From Clusters to Smart Specialization: Tourism in Institution-Sensitive Regional Development Policies
2. Agglomeration and Tourism in Research: Where Do We Stand?
- Theory: There is a large body on theoretical work on clusters and similar phenomena such as industrial districts including notably Porter’s (Porter 1990; Porter 1998a; Porter 1998b) seminal work but also different or newer approaches (e.g., Dorfman 1983; Enright 2003; Krugman 1991; Piore and Sabel 1984; Saxenian 1994; Scott 1988a; Scott 1988b; Storper and Walker 1989; Wolfe and Gertler 2004). These theoretical works typically develop theories explaining the evolution, the life cycle, or the mechanisms behind the observable phenomenon of agglomeration in manufacturing or service industries in general (Benner 2012a; Benner 2012b). On a conceptual level, these works tend not to be sector-specific but often use sectoral and regional case studies as examples. Mostly, these case studies focus on manufacturing industries or related service industries, notably design-intensive small-scale manufacturing and artisan sectors in Italy’s industrial districts (Piore and Sabel 1984) or information and communication technology manufacturing and services in Massachusetts and California (Saxenian 1994; Scott 1988a; Scott 1988b; Storper and Walker 1989). On a theoretical level, tourism usually does not feature as a case for theory design, although it is sometimes mentioned as an example for clustering (Porter 1990, pp. 254–56). Some works use tourism as an example to underline more general points, as does Porter on the aspect of complementarities when he mentions a salient specificity of tourism: “In tourism (…), the visitor’s experience is affected not only by the appeal and quality of the attraction (e.g., beach, historical site) but also by the quality of the hotels, restaurants, souvenirs, airport facilities, and transportation, making the different parts of the cluster mutually dependent” (Porter 2000, p. 22). Apart from this part of the literature, there is a large body of theoretical literature on tourism as such (e.g., Berg 2010; Steinecke 2011), which, however, rarely deals with theoretical considerations or conceptual thoughts on the fact that the tourism sector agglomerates.
- Empirics: When it comes to empirically observing and describing tourist destinations as clusters, many case studies can be found in the literature including, for instance, wine tourism in California (Porter 1998a; Porter 1998b). It is worth noting that tourism clustering remains very much in Porter’s focus. This is evident from the fact that his institute at Harvard Business School has over recent years published a number of student case studies on tourism clusters covering destinations such as Lisbon, Jerusalem, Bali, Monaco, Andalusia, Dubai and Baja California Sur as well as larger countries such as Kenya, Nepal, Tunisia, the Dominican Republic, Italy, Peru, Jordan, Morocco, or Tanzania (Harvard Business School 2017).1 Other studies examine tourism clusters in view of the relevance of embeddedness and trust within them (Partalidou and Koutsou 2012) or stress the relationship between cluster and tourism policy (Steenbruggen 2016). In terms of quantitative empirics, there is evidence of the incidence of agglomeration-driven externalities in Spanish tourism clusters (Segarra-Oña et al. 2012), confirming that clustering is indeed a relevant driver of economic development in the tourism sector. Apart from the cluster literature defined in a narrow sense, due to the high prevalence of clustering in the tourism sector, a large number of local or regional case studies in tourism studies can be classified as case studies of tourism clusters (e.g., Bertan et al. 2013; Kassianidis 2013; Mavragani and Lymperopoulos 2013), although they often focus on particular aspects of tourism demand or supply and thus less on the fact of agglomeration, its reasons and consequences.
- Policy: During the heyday of the cluster wave in the late 1990s and early 2000s, practitioners and policymakers moved ahead of literature, thus opening a considerable gap between practical approaches of cluster promotion and (usually much more careful) theoretical considerations of how clusters really can (or cannot) be supported by policy (Kiese 2008). Consequently, theory-informed and evidence-based concepts of cluster policy are rare and considerably younger than many cluster promotion schemes that have been tested in reality (e.g., Benner 2012a; Benner 2012b). There are some examples (Benner 2013; Hjalager 2000; Kachniewska 2013) of attempts to specify these approaches of evidence-based agglomeration-oriented policy approaches to tourism. In particular, Kachniewska (Kachniewska 2013) characterizes the approach of tourism clusters in comparison to regional or local tourism organizations in the case of Poland. Apart from these examples specific for tourism clustering, existing studies often focus on specific horizontal aspects of cluster policy such as the operational management of cluster initiatives or networks (e.g., Kiehlmann 2014). Literature developing approaches and methods or smart specialization (Benner 2014b; Benner 2017a; Foray et al. 2009; Foray et al. 2012) is inherently policy-oriented but has a generic character and thus does not deal with particular sectors or industries such as tourism. Yet, when analyzing existing smart specialization strategies, it is evident that many regions do include tourism in their portfolio or prioritized sectors and have an intention to promote their local or regional tourism industry under the umbrella of their smart specialization efforts (Ortega-Argilés 2012). On a different note, generic literature on tourism policy (e.g., Berg 2010; Hazboun 2008) does implicitly include policies using agglomeration as a lever for tourism development but usually does not explicitly focus on this particular aspect. An aspect that is rarely treated in works on tourism policy in a local or regional perspective is the need to develop institution-sensitive policies (Glückler and Lenz 2016), that is, policies adapted to the institutional specificities of the tourism sector as such and those of the destination at hand. In turn, literature on the role of institutions in regional development (e.g., Bathelt and Glückler 2012; Glückler and Lenz 2016) does exist but does not specifically focus on tourism and its specificities.
