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Competitiveness Review
Insights into the creation of a successful MNE innovation cluster
Michele O'Dwyer Lisa O'Malley Stephen Murphy Regina C. McNally
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Michele O'Dwyer Lisa O'Malley Stephen Murphy Regina C. McNally , (2015),"Insights into the
creation of a successful MNE innovation cluster", Competitiveness Review, Vol. 25 Iss 3 pp. 288 - 309
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Insights into the creation of a
successful MNE innovation
cluster
Michele O’Dwyer, Lisa O’Malley, Stephen Murphy and
Regina C. McNally
Department of Management and Marketing, Kemmy Business School,
University of Limerick, Limerick, Ireland
Abstract
Purpose – This paper aims to recount the genesis of a successful innovation cluster among Irish-based
divisions of multinational enterprises (MNEs) and Irish universities in the pharmaceutical industry.
This cluster was actively “narrativized” through the language of obligation, desire, competence and
know-how. As such, it is typical of the “hero’s quest” literary genre in which challenges are faced,
obstacles are overcome and victory is ultimately won. Importantly, in this story, the cluster was morally
and pragmatically charged with dealing with signicant challenges faced by the Irish pharmaceutical
industry. Broader societal discourses operated as a resource for actors to use in proposing collaboration
and innovation as the appropriate response to such challenges. Specically, through narrative and
discourse, actors created the necessary conditions conducive for a cluster to develop. These created a
discursively constituted shared purpose which ultimately ensured successful innovation collaboration.
Essentially, through narrative and discourse, the key actors identied the collaboration a protagonist in
pursuit of a quest. By linking theoretical and empirical insights, the paper offers a conceptual
framework that can be used in future studies to understand the emergence of clusters.
Design/methodology/approach – Adopting Wengraf’s (2001) structured approach to narrative
interviewing, 18 key actors shared their understanding of how the cluster came into being. Each
interview began with a single question intended to induce narrative, in this case “tell me the story of the
cluster as you see it.” This allowed participants to be in control of their own story (Wengraf, 2001). Each
interview was transcribed in full and appended to notes taken at the time of the interview. Each
narrative offered a “purposeful account” (Jovchelovitch and Bauer, 2000) of how and why the cluster
was formed and the centrality of the participants’ roles. In line with recognised protocols, in the authors
analysis of data, they paid specic attention to how stories were told, the roles assigned to key
protagonists, as well as how events and actors were linked in stories (see Czarniawska, 1997).
Findings – This paper further demonstrates how language, metaphor and narrative and discourse
(Hatch, 1997) becomes a strategic resource on which actors can draw to create desired realities (Hardy
et al., 2000) particularly in terms of collaboration and innovation. Further, this case highlights how
dialogue was encouraged throughout the process of establishing the cluster and has continued to be an
important element. Rather than imposing some grand design, the SSPC cluster is and always will be
emergent. In this sense, in the early stages of collaboration, detecting and supporting existing and
emergent communities is essential to success, and shared identity which is the outcome of members’
discursive practices appears to be a powerful driver of collaboration.
Research limitations/implications – There are important insights for cluster and innovation
theory development that can be extrapolated from this study. First, context-specic narrative accounts
provided in this study further extend the authors’ understanding of the process through which
fundamental changes (innovation) in organisational activities are enacted (Ettlie and Subramaniam,
2004). Second, the authors’ understanding of how new ventures are attributed organisational legitimacy
through language and story is augmented (Gollant and Sillince, 2007; Pentland, 1999). Third, the
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1059-5422.htm
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Received 31 August 2014
Revised 28 January 2015
Accepted 3 February 2015
Competitiveness Review
Vol. 25 No. 3, 2015
pp. 288-309
© Emerald Group Publishing Limited
1059-5422
DOI 10.1108/CR-08-2014-0026
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authors have articulated how different discourses are mobilised by actors at different stages of
development and for different audiences to create desired innovation outcomes, illustrating that
innovations can result from advances in knowledge (McAdam et al., 1998). Finally, the authors see how
discourse and practice are dynamic as participants articulate their intention to exert further inuence on
innovation discourse through their lobbying activities.
Practical implications – By focusing on the specic problem of crystallisation, and using the
discourse of collaboration, particularised ties emerged around SSPC and this inspired synergistic
action. When seeking approval from host organisations, they spoke in terms of return on investment
and the potential to add value, part of the discourse of organisational effectiveness. Consequently, the
authors stress the benets of understanding audiences and adjusting discursive approaches on this
basis. As such, this study provides evidence that tailored discursive approaches can be used as a
resource for managers and practitioners that are seeking to inspire innovation through collaboration.
Social implications – The discourse of collaboration also became a resource upon which actors could
draw to articulate how they might respond to the context and realise the vision. Because this discourse
is promoted in government reports and embodied in government strategy, the protagonists were able to
borrow from the discourse to secure the necessary resources (in this case funding) that would enhance
the possibilities of more effective collaboration. This is because different stakeholders engage with
discourse in ways that help to create the outcomes they desire. It was noticeable that the leaders within
the Solid State Pharmaceutical Cluster recognised the importance of discourse to innovation
collaboration, and on this basis, they successfully adjusted the use of terminology in relation to the
exchange partners they were addressing. When addressing potential partners within industry and
academia, they utilised both the “burning platform” and “Ireland Inc.” metaphors to create generalised
membership ties around the need for innovation and action.
Originality/value – First, context-specic narrative accounts provided in this study further extend
the authors’ understanding of the process through which fundamental changes (innovation) in
organisational activities are enacted (Ettlie and Subramaniam, 2004). Second, the authors have
articulated how different discourses are mobilised by actors at different stages of development and for
different audiences to create desired innovation outcomes, illustrating that innovations can result from
advances in knowledge (McAdam et al., 1998). Finally, the authors see how discourse and practice are
dynamic as participants articulate their intention to exert further inuence on innovation discourse
through their lobbying activities.
Keywords MNEs, Desire, Innovation, Collaboration, Narrative, Cluster, Competence, Obligation,
Know-how
Paper type Research paper
Introduction
This paper delineates the sequence of events and activities that led to the creation of a
successful innovation cluster-involving multinational enterprises (MNEs) in the Irish
pharmaceutical industry together with a number of universities. This context is
particularly noteworthy because the pharmaceutical industry is highly regulated and
insular: MNEs closely guard intellectual property (IP) and have historically been slow to
collaborate (Henderson et al., 1999). To sustain performance, however, MNEs may need
to adapt their strategies (Zhao et al., 2014) and, thus, in response to changing
environmental conditions, we see a discernible shift from competition to collaboration
within the Irish pharmaceutical industry over the past decade (O’Malley et al., 2015).
