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Framing knowledge-based urban development


and absorptive capacity of urban regions: A
case-study of Limburg, the Netherlands

Article in International Journal of Knowledge-Based Development · January 2015


DOI: 10.1504/IJKBD.2015.074303

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314 Int. J. Knowledge-Based Development, Vol. 6, No. 4, 2015

Framing knowledge-based urban development and


absorptive capacity of urban regions: a case-study of
Limburg, the Netherlands

Patricia van Hemert* and Paul Louis Iske


Department of Organization and Strategy,
School of Business and Economics,
Maastricht University,
P.O. Box 616, 6200 MD, Maastricht
Email: ppvanhemert@gmail.com
Email: p.iske@maastrichtuniversity.nl
*Corresponding author

Abstract: Policy makers and developers increasingly stimulate economic


prosperity by promoting the integration and concentration of research,
technology, and human capital, inspired by research that places science central
in the city. KBUD research stands out in that, besides measuring the campuses’
characteristics, it also includes the effect of a number of external environments
on the successful development of a city. However, so far, it has overlooked the
importance of measuring absorptive quality of a city region. In this article, we
propose an extension of the knowledge-based urban development (KBUD)
model with an additional pillar that measures the level of absorptive quality of
a region on the basis of local networking and cooperation activity. The
extensive model shows that although the development program of the Limburg
region scores good in the field of economic quality, the absorptive capacity of
the region is less well developed. In particular, start-ups and SMEs in the
service sector need extra attention in order to successfully boost innovativeness
in the region.

Keywords: knowledge-based urban development; KBUD; absorptive capacity;


innovation; collaboration; networking; SMEs.

Reference to this paper should be made as follows: van Hemert, P. and


Iske, P.L. (2015) ‘Framing knowledge-based urban development and
absorptive capacity of urban regions: a case-study of Limburg, the
Netherlands’, Int. J. Knowledge-Based Development, Vol. 6, No. 4,
pp.314–349.

Biographical notes: Patricia van Hemert is a Postdoctoral Researcher of


‘Environments for Open Innovation’ at the Maastricht University. Since 2005
she worked as a researcher at the VU University Amsterdam, Center of
Entrepreneurship, on European, national and regional research projects in the
field of innovation, entrepreneurship and regional development. In spring 2012,
she has successfully defended her thesis on innovation networks of small and
medium-sized enterprises and their role on innovation performance. She has
published in a number of international journals.

Paul Louis Iske is a Professor of Open Innovation and Business Venturing at


the School of Business and Economics, Maastricht University, where he
specialises in open, innovative, sustainable and smart business models. To raise
understanding for the complexity of the world in general and innovation in

Copyright © 2015 Inderscience Enterprises Ltd.


Framing KBUD and absorptive capacity of urban regions 315

particular, he developed the Institute of Brilliant Failures, striving for fear


reduction, so that people are not afraid to experiment and to share their
learnings from endeavours that did not meet the expectations. He also worked
as Chief Dialogies Officer and Head of Innovation Centre at ABN Amro Bank
as well as Senior Physicist at Shell.

1 Introduction

To sustain economic growth, researchers have analysed many aspects of innovation on a


