Computer Modelling Reveals the Optimal Development for the Organisational Structure of Business Clusters

Abstract

Science and Technology Parks (STPs) foster innovation between firms inhabiting the cluster. Networking channels are considered as integral parts of the knowledge exchange process, and therefore the innovation process. We simulated three organizational topologies for STPs; firstly, in the star model all are connected to the cluster initiative (CI), secondly the strongly connected model, when all are connected to each other, and finally the randomly connected model, where the network follows no centralised topology.

Analyses used adjacency matrices and Monte-Carlo simulation, trading transaction (networking) costs against knowledge benefit. Results show that star topology is the most efficient form from the cost perspective, and this is especially the case for start-up STPs. Later, when the cost of knowledge transformation is lowered, then the strongly connected model becomes the most efficient topology, but this transition to high transaction costs is very risky if direct ties do not quickly result in tangible benefits.

Keywords: Cluster, innovation, network, tech-hub, simulation, modelling, Monte Carlo

JEL Classification: O32, O33, R12, R58, L53