This transition occurred over a relatively short period of time through the creation of a
cooperative innovation cluster which provides individual and collective benets. This
has produced signicant advances in knowledge (McAdam et al., 1998) and generated
fundamental changes in the activities of participating organisations. Innovation
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clusters are acknowledged as important for economic development in many countries
with many governments attempting to encourage innovation clusters through
industrial policy (Liyanage, 1995;Arthurs et al., 2009;O’Malley et al., 2015). Government
support may be a necessary but insufcient condition, as the pre-existence of social
capital (Fillieri et al., 2014) is also recognised as an essential component.
Innovation clusters
Literature suggests two broad mutually reinforcing groupings of cluster typologies,
economic and industrial (Majocchi and Presutti, 2009), with three primary industrial
cluster types based on transaction costs: pure agglomeration, industrial complex and
social network (Ferreira et al., 2012;McCann et al., 2002). They can also be regarded,
more fundamentally, as social communities which specialise in the creation and transfer
of knowledge (Morosini, 2004).
Innovation requires “a search for diverse sources of knowledge, both existing and
new, in a manner unfamiliar to those at the centre of this endeavour” (Kelley et al., 2009,
p. 222). Innovation, knowledge and capabilities have been central themes in strategy and
performance research (Knight and Cavusgil, 2004) and although some large
organisations may be capable of innovation-based corporate entrepreneurship (Kelley
et al., 2009), the majority of innovating rms are unlikely to possess all of the necessary
capital, knowledge, expertise and technologies internally (Story et al., 2011) and are
unlikely to enter learning relationships (Dyer and Hatch, 2006;Spencer, 2008).
Therefore, clusters have emerged as central in facilitating efcient and effective
innovation processes (Powell et al., 1996). Clusters (Birkinshaw and Hood, 2000;
Boschma and Frenken, 2006;Boschma and Martin, 2010) or industrial districts (Inkpen
and Tzang, 2005) are networks of independent rms that share the same geographic
location and market segment and that collaborate for various strategic and operational
reasons, including innovation. Such clusters can represent worldwide centres of
excellence within particular industries (Mudambi and Swift, 2012).
Localised clusters have sprung up around the world including Silicon Valley, Ireland
and Taiwan (Bresnahan et al., 2001) and Portugal (Ferreira et al., 2012), and can include
R&D organisations, universities and research laboratories (Lee et al., 2001). Central to
the development of regional clusters is the belief that geographical proximity and
cultural sensitivity/distance result in more effective knowledge transfer than that
experienced between MNEs and their overseas subsidiaries (Birkinshaw and Hood,
1998;Shenkar, 2001). This global transfer and local implementation of knowledge is
critical for MNEs (Schleimer and Pedersen, 2014) and is aided by the heterogeneity of
organisations within clusters (Ter Wal and Boschma, 2011) and their boundary
spanning multinationality (Regner and Edman, 2014). Moreover, “alignment of the MNC
subsidiary with its host-country environment aids business growth” in a foreign market
(Hada et al., 2013, p. 790).
Industrial clusters have been acknowledged to offer a number of benets including
improved competitiveness through increases in both interorganisation and industrial
productivity, as well as by developing “innovation capability and urging new enterprise
formation” (Lin et al., 2006, p. 477). When successful, such collaborations provide access
to complementary assets and encourage transfer of codied and tacit knowledge (Faems
et al., 2005), thereby allowing participating rms to create and mobilise resources that
otherwise might not be possible (Das and Teng, 2000). Because localised clusters are
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regarded as an important antecedent to innovation capabilities (Gordon and McCann,
2000), they have been encouraged and supported in many countries by policymakers.
However, co-location does not automatically or necessarily ensure interaction (Lorenzen
and Mudambi, 2013).
Effective collaborative regional clusters create structural shifts from independent
rms typied by arm’s length relationships to collaborative relationships. However,
while there is increased understanding of the benets that can accrue to innovation
networks, the processes by which these collaborative clusters are orchestrated are also
deserving of attention. “Collaboration involves individual participants working in
collaborative teams while representing the interests of organisational stakeholders”
(Hardy et al., 2005, p. 59). This is particularly challenging when the collaboration is
between traditionally competitive participants (as in the pharmaceutical industry) or
between participants who perceive each others ways of working to be very different (e.g.
academic/industry partnership). Thus, although “collaboration has the potential to
produce powerful results, not all collaborations realize this potential” (Hardy et al., 2005,
p. 58). However, MNE’s success is dependent on two critical factors, localisation and
maximisation of knowledge (tangible and intangible) and transferring competencies
across borders (Mudambi and Swift, 2011;Dunning, 1998). As such, it is insightful to
explore a successful collaboration in the form of a cluster and evaluate why and how it
works (Contractor et al., 2010).
This paper is structured as follows. First, we present our understanding of the
necessary building blocks for inter-organisational innovation collaboration. Second, we
describe the narrative methodology employed in this study. Third, we characterise the
Irish pharmaceutical industry as the context in which this collaboration took place, and
tell the story of the Solid State Pharmaceutical Cluster’s (SSPC) formation and
achievements to date. While other research has examined how clusters evolve in terms
of exploration, exploitation and the balance of both (Zettinig and Vincze, 2012), we
explain how the SSPC was formed purely for exploration purposes. Fourth, we discuss
our ndings in terms of how the SSPC was actively “narrativized” with reference to
broader discourses, and detail how it was embodied through the routines, practices and
artefacts that ultimately combined to create a successful innovation collaboration.
Finally, we extrapolate insights from these ndings and provide recommendations for
managers and for further research.