firm level, and governments have proposed different policies to encourage firms to
innovate. To understand how the innovation behaviour of firms affect the region or
country, their behaviour can be studied by means of regional or national innovation
systems (NIS). NIS specifically focus on how a system of innovation shapes competitive
advantage, while the regional innovation system (RIS) approach emphasises economic
and social interactions between agents (van Hemert, 2012). For cities that seek to
compete on the basis of knowledge production and innovation, knowledge-based urban
developments (KBUDs) are an increasingly common element of urban planning and
strategy making (Benneworth and Ratinho, 2014a). Although many policy concepts have
emerged over recent decades that have placed science central in the city, including
technopoles, science cities, knowledge quarters, and innovation districts (Castells and
Hall, 1994; van Winden et al., 2007), KBUD stands out in that it emphasises the
contribution of knowledge production and innovation to their host cities’ development.
In particular, the advocates of KBUD assume that local physical development will
drive urban upgrading within wider innovative production networks (Perry and May,
2010; Yigitcanlar and Velibeyoglu, 2008). Strong focus is thereby placed on globally
connected innovative actors, and much less on how they interact and affect places’ local
innovation dynamics (Benneworth and Dassen, 2011; Sarimin and Yigitcanlar, 2012). As
a result, KBUD is still sometimes regarded as a fuzzy or thinly spatialised concept. Smith
(2014) refers to confusion in KBUD that relates to a ‘missing middle’ between
understanding local activities and how that drives urban upgrading. Benneworth and
Ratinho (2014a) thus argue that future KBUD research should focus more on exploring
knowledge community-building dynamics, while policy makers should promote
constructing and anchoring those local knowledge communities to drive urban upgrading.
A similar remark is made by Trippl et al. (2015) concerning the life-cycle models of
cluster development. They argue that thus far, limited appreciation is given to the role
played by the wider regional environment, and the ways by which agents and their
activities impact the evolution of clusters.
In this paper, we follow in the footsteps of Benneworth and Ratinho (2014a) who
analysed one particular kind of KBUD concept, namely knowledge community precincts
(KCPs), in an attempt to better understand how local activities drive urban upgrading.
KCPs are physical developments bringing together diverse groups of globally connected
actors to stimulate urban creativity and innovation (Yigitcanlar, 2010). Drawing on the
microscale science park and incubator literature, Benneworth and Ratinho (2014a, 2014b)
investigated science park developments in Enschede, eastern Netherlands. They argue
that in order to understand how KCPs emerge and function, the interactive building of
precincts and knowledge communities should be considered in parallel, because little is
316 P. van Hemert and P.L. Iske

known about how to actively build these communities in particular places to stimulate
KBUD. Instruments and policies need to be developed to embed knowledge communities
within emergent knowledge districts. Lau and Lo (2015) add to this insight by
highlighting the critical role of regional actors in science and technology and regional
innovation policies in creating appropriate contexts for knowledge creation and transfer.
They believe that studying the regional actors’ absorptive capacity (AC) is crucial for
understanding the region’s capacity to innovate and achieve global competitiveness.
This study aims to elaborate on the above debate by incorporating some of the local
activities related to the KCP and AC in an extended KBUD model, building on cluster
and science park literature. An extended model that takes into consideration elements of
the AC of regional actors can contribute to a better analysis of how local communities
engage and enrol external actors and embed their resources into these precinct
communities. The model framework will be tested in the Limburg region in the southern
Netherlands. In this region, similar to the Enschede region, urban upgrading has taken
place in recent years involving the promotion of increased connectivity between public
and private parties and knowledge institutions through the development of science parks
and incubators.
In this article, an extended KBUD framework will be developed and tested by means
of a case-study method. This KBUD framework will analyse the strengths and
weaknesses of the economic development program of the Limburg region as well as its
most important opportunities and threats. The design of this article is as follows:
Section 2 will introduce the KBUD literature and the conceptual framework. In Section 3,
an extended framework will be introduced that also includes aspects of AC necessary for
successful cross-over. In Section 4, the research context will be introduced. The extended
framework will be applied to the case of the Limburg region in Section 5, and in
Section 6 the most important strengths, weaknesses, opportunities and threats will be
presented. Finally, results and conclusions will be presented in Section 7.

2 Conceptual framework of knowledge-based development of urban


regions

Innovation in the current knowledge-based economy does not just involve the use of
knowledge in new products, but is often determined by bringing together and merging
existing knowledge in a transdisciplinary manner; by networks interconnecting tasks,
people, technologies, firms and markets; and by an amalgam of knowledge, technology
and local culture and creativity (Hearn, 2008). This study aims to further conceptualise
the concept of KBUD by combining theories on KBUD with the concept of AC in order
to design a model that can connect the phenomenon of KBUD to the performance of
urban areas.
Knight (2008), Kunzmann (2008), Yigitcanlar (2009) and van Wezemael (2012) refer
to the concept of KBUD to capture the performance of a city or urban region as a
complex and multifaceted phenomenon. According to Yigitcanlar and Lönnqvist (2013),
the concept has become popular in many urban regions that aim to increase their
competitive edge, attract talent and investment and provide prosperity and a high quality
of life to their inhabitants.
Framing KBUD and absorptive capacity of urban regions 317

