Understanding Innovation Clusters, An Exploratory Study of Israel and Southern

Abstract: The main purpose of this explorative master thesis is to describe, explain and understand the main success factors that lie behind the regional innovation system in Silicon Wadi in Israel. This is done in order to suggest some tentative ideas on how to further develop the emerging ICT cluster in Malmö/Lund. Four sub purposes have been applied in order to achieve the main purpose: To understand why Silicon Wadi in Israel has become such a successful and sustainable ICT cluster To benchmark the cluster in Silicon Wadi and the one in Malmö Lund: Which are (or seems to be) the key similarities and differences between Silicon Wadi in Israel and the Malmö/Lund region? To use the benchmarking to propose ideas on how to address some of the challenges that faces Malmo/Lund as a regional innovation system To develop a theoretical framework for exploring and comparing regional innovation systems. Method The study has been conducted mainly through two case studies where the ICT clusters in Silicon Wadi and Malmö/Lund have been studied. The method used to carry out these studies has primarily been literature studies, collecting mainly qualitative data. Theoretical Framework The empirical data has been analyzed with a model developed in this thesis called The Innovation Ecosystem Model. This model is a composition of theories within the theoretical sphere around clusters and innovation systems. The model is an attempt to describe and understand a regional innovation system, or a cluster, in three different dimensions namely Context, Actors and Activities. The context has been analyzed using Michael E. Porter’s diamond model, the actors with the triple helix model and the activities with Charles Edquist’s activity based approach to innovation systems. Conclusions There are many success factors behind the Israeli ICT cluster in Silicon Wadi, but some of the main factors determining the success of the cluster have been focused government initiatives, well developed capital markets, well developed commercialization infrastructure, a focus on high quality R&D and education, the characteristics the military service imposes on the population, a culture well suited for entrepreneurial endeavor and a high degree of international collaboration. In order to create a bright future of the cluster in Malmö/Lund actions needs to be taken on three different levels, societal challenges such as integration problems and high unemployment rates must be addressed, systemic challenges in the innovation system has to be addressed and finally a creative environment has to be built in accordance with Richard Florida’s theories on creative capital. The Israeli cluster can be a role model in addressing mainly the systemic challenges in Malmö/Lund where programs such as Yozma, a venture capital policy program, can be a source of inspiration.