Inter-organisational collaboration
Collaboration is considered to be “effective” when it leverages the differences among
participants to produce innovative, synergistic solutions and balances divergent
stakeholder needs. However, many collaborations never realise their potential (Faems
et al., 2005), they fail to balance stakeholder concerns, and many fail to generate any
collective action at all (Lawrence et al., 2002). This is often because inter-rm
collaborations rely neither on hierarchical nor market mechanisms of control (Hardy
et al., 2005). As a result, effective collaboration in a cluster relies extensively on the
relationships among participating actors; “MNEs create linkages when they are directly
involved in relationships with other rms in the host economy” (Giroud and
Scott-Kennel, 2009, p. 555), increasing MNE involvement in individual foreign countries
(Johanson and Vahlne, 1997). These relationships “are negotiated on an ongoing basis
throughout the life of the collaboration” (Hardy et al., 2005, p. 59). Successful negotiation
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results in the creation of legitimacy through which the collaboration “is inserted within
a broad frame of cultural understanding as an autonomous actor with a distinctive
programme of action” (Golant and Sillince, 2007, p. 1,154) Legitimacy is necessary for
long-term survival because it enhances an organisation’s ability to access the resources
provided by investors, suppliers, employees, etc. (Zucker, 1991). These stakeholders will
be unwilling to risk investing their resources in an organisation that they do not view as
legitimate. Legitimacy results from the adoption of organised, established procedures or
standardised interaction sequences (i.e. institutions) (Jepperson, 1991) that provide
stability and meaning to social behaviour (Scott, 1995). Legitimacy is ultimately
achieved through the adoption of common reference frames, conformity to values and
norms and adherence to laws. Yet, understanding the processes through which
organisations (including clusters) become legitimate is challenging (Golant and Sillince,
2007). These authors suggest discourse analysis in general, and narrative analysis in
particular, as a method capable of accessing how such challenges are addressed.
Methodology
There has been a long history of qualitative research approaches to capture the
processes through which clusters emerge and develop (Easton, 2010). Because narrative
and process research conceptualisations both capture events within a particular context
and temporal structure, narrative methodologies are particularly well suited to
explaining cluster evolution (Pentland, 1999;Makkonen et al., 2012;Zettinig and Vincze,
2012). Narratives are not necessarily grounded in fact and therefore do not purport to be
factual descriptions. Rather, they are a representation of experiences encoded with both
symbolism and meaning (McAdams and Ochberg, 1988) and within MNEs can facilitate
sharing of intangible assets (Berger and Luckmann, 1967). Consequently, the creation of
a story is, in and of itself, a symbolic process. It captures useful information through the
attribution of sequence, identication of focal actors, recognition of narrative voice and
through the implicit use of an evaluative frame of reference and the provision of
essential content and context (Pentland, 1999). “Managers and other stakeholders
strategically weave narratives incorporating conicting stories, to meet concerns within
and across international markets.” (Haley and Boje, 2014, p. 1,116).
To capture how collaboration within the cluster emerged, we sought the individuals
who initiated and developed the SSPC because it was “their perception, interpretation
and actions” (Makkonen et al., 2012, p. 291) that created [and that continues to
reproduce] this cluster. Informants were drawn from the ve universities and nine
MNEs involved in the initiation of the innovation collaboration[1]. In total, 11
participants involved in the formation and early stages of the cluster were interviewed.
Table I.
Participant
information
Participant Organisation Participant Organisation
Philip University 1 William Pharmaceutical Company 1
Donald University 1 Peter Pharmaceutical Company 2
Tom University 1 Geoff Pharmaceutical Company 3
Mary University 2 Paul Pharmaceutical Company 4
Kevin University 3
James University 4
Joseph University 5
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Interviews were conducted over a three-month period and lasted between 50 and 90
minutes. Please refer to Table I for a list of participants.
The biographic narrative interview methodology (BNIM) (Wengraf, 2001) was used
to elicit data from participants. Each interview began with a single question intended to
induce narrative (SQUIN), in our case, “tell me the story of the cluster as you see it.”,
followed by the introduction of topic questions aimed at inducing narrative. The third
phase of the interview allowed us to ask questions based on our preliminary analysis of
the rst two phases as well as theoretical and practical questions arising regarding the
SQUIN-BNIM narrative interview approach.
Each narrative offered a “purposeful account” (Jovchelovitch and Bauer, 2000)ofhow
and why the cluster was formed and participants’ roles. In line with recognised
protocols, in our analysis of data, we paid specic attention to how stories were told, the
roles assigned to key protagonists, as well as how events and actors were linked in
stories (see Czarniawska, 1997). We as authors subsequently engaged in interpreting
and analysing multiple informants’ stories, through supplementing and interrogating
interview accounts with a review of published reports, SSPC materials and websites[2]
and through engagement with academic texts. Thus, informed by these competing
theoretical frames, we revisited our interview transcripts and re-coded based on
concepts from these literatures.
Different informants described the key events, the central protagonists in their
recollections of how things had happened. Through analysis and interpretation of
interview transcripts, we began to get a sense that language and metaphor were
important in understanding how this innovation cluster emerged. We began to
appreciate that new ventures (such as this one) are brought into being through modal
constructions that provide meaning in terms of obligation, desire, competence and
know-how (Golant and Sillince, 2007 following Greimas, 1987). In this way, the cluster
“emerges as an independent social actor, i.e. it is actively ‘narrativized’, through the
plausible attribution of collective action with this set of modalities, or attitudes” (Golant
and Sillince, 2007, p. 1,152). When all four modalities are present in narrative, the
organisation emerges as a protagonist in pursuit of a quest (Cooren, 2001). Thus, across
all these texts, we searched for indicators of the modal constructions that Golant and
Sillince (2007) emphasised, and Downing (2005) attributed to a protagonist in pursuit of
a quest:
•obligation (organisations are ascribed a moral imperative);
•desire (managers emphasise enduring organisational engagement with a
distinctive set of values or objectives);
•competence (managers highlight organisational activity that demonstrates a clear
correspondence with the underlying beliefs, values or interests of stakeholders or
signal isomorphism with prevailing industry practices); and
•know-how (pointing to the knowledge processes that support superior organisational
performance).
Informants construct and communicate their experiences through the stories they tell
(Bruner, 1991), and these stories provide legitimacy and accountability for their actions
(Czarniawska, 1997). Thus, by adopting narrative interviews, we accessed “the same
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kind of data that organisational members use to plan, enact, interpret, and evaluate their
own actions and those of others” (Pentland, 1999, p. 717).
The wider context
To understand the SSPC story and how such innovation became possible, it is important
to appreciate how the Irish economy, Irish Government policy and the global and local
context of the pharmaceutical industry combined to create the necessary conditions for
this innovation cluster to emerge.