van Wezemael (2012) emphasises the heterogeneous context of KBUD, which can
offer a rich potential to seek alternative urban transitions. Fernandez-Maldonado and
Romein (2010) in this respect underline that for a KBUD to be sustainable a proper
balance between three KBUD perspectives is required to deliver concrete projects and
initiatives:
1 economic quality, which depends on a good business climate to produce prosperity
2 socio-spatial quality, which is based on a positive people climate for all people
3 organisational quality, which depends on coherence and consensus in the urban
region and an effective interaction between main stakeholders (i.e., government,
university, industry).
Yigitcanlar (2011) adds to this view that besides economic prosperity, socio-spatial order
and good governance KBUD should encourage environmental sustainability. As such, a
sustainable KBUD is concerned with economic, societal and spatial (both the built and
natural environment) development along with institutional development as an enabler of
the former three (see Figure 1). In order to sustain the necessary balance as suggested by
Fernandez-Maldonado and Romein (2010) between the four KBUD pillars, however,
cooperation in and between the pillars is essential. In the conceptual framework of
Yigitcanlar and Lönnqvist (2013) this cooperation is mainly shaped within the
institutional pillar, which serves as the enabler of the former three. Nevertheless,
increasingly in such prosperous knowledge milieus cooperation is stimulated by other
mechanisms that are less institutional and more ‘demand driven’.

Figure 1 Conceptual framework of KBUD (see online version for colours)

Socio-
economic
development

KBUD
acquisition Enviro-
Economic assimilation urban
development transformation development
exploitation

Institutional
development

Source: Based on Yigitcanlar and Lönnqvist (2013)


‘Demand driven’ refers to the shift of focus that has taken place in recent years towards a
strong ‘people climate’ to attract and retain talent in urban regions to form analytical
(science-based), synthetic (engineering-based), and symbolic (art-based) knowledge
bases (Asheim, 2007; Florida, 2002). Nowadays, it is believed that knowledge is held by
318 P. van Hemert and P.L. Iske

creative individuals, not firms, and that clustering supports collective learning in a city or
region. Individuals are keya, as the AC of the enterprise (whether private or social) will
depend on individuals who stand at the crossroad of the firm and the external
environment (Spithoven et al., 2010). For a cluster to thrive trust is important (Markusen,
1996). However, places must also be sufficiently porous allowing transient ideas and
people to pass by, generating an atmosphere of creative novelty (de Propris and
Hypponen, 2008). Further, co-location and coordination of overlapping but previously
unrelated sectors stimulates radical innovations (de Propris et al., 2009).
In order to create a proper balance between the four main pillars of KBUD, in a
sustainable KBUD, an environment needs to be created where people connect and
combine. This is also known as AC, which traditionally refers to a firm’s ability to create
and arrange the knowledge for developing operational capabilities to achieve a
competitive advantage (Zahra and George, 2002; Lane et al., 2006; Sun and Anderson,
2010). It is embedded in the systems, processes and routines of a firm (Todorova and
Durisin, 2007). AC generally entails four distinctive but complementary learning
processes: acquisition, assimilation, transformation and exploitation (Zahra and George,
2002). In Figure 1 these four forms of AC are depicted at the heart of the KBUD
conceptual framework, which implies that AC is essential to create KBUD. Acquisition
hereby refers to a regional actor’s (in the literature, generally firms) ability to identify and
acquire external knowledge that is important to its business. Assimilation refers to the
routines and processes that a regional actor uses to analyse, process, interpret and
understand the acquired information. Transformation refers to a regional actor’s ability to
build and purify the routines that combine existing knowledge with newly acquired
expertise. Lastly, exploitation refers to a regional actor’s ability to exploit existing and
transformed knowledge into its operations.