3. Towards Agglomeration-Oriented Tourism Development
3.1. Institutions in Regional Development
- Rule-reinforcing institutions underscore the effectiveness of rules and policies, possibly rendering regional policies more efficient. Similarly, but in the opposite direction, institution-reinforcing rules ensure synchronization between policy and institutional context and provide good chances for policy effectiveness.4
- Rule-substituting institutions and rule-circumventing institutions might involve a strong degree of micro-level agency (Benner 2014b; Benner 2017a) including institutional innovation and entrepreneurship. These types of interaction severely limit the effectiveness of explicit policy or rule-making, but they might equally represent a reaction by micro-level agents to political sclerosis and inertia.
- Institution-circumventing rules may be necessary for policy to react to harmful institutions, but efforts to enforce them will be needed. This case is especially interesting for tourist destinations, especially for those in need of competitive upgrading. For example, lacking competitiveness of enterprises or trading-down processes of neighborhoods or locations are situations where policies creating institution-circumventing rules may be beneficial. Cluster initiatives or schemes such as business improvement districts can provide a forum for anchoring such new rules, and for facilitating the emergence of consistent institutions.
- Rule-competing institutions and institution-competing rules are cases in which explicit policies face low chances of success, at least in the long term. Then, it might be wise to look for alternative mechanisms to shape institutional change such as institution-circumventing rules.
3.2. Tourism and Agglomeration
3.3. Tourism Cluster Policy
- Labor-market mechanisms such as mobility of workers between enterprises or mobility of graduates from education and training entities towards enterprises, or student internships can be promoted by schemes such as job fairs, matching initiatives, internship placement arrangements, internship or thesis scholarships, or social media campaigns. Considering that tourism is a labor-intensive industry and that quality in tourism is affected to a large degree by the skills and training of workers, the availability of a qualified workforce is a critical factor of a destination’s attractiveness and competitiveness.
- Cooperative mechanisms such as vertical or horizontal collaboration between enterprises (e.g., in marketing the destination as such), public-private dialogue, or joint lobbying towards policymakers can be promoted through targeted investments (such as grants) for collaborative actions or dialogue-inducing and trust-building measures such as conferences and roundtables. At the intersection between labor-market mechanisms and cooperative mechanisms, quality can considerably be improved through joint training programs between enterprises and education or training entities. Joint initiatives to attract qualified workers from other locations are another example for cooperative schemes of tourism cluster policy.
- Knowledge spillovers such as “cafeteria effects” may be somewhat less important in the tourism sector than in “high-tech” industries but will still occur to some degree. Promoting them with policy tools is difficult, however, and boils down to cooperation-inducing and trust-building instruments as were described above.
- Entrepreneurship in a tourism cluster can be promoted, for example, through thematic business planning contests or improved access to capital for start-ups with tourism-related business models. Setting up coaching and mentoring schemes, for example, by matching young entrepreneurs with retired tourism executives who act as mentors, can further improve new business formation and growth in tourism and thus contribute to upgrading the destination’s competitiveness by facilitating the emergence of new trajectories through entrepreneurship and (service) innovation (Benner 2014b; Benner 2017a), and even to overcoming a lock-in situation the destination might eventually face in the absence of entrepreneurialism (Grabher 1993).
- Competition between incumbent enterprises is difficult to affect, but in addition to promoting entrepreneurship as was described above, some limited policy interventions are feasible. Policy interventions designed to enhance competition related to quality among incumbent tourism service providers include, for instance, quality contests or rating schemes.5 In combination with policy efforts designed to establish institution-circumventing rules such as tourism improvement districts, interventions aiming towards increasing competition and differentiation among enterprises could contribute considerably to upgrading a destination’s competitiveness and attractiveness.