Throughout the 1960s and 1970s, the Industrial Development Authority (IDA)
promoted Ireland as a low-cost manufacturing base. However, as the Irish economy
improved, Ireland became vulnerable to competition from other low cost countries. In an
effort to shift the economy towards discovery laboratories, the IDA recognised that
Ireland needed to develop the necessary infrastructure for science and technology.
However, Ireland did not have any centres of excellence in this space, and collaboration
between industry and academia was supercial at best (ICCSTI, 1999 cited in Van
Egeraat, 2006). From 2000, government policy deliberately supported the development
of a “knowledge economy” and began to invest in high-level technological infrastructure
through Science Foundation Ireland (SFI). In particular, SFI began to promote and fund
industry collaboration through an initiative known as Centres of Science, Engineering
and Technology (CSETS) (van Egeraat, 2006). Recognising the potential for innovation
through basic research (Orsenigo et al., 2001), signicant efforts were made to include
academia in this innovative innovation collaboration. Specically, a number of Strategic
Research Clusters (SRCs) were established to link academia and industry through
“focused attention to common problems” (Department of Enterprise, Trade and
Employment, 2008, p. 13).
Findings: obligation, desire, competence and know-how
Key actors brought the cluster together and made it work by using their personal
capabilities, the inuence encompassed in their roles, by employing the narrative
language of obligation, desire, competence and know-how. The idea and the impetus for
the cluster came arose during a conversation between Philip and Donald from
University 1. Industry commitment and participation was mobilised by Peter, a senior
gure in one of the larger pharmaceutical companies. Following a successful funding
bid, a project manager was appointed and played a key role in developing and
supporting collaborative structures and processes.
Obligation: the context for action
Prior to the creation of the SSPC, the Irish pharmaceutical industry was characterised by
arm’s length relationships as are typical of the global industry (Henderson et al., 1999).
According to Peter, the atmosphere between MNE subsidiaries was such that
individuals intentionally maintained their distance:
I would say that ten years ago you were afraid to be talking to someone from another
competitor company. I suppose there was that level of fear. I don’t know where that originated,
[but] there was real fear. [Peter, Pharmaceutical Company 2]
Although Peter is unable to explain this level of fear, it may be explained by the nature
of competition between pharmaceutical MNEs, which historically has been concerned
with protecting IP (Henderson et al., 1999). As a result, competitors have been extremely
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slow to collaborate. The Irish subsidiaries of the pharmaceutical MNEs enjoyed a steady
supply of manufacturing business from their parent companies. Within an increasingly
global marketplace, Ireland’s economic prosperity had a negative impact on Irish rms’
competitiveness (Van Egeraat, 2006). Indeed, as the Irish economy improved,
particularly during the Celtic Tiger period from 1995 to 2007, Ireland became vulnerable
to competition from other low-cost countries. Irish rms compete with other subsidiaries
(of the same company) throughout the world, and decisions about where to manufacture
ultimately rest with the parent company:
Drug discovery would tend to come from head ofce. They would develop it to a certain stage
and then they would go into clinical trials. And then towards the end of clinical trials they
would start to think how are they going to manufacture it. And they would typically choose a
plant, one of their plants around the world. It’s at that stage the Irish companies would get
involved. And they are competing to be the plant that gets the drug. And then they will
manufacture it for some years. [Philip, University 1]
The dynamics of internal competition between subsidiaries became a critical
determinant of which subsidiaries survive (Almor and Hirsh, 1995), and is largely
driven by the track record of those subsidiaries (Birkinshaw and Hood, 1998) and the
cost climate in which they operate. This competition between other MNE subsidiaries
was recognised as a signicant threat to the Irish pharmaceutical industry:
As you may know, the pharma sector is under threat from India and China because they can
produce materials much cheaper. [Donald, University 1]
Ireland was rapidly losing the basis of its competitive advantage over subsidiaries in
other countries. In particular, the old manufacturing mandate was predicated on low
cost production capabilities:
Recognising that Ireland had moved from a place 20 or 30 years ago where we were getting
investment for our low cost operation in addition to all the other advantages that are in Ireland
that are well publicised like our tax, skills, access to European markets, access to English
speaking skills and all of that. We knew that our old manufacturing mandate was not going to
serve us in the future because of the impact of the Celtic Tiger raising our costs signicantly.
Therefore we were being challenged on a competitive scale by other locations. [William,
Pharmaceutical Company 1]
In response to this acknowledged threat, industry participants created a special interest
group as part of the Irish Business and Employers Confederation (IBEC)[3] as early as
the late 1990s. As outlined below, this was central to breaking down the perceived
barriers between rms:
Having a group like IBEC PharmaChem Ireland[4], that’s got people to get to know each other
a bit better and relax a bit to share our challenges. In parallel the world was changing and our
challenges were becoming more and more similar. Losing manufacturing was a problem that
we all had. Then we were able to rally around this problem of how do we stop hemorrhaging
manufacturing out of Ireland? [Peter, Pharmaceutical Company 1]
The threat to the pharmaceutical sector was perceived as very real. Moreover, as an
industry that accounted for a quarter of Ireland’s manufacturing output and 56 per cent
of national exports in 2009, the potential impact of its failure on the Irish economy was
untenable. The latter is evidenced in the excerpt below from PharmaChemical Ireland’s
Strategic Plan (2010):
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Ireland depends heavily on the pharmaceutical sector which generated over 50 per cent of Irish
exports, worth some €44 billion, in 2008. Responding to the challenges facing the sector must
be a national priority. In order to remain the great success story that Ireland has become,
industry, government and other related stakeholders need to meet these challenges head on.
Companies need to respond by linking research directly to manufacturing, via process and
product development (Innovation and Excellence PharmaChemical Ireland Strategic Plan,
2010).
This excerpt clearly sets out the obligation for industry participants and for other
stakeholders to address the “challenges” faced by the pharmaceutical industry. The
report draws upon the widely accepted discourse of “Ireland as a great success story”
and the role of the pharmaceutical industry within this. As a result, it is able to juxtapose
the “challenges facing the industry” with the “national priority” and, thus, call upon the
help of government and other stakeholders in responding to challenges. The actors are
able to draw upon discursive terminology as a means of creating a communal identity
and, thus, the group is bonded through a generalised connection to the issue in question.