3 Extended framework to asses KBUD and the performance of urban


regions

Science park and cluster literature have highlighted an extensive list of factors that can be
considered crucial for successful knowledge-based development in any designated area.
There is empirical evidence linking clusters to economic benefits including increased
firm productivity (Madsen et al., 2003; Szforzi, 1990), entrepreneurship (Feldman, 2001;
Guiso and Schivardi, 2007; Rocha and Sternberg, 2005; Rosenthal and Strange, 2005),
local employment growth (Audretsch and Dohse, 2004; Fingleton et al., 2008; Wennberg
and Lindqvist, 2008) and local wages (Brenner and Gildner, 2006; Porter, 2003; Wheaton
and Lewis, 2002). For our extended framework, we have chosen to elaborate in particular
on the findings of a study on clusters, innovation and entrepreneurship of the OECD
(2009) that studied seven internationally important bio-technology clusters (Grenoble,
France; Vienna, Austria; Waterloo, Canada; Madison, Wisconsin, USA; Dunedin, New
Zealand; Oxfordshire, UK; Medicon Valley, Sweden/Denmark). Biotechnology is often
considered a sector for which clustering has particular benefits because it relies heavily
on the transfer of tacit knowledge. Our aim is to construct an extended framework to
asses KBUD that also includes the human capital and social capital elements that are
necessary for successful new combinations by integrating key factors and obstacles
highlighted in the OECD (2009) report in the different pillars of the KBUD framework.
Framing KBUD and absorptive capacity of urban regions 319

In the next paragraph, we will test our extended framework on the Maastricht region and
cluster developments that are taking place there, as part of the central goals of Brainport
2020.

3.1 Institutional quality


Clusters are generally considered as associations consisting of a strong fabric of small
and medium-sized enterprises (SMEs), which often draw on collaborations with a few
key large enterprises and/or universities and research organisations for their innovation
and competitiveness. These networks are important for the growth of SMEs as they
provide the opportunities for identifying customers, sharing information and financial
support, thus helping build supply chains. Since Porter (1998a, 1998b) addressed the
political dimension of clusters to national governments by highlighting their critical role
in raising the performance of the local economy, clusters have become as much a power-
laden political construction as they are a market-driven economic construction (Bathelt
and Taylor, 2002). From a political perspective, effective coordination of public policies
based on a common strategy is thus often highlighted, together with a need to strengthen
public-private partnerships and involvement of the private sector in initiatives to develop
clusters, both in terms of their knowledge of cluster needs, and in terms of the financial
and other resources they can offer the development process (OECD, 2009).
In the innovation literature, this form of coordination is often referred to as triple
helix cooperation between the business sector, knowledge institutions and government
institutions (Etzkowitz and Leydesdorff, 1995, 1997). Increasingly, however, the
inclusion of financial parties as a separate helix is advocated in order to better balance the
needs of the business sector (Rabobank, 2014; Beetsma and Bouwens, 2013; Canoy and
van Toledo, 2011). In particular in the development phase of an innovation or start-up,
financial support is needed that generally does not come from within the business sector
due to the high risks involved, but is provided either by government subsidies or financial
institutions that also have a different risk position than business firms. For this reason,
when addressing cooperation for innovation, it is suggested that it is better to refer to
quadruple helix, i.e., also including financial institutions.
In order to coordinate public policies and regional initiatives, the OECD (2009)
advices to:
a Create strong partnerships.
b To develop a joint strategy for the cluster. Solid partnerships between key
enterprises, local government authorities, university institutions and the business
community facilitate the implementation of economic development projects and the
definition of common initiatives and types of support from which the cluster could
benefit, particularly if the financial sector is also involved. An infrastructure
consisting of universities, research institutions, as well as private businesses is a
defining characteristic of clusters and science parks throughout the world (Phan
et al., 2005) and a well-discussed topic in urban studies (Moulaert and Sekia, 2003).
Further, increasingly.
c The encouragement of new activities is highlighted as a means to overcome
economic instable times.
320 P. van Hemert and P.L. Iske

Both industry and researchers see active management as a defining condition to science
parks and incubation activities (Amirahmadi and Saff, 1993). In particular, it is important
to create policies which encourage the emergence of new activities in complementary
knowledge sectors to the existing base of the cluster in order to make sure innovations
evolve at the same pace as knowledge. Leading enterprises and universities and research
centres of international reputation are essential elements for growth. They are the
fundament of entrepreneurial activities in an area.