3.4. Tourism in Smart Specialization Strategies
3.5. Anchoring Tourism Development in Cross-Sectoral Strategies
4. Cases for Agglomeration-Oriented Tourism Development in Mediterranean Countries
4.1. Benefitting from Urbanization Economies: The Case of Limassol
4.2. Promoting Tourism under Smart Specialization: The Case of Haifa
4.3. Integrating Tourism in a Cross-Sectoral Regional Development Strategy: The Case of Sousse/Monastir
5. Agglomeration and Diffusion: Combining Divergent Goals in Integrated Tourism Development
Conflicts of Interest
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The imprecise definition of the cluster concept in terms of spatial scales is evident throughout Porter’s work and one of the major aspects of critique against his work (Martin and Sunley 2003). It is questionable whether a whole country covering larger area can qualify as an agglomeration of an industry such as tourism. Most likely, the tourism industry will be concentrated in a number of clearly delimited local or regional-scale destinations in some parts of the country. For example, Tunisia as a country certainly does not qualify as a tourism cluster but rather includes local tourism clusters such as Hammamet, Sousse/Monastir, or Djerba.
Tourism does not have to be based on density, though. Some kinds of tourism prosper on their distance from urban life or from popular mass tourist destinations. In these cases which include, for instance, luxury resorts in isolated desert locations, peripheral destinations offer assets not based on agglomeration economies. These kinds of destinations are not the focus of this article.
In practice, there will be some degree of localization economies within the tourism sector in larger cities, while some degree of quasi-urban diversity may be present in sun/sand/beach mass tourist destinations, leading to some urbanization economies. Thus, in reality the delimitations between the effects of both categories are not so clear-cut or unambiguous.
These cases do not necessarily need to be beneficial for the aggregate economy or even for the region or sector in question. Rules and institutions can be consistent but still lead to inefficient results, for example in a lock-in situation (Grabher 1993). If, however, policy goals embodied in rules and institutions are directed towards efficiency-enhancing ends, consistency between rules and institutions arguably suggests higher degrees of effectiveness in reaching these policy goals (such as growth and employment creation).
The high importance and visibility internet rating portals such as TripAdvisor have achieved for competition among companies in the tourism sector is evident, for instance, in the fact that many hotels publicly display TripAdvisor’s “Certificate of Excellence” (TripAdvisor 2016). Similar quality-focused and competition-enhancing rating and award mechanisms are possible on the local and regional level including, for example, shop-window competitions for retailers. Where broadly accepted rating and award mechanisms such as online hotel or restaurant rating portals exist, tourism policy might wish to align its incentives with these schemes, e.g., by making an improvement of internet ratings or an increase of TripAdvisor “Certificates of Excellence” awards to the destination’s hotels, restaurants and attractions an explicit goal of tourism policy. Such an alignment of public and private incentives can take the form of an institution-reinforcing rule. Systematically monitoring internet ratings of a destination’s hotels, restaurants and attractions can be an important task of tourism cluster management and serve as a monitoring and evaluation tool for the destination’s competitiveness, as well as help identify further measures of tourism cluster policy to enhance quality and competition.
The strategic thrusts for tourism development in Haifa look similar to those proposed above for Limassol, reflecting the cities’ similar structural characteristics. Yet, it is important to note that the strategic perspectives pursued in the two cases is different: While the ideas presented in the case of Limassol were founded on the assumption of urban diversity and possible trajectories emanating from such a diverse urban landscape, the ideas suggested for Haifa are based on existing sectoral strengths in the city’s economy. In a different environment, these two different strategic perspectives might lead to significantly different conclusions. In practice, however, both perspectives can be combined into an integrated and more generic regional development strategy.
Outside the Mediterranean perspective taken in this article, a case for debating such a trade-off would be Iceland with its spectacular growth in international tourist arrivals from 489,000 in 2010 to 1,289,000 in 2015 against the background of its small population size and sensitive ecosystem (World Tourism Organization 2016, p. 8).
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Benner, M. From Clusters to Smart Specialization: Tourism in Institution-Sensitive Regional Development Policies. Economies 2017, 5, 26. https://doi.org/10.3390/economies5030026
Benner M. From Clusters to Smart Specialization: Tourism in Institution-Sensitive Regional Development Policies. Economies. 2017; 5(3):26. https://doi.org/10.3390/economies5030026Chicago/Turabian Style
Benner, Maximilian. 2017. "From Clusters to Smart Specialization: Tourism in Institution-Sensitive Regional Development Policies" Economies 5, no. 3: 26. https://doi.org/10.3390/economies5030026