In this case, the terminology draws upon rhetoric surrounding the issue of challenging
times facing Ireland. Recognition of the “need for change” (Ford and Ford, 1995) became
a resource for actors to use, and helped create an environment for effective innovation
collaboration:
Of course behind all of this there has to be a reason for working in this area. It just so happens
to be an area that is very difcult for the pharma industry and there was a burning platform.
[Peter, Pharmaceutical Company 2]
The term “burning platform” has been a mainstay in the business lexicon for many
years. It is arguably the ability to identify urgent issues that will have the greatest effect
on securing stakeholders’ willingness to change. The origin of the metaphor is
attributed to an oil rig worker who, noticing ames, jumped 150 feet into the North Sea
on the basis that it was better to face probable death than certain death (Embley, 2005).
The metaphor is employed discursively, so that stakeholders are able to justify and
articulate the need for change to survive.
Competence: the idea is born
Philip (an academic) had been involved in research on crystallisation (a chemical solid –
liquid separation technique, in which mass transfer of a solute from the liquid solution
to a pure solid crystalline phase occurs) within another industrial sector and Donald (a
newly appointed member of faculty who had signicant experience in the
pharmaceutical industry), recognised its potential to be extremely benecial to the
pharmaceutical industry. Philip relays the conversation below where he was told:
The kind of stuff you do here in crystallisation would be very interesting for them
[pharmaceutical industry] because they have endless problems with crystallisation and it’s a
big, big issue for them. [Philip, University 1]
This conversation encouraged Philip to understand the nature of the problem in a
pharmaceutical context. Being aware of broader societal discourses and policy
developments, Philip explains his reasoning behind proposing a cluster in this space:
And the whole idea was that we felt as a group that there just wasn’t enough work going on in
the Irish university sector to support the area. […] they wanted to have expertise locally. In the
past when they came up against problems in the area of crystallisation, they would have to go
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to corporate HQ to get the problem solved. And they wanted to be able to demonstrate to the
HQ that they could handle this locally. Because it’s of importance for the next round if they can
show technically that they are very efcient, they are more likely become the site that
manufacture that drug rather than someplace else. [Philip, University 1]
Philip argues that Irish subsidiaries would be more likely to maintain manufacturing of
existing drugs as well as secure contracts to manufacture new drugs [the next round] if
they could demonstrate competence in crystallisation and other processes – rather than
constantly having to refer problems back to head ofce. While the ability to
manufacture at a low cost represents the traditional source of competitive advantage,
Donald recognised that expertise in process control could be developed into an
alternative and equally compelling basis of competitive advantage:
However, with pharmaceuticals the labour costs don’t tend to be the main thing surprisingly
enough, because much of it is automated. So even though India and China can produce cheaper,
they don’t meet every regulatory requirement of the FDA and the European equivalent […].
We have an advantage here in that we have a very good record there, but companies are
always trying to add more value to themselves. So from a regulatory side of things we do tend
to do the best for ourselves by having good processes. [Donald, University 1]
In the excerpt below, Philip is presented as providing a solution to the burning platform.
In this sense, he is validated much as the hero in the traditional romantic or quest literary
genre, in which “a hero challenges the status quo, engages in various adventures, has
setbacks but ultimately succeeds” (Downing, 2005, p. 195):
So into that scene then comes [Philip] with a proposal for a cluster. Now within IBEC there was
always a driver to increase research and development in the country. When this cluster came
in then we recognized it was the potential way forward to get connected with companies and
academia in a more systematic manner. [Peter, Pharmaceutical Company 2]
While individual MNEs were making efforts to improve their processes, the opportunity
for more innovation might be realised through collaboration with other pharmaceutical
MNEs and with academia. Having sketched out an initial proposal, Philip then
approached academics in other universities to mobilise the necessary resources on
which to create a platform for engagement with industry. Participants were
intentionally chosen to represent all of the major universities and to provide different
skill sets. The choice of participants paved the way for more effective collaboration by
involving participants who would play complementary roles. This also provided an
attractive and compelling proposition to industry. Following initial discussions, an
academic team was established that consisted of two researchers from each of the ve
academic institutions. This team contributed detailed scientic information to the initial
discussion document and, in parallel, through conversations with industry actors,
gathered information on the practical challenges they were experiencing. This helped to
delineate the “problem” that the cluster would focus on. Based on these conversations,
the proposal for the SSPC was developed to represent the convergence of clinical,
pharmaceutical, academic, commercial and other relevant stakeholders.
When SFI announced a call for applications for the development of SRCs, Philip had
to work quickly to get industry on board:
So we approached the industry then and we just proled the kind of capacities which we had.
They were very interested in the presentation that we made. There were some big names there
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who were opinion leaders […]. They were all quite supportive of the whole idea. They said this
expertise is something that we denitely lack expertise in Ireland. [Philip, University 1]
Philip hoped to get two or three MNEs involved in the initial programme. Through a
focus on “capacities” and “expertise”, the process of attributing competence (Golant and
Sillince, 2007) to the emerging cluster was initiated. This may have led industry to be
more open to the concept of a cluster than had originally been anticipated:
[Philip] […] was actually surprised with how receptive we were to his proposal […] He went
around the companies and I think of all the companies only one turned him down and he ended
up with 9 companies that would be prepared to work together with the institutions. [Peter,
Pharmaceutical Company 2]
The proposal required only a minimal nancial contribution from industry participants,
thus removing a signicant barrier to their engagement. This tactic was essential to the
evolution of a successful group dynamic. Moreover, academia presented the potential
benets in nancial terms to the technical decision-makers using the rhetoric of
organisational effectiveness and competence. Thus, we see how discourse is both
adopted and adapted depending on the target audience:
If we cracked it we would actually have a gross margin return on investment for them, which
would be very signicant because crystallisation normally happens right at the end of the
process […] if you can have a 1 per cent increase in yield by better understanding the process
then you can have huge cost benets […] So we did a calculation just to demonstrate on a
compound, okay this shows how much you can save if we made the yield 1 per cent better. So
that was how we convinced the technical people. [Donald, University 1]
Although the impetus for the initial bid came from academia, industry engagement and
conversation with the external auditors was extremely important in securing funding:
So basically SFI brought in a group of international experts to critique what the proposal was.
This was pretty intense; they brought people in from the States and from across Europe and we
supported them [the academics] on the day, and I think that was an important part of it because
SFI could see that industry was engaged from an early stage […] We understood what things
would involve and we stayed engaged with the process. So I think that carried it over the line.