3.2 Economic quality


Also, venture capital and other sources of private of mixed financing are essential to meet
the need of advanced technology development, especially at the start-up phase and until
production is under way. Venture capital is a form of equity financing particularly
important for young companies with innovation and growth potential but untested
business models and no track record; it replaces and/or complements traditional bank
finance. The development of the venture capital industry is considered as part of the
framework conditions to stimulate innovative entrepreneurship (OECD/World Bank,
2014). The OECD (2009) particularly highlights the importance of the support of
national, regional and local authorities to the financing of research infrastructure and
research projects as well as universities and public research institutes. This support needs
to be sustained over time and responsive to changes in markets and technologies.
In order to stimulate an entrepreneurial environment and enhance economic quality of
a cluster, the OECD (2009) suggests the following:
a finance areas of incubation and spin-outs
b stimulate an entrepreneurial culture by familiarising researchers with creation and
promoting entrepreneurship education
c create public funds for SMEs
d provide financing and advice
e allow creators to keep intellectual property
f establish a marketing centre.
The first four recommendations concern the encouragement of entrepreneurship and
innovation, both in a university as well as in a business environment. The distribution of
high-tech, knowledge-based service and spin-off companies are popular tools among
policy makers and urban developers to promote job creation and economic prosperity
(Norrman and Bager-Sjogren, 2010; Shane, 2009). In the same fashion, business
incubators have become ubiquitous in today’s economy, supporting new business by
providing infrastructure and an array of business support activities, and facilitating
professional networks (EC, 2002). With regards to financing, the OECD also highlights
the involvement of private investors in the activities of the cluster, the establishment of a
technology transfer bureau, improvement of access to finance by means of tax incentives,
etc., and the organisation of recurrent events which serve as platforms for investors and
entrepreneurs to meet. The last two recommendations are more specifically targeted at a
better marketing of products. The public research sector often has limited capacity to
Framing KBUD and absorptive capacity of urban regions 321

promote the products and innovations in the market. Cooperation with the private sector
can in this respect be beneficial. Establishing a marketing centre for products resulting
from academic research located in the very heart of university is an innovative approach
tried in Ontario (Wolfe, 2009). The centre serves as a public relations bureau linking the
economic reality of the results of academic research and vice-versa, so as better to
identify a potential market. Also, the OECD (2009) argues that universities can play a
more important role in marketing if they have an active intellectual property policy.

3.3 Socio-economic quality


In the technology-gap tradition, human capital is often regarded as the single most
important factor shaping a country’s capability to imitate and absorb foreign advanced
technologies (Verspagen, 1991; Benhabib and Spiegel, 1994; Papageorgiou, 2002;
Stokke, 2008). The OECD (2009) also brings to the attention the important issue for
several of the clusters in the study concerning the training of qualified staff capable of
anticipating and responding to changes in the markets and technologies, covering not just
the highly skilled such as researchers and professionals, but also skilled staff, for example
laboratory assistants and operators of sophisticated machinery. Global economic
developments make it necessary that the human capital constantly adjusts to new needs,
but is also sufficiently challenged. This requires both adequate training programs, which
may need to be coordinated or supported by the public sector and an infrastructure and
quality of life to attract labour from other areas. This stems from the idea that
communities are not just born with global connections but can be actively and
strategically constructed (Lagendijk, 2011). Further the OECD report points out the
possibility that the growth of clusters may give rise to an increase in internal social
inequalities within agglomerations between ‘high-tech’ employees and other strata of the
population. This can stem from disparities in incomes and levels of activities of the
various groups in the labour market, but also from increases in the cost of living. This
could undermine support for the cluster.
There are several ways in which quality of human capital can be ensured in a cluster
environment. The OECD (2009) mentions four, namely:
a The adaptation of university programs.
b The creation of databases to anticipate skills needs1.
c Attracting talent from abroad.
d Offering technical training programs. The latter can draw on the capacities of the less
skilled and steer them towards new employment niches in the core of the cluster. In
order to address social inequalities, the OECD further suggests.
e The investment in social housing.

