial for competitiveness and decreasing the risk.

TCI -2008, Cape Town Influence of Euro Appreciation of PLN decrease the dynamics of export and competitiveness. Exchange rates result in: Cost of exchange Risk of exchange Increasing transaction costs Increasing costs of capital gathering Poland’s accession to EMU and Eurozone will cause the following positive and negative effects (in manager’s opinion):

TCI -2008, Cape Town Negative impact of Euro

TCI -2008, Cape Town Positive impact of Euro

TCI -2008, Cape Town Preliminary results Simultaneously relatively strong role of state decreases activity of industry e.g. in financing R&D and innovation. The weak knowledge transfer between universities, research institutions and industry, decreases co-operation and implementation of local latent knowledge and experience.

TCI -2008, Cape Town Impact of institutions and social capital on clusters development Small Large DEVELOPMENT / QUALITY OF INSTITUTIONS QUALITY OF HUMAN CAPITAL Low High Lack of co- operation. Only competition. Creation of relation capital. No support from institutions. Clusters’ emergence and their development. Development of externally created clusters is in danger.

TCI -2008, Cape Town Impact of social capital on clusters’ formation Clusters’ arising and development Quality of life Regional competitive advantage Regional coherence New enterprises Institutions’ improvement Management improvement (micro, mezo) Cooperence Networks and clusters Environmental relations Social entrepreneurship Developed forms of co-operation Simple (non-formal) forms of co-operation Social capital maturity

TCI -2008, Cape Town Social institutions INSTITUTIONS ECONOMIC AND MANAGERIAL CLUSTER INITIATIVES SOCIAL CAPITALENTREPRENEURSHIP BUSINESS CLUSTERS Impact of social capital on clusters’ formation

TCI -2008, Cape Town SOCIAL CAPITAL Education Aversion against risk Ability for co-operation Knowledge creativity Innovative activity

TCI -2008, Cape Town Legend: G_1:1 – IT and telecom, G_2:2 – food processing, G_3:3 – other.

TCI -2008, Cape Town Ratings given to external factors (barriers – success) Stimulating Financial System creation - FS Financing investments on IT infrastructure from State budget Improving activities by legal institutions and clarity of procedures - TR

TCI -2008, Cape Town

Conclusions Regulatory part of institutions (out of market) is not successful. Institutions are reluctant to changes, reduce enterpreneurship and innovative activity Institutions do not reduce risk through information supply and promoting co-operation. It is due to behaviours (habits, customs, mental patterns, traditions, ownership forms, weak role of PPP). Stimulus for cluster development is improvement of behavioural part of social capital. The decreased role of state’s institutions towards market mechanism is necessary. Increase in reproduction of social capital is necessary. Development of market institutions and improvement in quality of their activities. Privatization – change of property rights. Euro – in spite of threats – does not encourage to co-operation.

TCI -2008, Cape Town Impact of institutions on market economy is tremendous through: Behavior of economic entities (e.g. selection of their aims and ways of realization, individual and social preferences), Fulfilling their functions: assuring co- operation possibilities.

TCI -2008, Cape Town Thank you for your attention.