We brought in SFI funding to the tune of around 7 million. [Peter, Pharmaceutical Company 2]
The group had established itself as a “discursive object” (Hardy et al., 2005) through
successfully defending the SSPC proposal to the expert panel.
The SSPC is formed
In 2007, the SSPC was established as one of three SRCs, and secured funding of €6.97
million from SFI. Its focus was to support knowledge clusters to create distinctive
capabilities that would ensure that Ireland remained competitive in the global
pharmaceutical industry (Hannon et al., 2011). The SSPC was formed ostensibly to
conduct research in the area of crystallisation of pharmaceutical solids and has already
developed and utilised important capabilities in process innovation. Signicantly,
Philip chose to divide the funding equally among the participating universities, which
has not been the case in other SRCs, nor indeed, in many collaborations worldwide. This
innovation ensured full cooperation from the academics involved and inevitably helped
establish collaboration. Equally important, a project manager familiar with the culture
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and practices of both industry and academia was appointed. This ensured more
effective communication both between and across groups.
The SSPC governance structure is intentionally inclusive, comprising a Scientic
Director, an SRC Operational Committee and an Executive Committee. The operational
committee is chaired by the project manager and includes the scientic director and
representatives from the academic partners. Being industry informed is critical to the
success of the research of the SSPC and, from a governance perspective, this is achieved
by the Executive Committee which includes the operational committee members, an
independent chair and ve industrial members.
Desire: building “Ireland Inc.”
In keeping with the notion that discourse serves to constitute a sense of reality for social
actors (Hardy et al., 2005), members of the SSPC actively incorporated the discourse
(disseminated by the Irish government and reinforced by governmental agencies) that
the pharmaceutical industry represents a burning platform whose resolution is critical
for Ireland’s future success:
If they can show capability in Ireland, that does all of the companies that are based here good.
It means that there is a strength developed within the country. [Donald, University 1]
In explaining the new mindset, Donald illustrates the gravity of the challenges faced by
the Irish pharmaceutical sector. In choosing to identify “sister companies in other
countries” as the focus of a metaphorical ght, Donald invokes images of organisations,
which were previously competitors, coming together to ght for Ireland in the global
marketplace. This metaphorical light is around process control and innovation. When
we consider the previous narrative of “real fear”, it seems that changing conditions
created opportunities for the corporate bond to be eschewed to protect the “Irish facility”
of that company. By individually aligning with the “Irish facility” of the company, there
seems to be a perceptible shift towards country over company, as evidenced by other
narratives:
[…] people’s rst responsibility is to their companies but there is a kind of commitment to
Ireland Inc., as they say, you know. People are proud of the success of the industry in this
country and people are generally very happy to see the success of other companies here. On a
local level the cooperation is much stronger than competition […]. [Geoff, Pharmaceutical
Company 3]
The term “Ireland Inc.” is prevalent in several other narratives. It was never explained.
Rather it was assumed that those who created the narrative and those who would be
exposed to it would implicitly understand its meaning. This demonstrates that the term
had become part of the lexicon of familiar conversation. “Ireland Inc.” borrows from the
broader discourse of a successful Ireland, and directly supports government policy to
develop Ireland’s competence as a “knowledge economy”. By juxtaposing “Ireland Inc.”
with the “success of the industry”, the discourse that the success of Ireland is
inextricably linked with the pharmaceutical industry is in turn reinforced. While the
basis of Ireland Inc. is a knowledge economy – the output of that economy is innovation
in products and processes. By creating this meaningful identity between subsidiary and
country, local management is empowered to “take certain actions for the benet of their
country and for themselves” (Birkinshaw and Hood, 1998, p. 774). For the Irish
pharmaceutical sector, this action is collaborative in the hope that breakthroughs might
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be found that would fundamentally change the competitive landscape (Leifer et al.,
2000):
For some of the companies, they view [collaboration] as much of a strategic benet to Ireland
as it was to their own individual companies […]. I think the nature of the companies in Ireland [is
that] for them, their competitors may be sister sites in other countries […]. [Kevin, University 3]
The way in which MNEs are structured in a global economy results in a more tangible
competition between subsidiaries in other countries, rather than with competitors in
Ireland. MNEs are beginning to recognise the advantages that can be gained through
pooling resources and expertise and this is reected in a more open attitude towards
collaboration (Fillieri et al., 2014). Importantly, this rationale enabled group members to
“construct themselves, the problem and the solution as part of a collaborative
framework in which the potential for joint action is both signicant and benecial”
(Hardy et al., 2005, p. 63). Thus, the desire to build “Ireland Inc.” provides an enduring
rationale for collaboration.
Know-how: creating structures, routines and practices
Participant narratives provide some insight into this changing attitude within the
industry. SSPC developed a very specic mandate in terms of focusing on improving the
crystallisation process. All participants engaged in lengthy discussions on how best to
deal with IP issues, and an IP committee was established. As a result, participants
decided to work on generic compounds, thus alleviating the fear associated with IP
infringement, and creating opportunities for the development of trust, which is
conceptualised as an important intervening construct in knowledge creation (Niu et al.,
2012):
So the rst thing that we did was we set in place communication sessions whereby we would
meet quarterly, we would work on generic compounds and demonstrate our capability. […] So
we did some basic research over the rst couple of years and showed that we could improve the
process […]. [Tom, University 1]
In September 2008, the academic partners underlined their commitment to the
collaboration process by rolling out training modules for collaborating partners, in
various locations, on topics specic to the cluster:
We were creating clustering opportunities, opportunities for them to share information. The
cluster really helped that because it structured it, it wasn’t just ad hoc. There were the coffee
sessions and the lunch sessions where people would get to talk but this was kind of how do we
codify the information and make it usable for others so you didn’t have to be at the training
sessions to hear about that bit of information. It’s much easier to share it once you’ve captured
it. [Donald, University 1]
High-level training was provided which focused on demonstrating the underlying
research behind the processes in which they were actively involved. Thus, the cluster
began to create an environment in which individuals could learn, engage in constructive
confrontations and challenge others’ points of view. These strategies helped to invoke a
focus on developing competences into know-how (Golant and Sillince, 2007), and was
intensied by encouraging MNEs to directly interact with academics to resolve any
crystallisation problems they had.