3.4 Enviro-urban quality


The provision of a favourable environment is considered an important condition for the
attraction and growth of the human capital in the area. Modern science parks act as
co-developers of new companies, addressing all phases of the innovation process, from
R&D to commercialisation (Hansson et al., 2005), actively managing and facilitating
322 P. van Hemert and P.L. Iske

knowledge exchange, both between tenants but also the wider environment (Bigliardi
et al., 2006; Ratinho and Henriques, 2010). Social networks, people-oriented services,
communications and infrastructure are some of the many elements which have an impact
on the attraction and retention of the highly skilled population. Infrastructure, in this
respect, deserves extra attention. The rapid recent economic growth of the clusters studies
by the OECD (2009), for example, has in some cases led to significant problems of
congestion in their host agglomerations that impeded further growth, particularly where
the cluster dominated the agglomeration and there was little capacity to expand the
agglomeration because of planning or physical constraints. Strong growth in constrained
agglomerations was particularly associated with rising land and property prices, rising
wage costs, increasing commuting times and transport problems.
In order to maintain the quality of the environment, the OECD suggests measures to
improve:
a Accessibility of road traffic to reduce congestion. The creation of free car parks on
the outskirts of town is suggested. This seemed to have had good results in
Oxfordshire (Lawton Smith, 2009).
b Increased investment in local communications infrastructure.
c Increased investment in public transport is suggested to alleviate road congestion
problems.
d Planning policies that disperse activity out of the more congested parts of the
agglomeration could be considered, although they should not be implemented at the
cost of the environmental qualities of the region.
This can lead to local opposition.

3.5 Absorptive quality


A key activity that has not been actively addressed in previous KBUD studies that deals
specifically with the capability to learn and improve necessary for innovation and
competitiveness is AC. Lau and Lo (2015) recently explored the effects of RISs on the
AC of firms, who they argue are the main actors in creating innovation performance in a
region. Their capacity to innovate is partly determined by their own capacities and partly
by their AC to interact with various regional sectors (Fischer, 2001). Enhancing
collaboration and networking within the region is important to economic development
and sustainable competitive advantages (Cooke et al., 1997; Kajikawa et al., 2012), but it
is unclear how different types of external interactions at the regional level affect the
internal capability development of the firm (Romijn and Albaladejo, 2002). Clearly, there
is a need to better understand local knowledge pools’ dynamics and their territorial
consequences in terms of their wider connectivity (Benner, 2003; Roberts, 2014). In
particular, a better understanding of these dynamics may be beneficial for knowledge
sourcing in SMEs, as they still often generate knowledge either by internal R&D or by
external technology sourcing due to smallness and attention-allocation problems (Alvarez
and Iske, 2015). In today’s increasingly complex and knowledge-intensive world with
shortened product life cycles, networking has become even more important than before,
in particular for innovative SMEs, who often need to draw heavily on their networks to
find missing innovation sources (van de Vrande et al., 2009).
Framing KBUD and absorptive capacity of urban regions 323

AC refers to a firm’s ability to utilise external knowledge through the sequential


