Urenio Watch Watch: Innovation Clusters

Bangalore: Porter and the software cluster

bangalore-electronic-city.jpgBangalore, a city of 6.5 million in the state of Karnataka, southern India hosts a successful cluster of information technology companies, both local (Infosys, Wirpo, iGate) and multinationals. The paper “Localized advantage in a global economy: The case of Bangalore’  by Nair, Ahlstrom and Filer, offers an account of the development of this global software cluster. The authors use Porter’ s “diamond model’  and examine systematically how the different components of the model have been working in Bangalore:

  • Factor conditions: the training and local supply of engineers and software specialists;
  • Demand conditions: global delivery covering needs of IT markets in the US, Japan, and Germany;
  • Related and supporting industries: the software cluster succeeded despite the initial luck of supporting industries; later local VC and consulting became available;
  • Firm strategy: global perspective, exposure to global markets; from low cost to high quality and service; flexible work practices;
  • Government: economic liberalization; technology parks (STP, electronic city) to host FDI allowing foreign equity, duty-free import, and facilities; start-ups support policy; NGO and software companies alliances involvement.

The paper is very relevant in  drafting strategies for regional innovation poles as it highlights the multiple factors that influence the success  of innovative clusters.

Source: Nair, A., Ahlstrom, D., and  Filer, L. (2007) “Localized advantage in a global economy: The case of Bangalore” Thunderbird International Business Review, Vol. 49(5), 591-618: bangalore.pdf

Photo: Bangalore’s Electronics City. Source: Silicon.com, Inside India