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The “program for action” was not determined in advance, but further evolved
through a long process of engagement and interaction, this structure evolved:
The whole thing has changed in the ve years […]. We started off with a programme for SFI
[…]. [but] at the mid-term review three years later, it was all completely different […]. And
that’s what they want from the cluster. [Philip, University 1]
In addition to providing training, clustering opportunities and more focused
problem-solving, the cluster embarked upon an ambitious venture to create a “best
practice crystallisation port”:
We looked at the manufacturing process of an active ingredient and we divided it into logical
blocks and see if we can put teams together that will study the state of the art in terms of
literature and what is happening in companies and write a best practice approach for
crystallisation of the pharmaceutical compound. So we said let’s put some academics, students
and industry people from different companies into 8 groups and put them working together. We
ended up with about 64 people working on this and I think the fact that we did this and we had the
training done kind of gelled the cluster early on. It broke down a lot of barriers because all of these
people were openly sharing information about how to do things. [Tom, University 1]
The cluster developed the Best Practice in Crystallisation website (BPX) that was
launched on the 6th of November 2009. The formation of BPX.i.e. is an innovation,
resulting from the combined efforts of academic and industrial members of the SSPC,
working together to dene the current state of the art in pharmaceutical crystallisation.
As such the BPX website is recognised within the cluster as a testament to the success
achieved through collaboration. Putting together eight teams involving academics,
students and industry, people allowed participants to work in small groups. A major
part of the process was capturing tacit knowledge and sharing it through a purpose built
website, essentially a form of knowledge codication. This was a hugely important
aspect of the learning relationship, with information becoming transparent, less sticky
and essentially easier to access. This had a profound impact on the learning community,
as it provided a designated arena to store and access the knowledge that was being
developed by the group. Ultimately, the learning that took place allowed each MNE to
transfer expert knowledge that was being developed by the SSPC group back to the
individual MNEs, thereby contributing to each MNE’s capability to compete more
effectively within their own corporate structures:
It probably has achieved more than we thought initially. That’s normal enough - you wouldn’t
anticipate everything, you know. But we’ve had very good people. They’ve all had their – there
has been a lot of engagement. The people involved are all genuinely interested. No one has left
the cluster. We’re all still together, we’re all working together. [Philip, University 1]
At the mid-term review, the extent to which the cluster had developed important
know-how becomes apparent:
Companies actually started to really buy into it. It was the rst time they thought it was a
relationship and they were learning. They found that they were learning as much from their
peers as they were from the academics. [Donald, University 1]
While the formation of the cluster may have been motivated by the creation of
capabilities for Ireland Inc., there is recognition that the actors and their companies have
also beneted. This is important for actors’ internal conversations in their own
companies (Hardy et al., 2005). Initially framed as Ireland Inc. against the “sister
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companies” in the global marketplace, one participant identies how this has in some
sense come full circle with the parent companies now beneting too:
Their reaction is “Oh my god you’re sharing stuff with [other Pharmaceutical]” followed by
“Can we get access to it?” […] that’s what the cluster is about, its taking that common
knowledge and putting it into one place. It’s very powerful. [Peter, Pharmaceutical Company 2]
Peter’s narrative provides some relevant perspective and context on the level of
innovation achievement that the SSPC has attained. Here, we see how the best practice
website represents a nal output that is valuable to parent organisations. While his
colleagues at Pharmaceutical Company 2 are initially shocked at the fact that this
information is being shared with others, their next reaction is to look for access. By
developing know-how by capturing, codifying and sharing knowledge, value is
ultimately created for the Irish rm, as they gain a specic area of expertise, which aids
them in competing against sister rms within their own corporate structure:
The bigger the company the more they tend to communicate with head ofce. They just want
them to know what’s going on. Sometimes there is a kind of perverse delight in saying
corporate couldn’t solve this problem but we did. [Philip, University 1]
“Narrativizing” the future
Interestingly, Philip recognises that because the cluster has been so successful, much of
the expertise held by academics has already been transferred:
We won’t always be the people they will work with. In many ways, a lot of the expertise we
have has been transferred, and will continue to be transferred through the graduates and the
PhD students in the coming years. There is also a sense in which the companies feel that
they’ve denitely beefed up their expertise in this particular area. [Philip, University 1]
While this might represent the end of this particular cycle of collaboration, it seems that
the industry has additional challenges that need to be solved. Moreover, despite the
rhetoric around the signicance of the industry to Ireland, Philip suggests that the
industry has secured very little national funding:
I suppose one of the things we’ve tried to make them aware of is that there is this enormous
Irish national R&D budget which is knocking around. And that as an industry the
pharmaceutical industry has got very little up to now. Some areas in which we have much less
either multinational or indigenous industries - or none for that matter - would have got a much
larger share of the pie than the pharma got. So they are now aware of this as well! And they are
being much more involved in lobbying so that they can ensure that they get a more signicant
part of the pie. [Philip, University 1]
While, to date, the industry has secured very little of the national R&D budget, industry
participants are now more actively employing the discourse to inuence how national
budgets are allocated. The cluster is currently developing a new proposal that focuses
on the synthesis phase, and it will seek signicantly more funding from SFI.
Discussion
The SSPC is presented here as a successful innovative cluster among ostensibly
competing MNEs in the Irish pharmaceutical industry. It is narrativised in this way by
participants, industry leaders and academics. While this part of the story is clearly
nearing completion, new challenges have been identied and through its current
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funding bids and collaborative research plans, the SSPC continues to be narrativised as
an organisation in pursuit of a quest. Whether this represents a new chapter in the
current story or a sequel is, as yet, unclear. In any case, the protagonists have learned
from each other, not only in terms of improving crystallisation processes, but more
fundamentally, in terms of effective innovation collaboration.
In terms of understanding how this innovation cluster works so effectively, the
members to whom we spoke articulated the moral legitimacy of the SSPC. In terms of the
modal constructions, the obligation to address industry problems is narrativised by
participants through reference to the burning platform. Industry-specic reports
published by governmental agencies served as a medium to construct and reinforce the
idea that the pharmaceutical sector was at a critical juncture.