learning processes of acquisition, assimilation, transformation and exploitation (Lewin
et al., 2011; Zahra and George, 2002). The external environment thus affects the firm’s
incentive to develop AC, according to the AC literature. Cohen and Levinthal (1990)
suggest that such incentives include external funding to support R&D activities, extensive
knowledge spillovers, low learning costs and a large amount of available external
technological knowledge. Zahra and George (2002) propose that the diversity of external
knowledge affects the acquisition and assimilation capacity of a firm, while the similarity
of external knowledge to internal knowledge improves the transformation and
exploitation capacities of a firm. In order to improve economic development and
sustainable competitive advantage, it therefore appears important for policy makers and
urban planners to affect the firm’s incentive to develop AC primarily through the active
enhancement of collaboration and networking.
According to the OECD (2009), collaboration in the cluster and between clusters can
be encouraged in several ways, namely by:
a creating formal projects for collaboration between clusters
b involving non-members in the core activities of the cluster
c communicating the benefits of collaboration.
Interaction between the players of the triple helix (government, industry, research) is
central in most local innovation policies. Usually, networking takes place within the
cluster, but if more clusters co-exist it is beneficial to actively link the networks in the
different clusters and weave new relations in the emerging technologies to create a
stronger critical mass2. Involving SMEs and very SMEs of more traditional sectors is also
suggested, because they have strong regional roots and can often contribute to some of
the cluster’s core projects with their know-how. Chambers of commerce can help
formalise targeted collaboration projects with enterprises outside the cluster core3.
Another way in which non-members can be involved in the core activities of the
cluster is via the development of specifically technological enterprise networks. The
actual inclusion of SMEs in formal networks is considered to help to create a climate of
trust between members of the clusters which encourages collaboration. Open
communication mechanisms, like online platforms, can be further beneficial in sending
the message of the positive advantages of cooperation. In east London, for example,
noisy networks are being generated through face to face contact followed up by tweets,
Facebook and LinkedIn groups (Foord, 2013). The proliferation of tech-celebrity events,
meet-ups, hacks and mentoring schemes contribute to a growing sense of an ‘ecosystem’
of interconnected individuals for whom place-based face-to-face contact is particularly
important. Startups work with neighbouring companies on pitches and projects, which
helps their businesses because the area is increasingly attracting talent.
A mix of a variety of policy actions are suggested to help SMEs to overcome barriers
to cooperation4. Finally, trust and networking is also enhanced by: d) the creation of
(interactive) meeting spaces. This is a typical form of combinatoric innovation, whereby
an (often physical) environment is created for innovative value (Iske, 2011). The OECD
(2009) underlines the importance of providing for both the more formal meeting spaces
that provide services such as workshops to share knowledge, and seminars and
conferences to encourage dialogue, and the more informal social meeting spaces to
generate a ‘cafeteria’ effect that stimulates informal exchanges. The OECD considers
324 P. van Hemert and P.L. Iske

informal exchanges to be just as important as those which take place around a working
table.

3.6 Performance
The economic performance can be measured in a variety of ways, for example by looking
at the total life sciences turnover in a region. Cluster development also leads to a
considerable growth in the number of new and small firms and employment. With regard
to the latter, in the case of Medicon Valley in the border region of Denmark and Sweden,
empirical data shows that the employment in life sciences activity has increased by 30%
in Denmark and 40% in Sweden during the period 1997–2009. Further, clusters are often
associated with a strong fabric of SMEs, which often draw on collaborations with a few
key large enterprises and/or universities and research organisations for their innovation
and competitiveness. In Medicon Valley, for example, the strong industrial base shows a
clear predominance of large companies (mainly pharma), with some medium sized
companies in med-tech and therapeutics and reinforced by the inflow of foreign
companies, among them some world-leading pharmaceuticals (del Carmen et al., 2012).
The new biotech start-ups that were created (146 in the period 1997–2006 in Denmark),
are predominantly involved in drug discovery and development or diagnostics. Many of
them were launched as university spin-offs (55%) but a considerable number of them
(45%) were spin-outs from the large pharmaceutical companies, mainly on the Danish
side.
Although, in our extensive model, we will focus on the measurement of economic
performance in the more traditional sense, there is a growing need to develop advanced
performance measures that also take into consideration economic, social, and
environmental sustainability relating to urban regeneration. In a sustainable city, all
decisions taken are based on an evaluation of whether their consequences will be
beneficial to sustainable development within the city. At the moment, there is no
international policy regarding sustainable cities and there are no established international
standards. On a European Union level, however, practical tools to be used in strategic
target-setting could be the commitments of the Aalborg Charter (1994). The Charter is an
urban environment sustainability initiative approved by the participants at the first
European Conference on Sustainable Cities & Towns in Aalborg, Denmark. It is inspired
by the Rio Earth Summit’s Local Agenda 21 plan, and was developed to contribute to the
European Union’s environmental action program, ‘towards sustainability’. The Charter’s
commitments encompass a list of qualitative objectives organised into ten holistic
themes, namely:
1 governance
2 urban management
3 natural common goods
4 responsible consumption
5 planning and design
6 better mobility
7 local action for health
Framing KBUD and absorptive capacity of urban regions 325

8 sustainable local economy


9 social equity and justice
10 local to global.
According to the sustainablecities.eu website5, “to date the Charter [is] the single most
successful European effort in sustainable urban development”.

