Seeing trees and forests: a comparative evaluation of business clusters and national industry associations in the New Zealand forest sector.

Consequently, the cluster groups have offered a different form of collective association rather than a first opportunity to engage in joint action with competitors. This can be a different experience to other industries in New Zealand to the situation in other countries where timber industry clusters arise without a prior history of collective association (such as described in Sommers, 1998). In New Zealand, small industry associations have to some extent operated as 'national clusters' in terms of the personal association among members and in them sometimes engaging in group marketing initiatives. Clusters must compete for support but are potentially advantaged by avoiding alignment to an industry association representing one type of business.

EVALUATION OF NATIONAL ASSOCIATIONS AND CLUSTER GROUPS

The case study obtained responses from 46 managers whose enterprises had been associated with a cluster group (other respondents were government and training agencies that are excluded from this analysis). Of these managers, 21 described themselves as active participants in the cluster group. Of these, 9 were associated with the Southern Wood Council which was the only one where all respondents identified themselves as active participants. Cluster differences have been explored in a separate study (Perry, 2007) but some of the reasons for the Southern Wood Council's support are explored in the next section. Of the other 26 respondents, most (15) said that they no longer participated in the cluster: others (10) said that they retained a marginal attachment. There were 27 respondents that were members of at least one national industry association, of which, 10 said they were also active cluster participants at the same time. Most respondents, therefore, had made a choice to join one form of association or neither.

Managers were asked their reasons for participating in the form of association that they had participated in. The responses indicate that similar motives exist but with each form of association generating its own attractions as well (Table 4). Cluster membership is more likely to result from a desire to show support to the industry than is national association membership. Support reflects an altruistic motive: joining because it may help others in the group rather than because direct individual benefit is anticipated. This can be interpreted positively, as a sign of cooperative intentions, but it can also mean that participation will be passive as they perceive no direct benefit for their own organisation. Joining an industry association offers another way of showing support to the industry but social pressure to join a cluster may increase altruistic behaviour. The newness of cluster groups also assists the altruistic motive. Unlike industry associations, they do not have a history of lobbying activity or association with particular business interests whereas clusters can appear 'neutral' and without implication of joining one side of the industry.

Clusters appear to disproportionately attract support as a way of helping 'ensure everyone is working in the same direction'. This may be surprising as industry associations have capacity to promulgate industry standards. The cluster effectiveness in this regard relates to direct cooperation between enterprises linked in supply and subcontract relations. Industry association membership appears to be less motivated by the perceived assistance this will bring to forming new business relationships than does cluster membership. On the other hand, access to advice and activities appears more likely to motivate industry association membership and these outcomes have potential to support business development.

The overall rating of the respective usefulness of the two forms of association identifies that on most issues there is no clear judgements (Table 5). Indeed for many of the issues examined a high proportion of respondents indicate that they are unsure which form of association may be most effective. These respondents indicate that they need more experience before passing judgement and this suggests that they remain open in their evaluation. Looking at those issues where there was a majority at least double the next largest response group, there are seven issues where a clear judgement exists. Of these statements, four may be interpreted as indicating an advantage to a cluster group:

* Clusters provide a better way of keeping in touch with what your suppliers and customers are doing.

* Clusters give more scope for your business to influence network activity.

* Industry associations are less focused on issues/ activities that are of direct interest to this business.

* Industry associations demand equal commitment as belonging to a cluster. (Except for office holders in a national association, respondents indicated that a cluster was a bigger commitment.)

Two of the other seven statements can be seen as neutral:

* Clusters manage relations with regional government, industry associations with national government.

* Industry associations are about industry politics.

This leaves one statement that can be viewed as indicating an advantage to national associations:

* Industry associations are more effective in keeping you in touch with industry developments such as market changes and new machinery.

The final part of the comparison looked at outcomes for the respondent business from the cluster and, for members, an industry association during the 12 months prior to survey interview. This form of question can disadvantage industry associations as they have existed for longer. Outcomes such as finding business partners may be more likely in a novel group than a long established one. On the other hand, as clusters bring together a more limited population of firms it might equally be argued that there is less scope for new relationships to be stimulated. In practice, clusters were more likely to have helped enterprises find new customers and suppliers but in other ways industry associations were at least if not more effective (Table 6). Overall, both forms of association had most impact on 'softer' outcomes such as obtaining industry intelligence and equipment and other purchasing information.

Of course, the outcomes are only indicative of the results of participation in a collective group and do not say anything about their importance to the growth of individual enterprises. To test further the significance of each form of association, industry association members were asked which form of association they would select if they could retain a membership of only one group. Respondents split evenly on this issue: 13 indicate their priority would be an industry association and 13 a cluster with a further respondent being undecided. All respondents were asked which form of association should be the priority for government funding support. Half are undecided which, if either merited government assistance with the balance not significantly more in favour of one form of association.

INTERPRETATION OF RESPONDENT EVALUATIONS

The overall results suggest that there is no decisive preference for one form of association. One interpretation, therefore, is that each is viewed as potentially making a distinctive contribution to industry development although there are some functions that both might perform equally effectively. Whether an individual enterprise gives priority to a cluster, a national association or neither can then reflect the particular range of challenges that they face at any point in time. For example, enterprises that are satisfied with their current supply and market relationships but that are seeking guidance with industry regulation and new technology might favour industry association over cluster membership. Evidence of this kind of decision making was found. Typically the largest enterprises favour industry association membership partly as they do not seek group assistance in developing business linkages. In contrast, small enterprises that are seeking to establish their activity can value cluster groups as a mechanism for helping building links with other enterprises. Overall, the pattern of responses broadly confirms the starting expectations of how clusters and national associations might be differentiated.

1. Interaction with other business members in respect of the chance to form new business contacts, customers and suppliers tended to be viewed as most assisted by a cluster. In terms of simply being informed about what other businesses are doing, both forms of association appear to be perceived as equally useful.

2. There is generally seen to be more ability to influence cluster than national association activity.

3. It is not evident that industry associations are viewed as more effective in helping to develop new markets although those with an opinion on this issue tend to think that associations do this more effectively than clusters.

4. As expected, advice on industry developments and government regulation tends to be viewed as more effectively obtained from national associations than cluster groups. In line with this, most agree with the proposition that clusters are useful for support on regional government matters and national associations for national government matters.

5. Industry associations are more likely to be perceived as political organisations than clusters. On the other hand, there is no clear view that business clusters are exclusively concerned with business development.

6. There is a stronger feeling that cluster membership implies more commitment to the group than does industry association membership.