By identifying the industry as an integral element of Ireland’s “knowledge economy”,
future success for both industry and country are integrally linked. Thus, addressing the
problems facing the pharmaceutical industry became an Irish problem, involving not
only industry participants but also government and academia. This “narrativization”
thus served to identify government and academia as important stakeholders with
signicant resources to be called upon. Pragmatically, the legitimacy and contribution
of SSPC to this agenda was achieved through developing specic competences. While
this helps us to understand some of the SSPC story, it does not particularly explain why
the cluster was so effective. Here, the work of Hardy et al. (2005) sheds some light, both
in terms of explaining how the SSPC was situated within wider societal discourses.
While obligation represents a strong “need for change” (Ford and Ford, 1995), it was
through the articulation of the vision for Ireland Inc. as a vibrant, successful knowledge
economy and location of choice for pharmaceutical manufacture that the modality of
desire was associated with the cluster (Golant and Sillince, 2007). Thus, an emergent
identity was discursively produced and provided a basis by which participants could
identify issues as being “relevant to their organisation and consequently identifying
themselves as interested and affected by it” (Hardy et al., 2005, p. 64). While the modal
constructions of either obligation or desire may have been sufcient to create a bond,
together they represent a compelling argument that identied “a context for action (also
termed “breach”) and a quest or set of objectives for the protagonist to respond to this
context” (Golant and Sillince, 2007, p. 1,153).
In this example, we see how various discourses were used to create the moral
obligation and the shared vision (desire), which led to routines, practices and artefacts
that demonstrated competence and know-how. Moreover, because this discourse was
embedded in government policy through funding mechanisms, it also secured access to
the necessary resources to realise the vision. Finally, the SSPC demonstrated know-how
through the creation and sharing of the BPX.i.e. website. The website became a further
artefact on which they could draw to signal their expertise in conversations with their
parent organisation. Thus, successful outcomes reinforce the discourse of collaboration,
rendering future successes more likely.
The wider discourse of collaboration also became a resource upon which actors could
draw to articulate how they might respond to the context and realise the vision. Because
this discourse is promoted in government reports and embodied in government
strategy, the protagonists were able to borrow from the discourse to secure the
necessary resources (in this case funding) that would enhance the possibilities of more
effective collaboration. This is because different stakeholders engage with discourse in
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ways that help to create the outcomes they desire. It was noticeable that the leaders
within the SSPC recognised the importance of discourse to innovation collaboration, and
on this basis, they successfully adjusted the use of terminology in relation to the
exchange partners they were addressing. When addressing potential partners within
industry and academia they utilised both the “burning platform” and “Ireland Inc.”
metaphors around the need for innovation and action. By focusing on the specic
problem of crystallisation, and using the discourse of collaboration, synergistic action
was inspired. When seeking approval from host organisations, they spoke in terms of
return on investment and the potential to add value, part of the discourse of
organisational effectiveness. Consequently, we stress the benets of understanding
audiences and adjusting discursive approaches on this basis.
Conclusion
In developing competitive advantage in MNEs, the ability to share and integrate
intra-organisational knowledge (Mäkelä et al., 2012) and inter-organisational knowledge
is critical. One way to achieve this is through collaboration within a social community
whose purpose is to create and transfer knowledge (Morosini, 2004). This paper
reiterates the centrality of a positive government policy (Arthurs et al., 2009) and the
pre-existence of social capital (Fillieri et al., 2014) in creating an innovation cluster.
However, it goes further by demonstrating how language, metaphor, narrative and
discourse (Hatch, 1997) becomes strategic resources on which actors can draw to create
desired realities (Hardy et al., 2000) particularly in terms of collaboration and
innovation. Moreover, this case highlights how dialogue between MNEs and academics
was encouraged throughout the process of establishing the cluster and has continued to
be an important element. Rather than imposing some grand design, the SSPC cluster is
and always will be emergent. In this sense, in the early stages of collaboration, detecting
and supporting existing and emergent communities was essential to success.
The emergence of the organisation as a protagonist in pursuit of a quest was explored
using Golant and Sillince’s (2007) four modalities, obligation,desire, competence and
know-how. The study concludes that the obligation stemmed from the need to address
industry problems in the pharmaceutical sector which was at a critical juncture. The
modal constructions of obligation and desire led to the establishment of routines,
practices and artefacts that demonstrated competence and know-how through the
creation and sharing of the BPX.i.e. website. This enabled resolution of two key
conditions essential for the success of each MNE involved – localisation and
maximisation of knowledge in Ireland, and the transfer of knowledge back to parent
organisations (see also Mudambi and Swift, 2011).
In conclusion, the context-specic narrative accounts provided in this study further
extend our understanding of the processes through which innovation is enacted (Ettlie
and Subramaniam, 2004). While the particular examples of how obligation, desire,
competence and know-how were mobilised may be peculiar to the Irish pharmaceutical
context, it is likely that in the creation of other clusters, these modalities are likely to be
equally important, if manifest in different ways. Second, we have articulated how
different discourses are mobilised by actors at different stages of development and for
different audiences to create desired innovation outcomes. Finally, we see how discourse
and practice are dynamic, as participants articulate their intention to exert further
inuence on innovation discourse through their lobbying activities. These insights can
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offer a useful conceptual framework for investigating the creation of other clusters as
well as a guide for managers as to how to positively inuence cluster success through
engaging and interacting with stakeholders within their particular environment.
Notes
1. The academic contributors are University of Limerick, National University of Ireland,
Galway, Trinity College Dublin, University College Dublin, and University College Cork. The
Pharmaceutical Company members are Janssen, Schering Plough, GlaxoSmithKline, Merck
Sharpe and Dohme, Roche, Pzer, Eli Lilly, Clarochem, Hovione, and Bristol Myers Squibb.
2. SSPC website is www2.ul.ie/web/WWW/Faculties/Science_%26_Engineering/Research/
Research_Institutes/MSSI/Research_Themes/SSPC/Governance (accessed 27 March 2015).
3. IBEC is a business clustering forum and within this there had been a pharmaceutical group in
existence since 1994. Strategic issues were discussed but no formal collaboration had emerged
until after the proposal for the SSPC cluster.
4. Pharmachemical Ireland is a subsidiary of the Irish Business and Employers Confederation
(IBEC) that focuses on the pharmaceutical and chemical industries in Ireland.
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Further reading
Dai, Z. (2012), “Toward a learning-based view of innovation”, Competitiveness Review: An
International Business Journal, Vol. 22 No. 1, pp. 18-27.
Corresponding author
Michele O’Dwyer can be contacted at: michele.odwyer@ul.ie
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