Figure 2 Model structure and main development indicators

Performance
Turnover
Firms
Jobs

Absorptive quality
a) formal projects for
collaboration
b) involving non-members
c) communicating benefits
d) (informal) meeting spaces

Economic quality Enviro-urban quality


Socio-economic quality
a) finance incubation a) accessibility
a) adaptation of
b) stimulate b) local communication
university programs
entrepreneurial culture infrastructure
b) skill databases
c) public funds for SMEs c) public transport
c) attracting talent
d) finance and advice d) alternative planning
d) technical training
e) IP ownership policies
e) social housing
f) marketing centre

Institutional quality
a) strong (triple-helix)
partnerships
b) joint strategy
c) encourage new
activities

Figure 2 gives a schematic overview of the extended model structure and the main
indicators that determine the successfulness of a cluster policy or KBUD. For example,
the evaluation of KBUD policy in the paper of Romein et al. (2011) was based on only
one indicator, i.e., growth of employment, being the main objective of these policies in
the city of Delft. For a broader diversity of schemes to measure performance, a reference
can be made to the overview of evaluation studies of science parks as planning tool by
van Geenhuizen and Soetanto (2008).
326 P. van Hemert and P.L. Iske

4 Research context

In this study, the Limburg region will serve as a case study for further analysis of KBUD.
Located in a geographically peripheral, slightly closed and economically depressed area
in the 1970s, Limburg has turned into an ambitious, confident and progressive region
within Europe. This turnaround had a lot to do with the successful restructuring process
that Limburg, and especially South Limburg, underwent after the closing of the mines in
1965–1975. Undoubtedly, the process of European integration also served as a catalyst.
Since 2000, KBUD in Limburg has further intensified with a strong focus on
entrepreneurship, and strong collaboration between industry, knowledge institutes and
government in the triple helix and participative involvement of civic society in several
focal sectors, namely chemistry and materials and life sciences and health with
increasingly strong crossovers to logistics, agro-food, care, energy, smart services and
leisure (LED, 2014). On a national policy level, Limburg is increasingly considered part
of the larger economic area Brainport Southeast Netherlands. According to this national
development policy, the development of the Dutch economy supports on three
geographical pillars; Airport Amsterdam, Seaport Rotterdam and Brainport Southeast
Netherlands.
Despite the large scale investments in the economy in the past years, however,
Limburg is still facing a demographic transition in terms of stagnating population growth
and an ageing society. Population shrinkage in Limburg is largely due to declining
employment in traditional manufacturing sectors and the related migration to other
regions in the Netherlands. For long, it was more convenient for people from the Limburg
area to move to central regions, where one could choose from a large supply and a wide
variety of jobs. Increasingly, policy interventions have been initiated in Limburg that aim
to revitalise the Limburg economy. To become an attractive region, a vital economy, a
dynamic labour market, strong job creation and attractive living conditions are essential.
So far, however, not all of these conditions seem to be sufficiently addressed in the
development policy of the Limburg region. R&D investments in Limburg have been
declining, whereas R&D investments in the Netherlands have increased. Also, Limburg
shows a declining share in total Dutch GDP due to stagnating population growth in
Limburg (Martinez-Fernandez et al., 2013).
So, similar to the case-study of Benneworth and Ratinho (2014b), despite the efforts
of policy makers, the position of the Limburg region is not at the same level of
Eindhoven region yet. In particular, lack of improvements in the cross-city connectivity
elements was considered an important bottleneck in the Enschede case-study. By means
of the extended KBUD model, we aim to investigate if similar bottlenecks can be
discerned in the Limburg region.

5 KBUD of the Limburg region: model application

In this section, our aim is to test the KBUD or cluster developments of the Limburg
region by means of the model introduced in the previous section. Limburg is the most
southern province of the Netherlands bordering Germany and Belgium. It is located
between the main metropolitan areas of Europe: Randstad Holland and Brussels to the
west and the German Rhine-Ruhr area to the east. Limburg is renowned for its logistics
expertise, industrial focus and multilingual labour force. The area’s key industries are:
Framing KBUD and absorptive capacity of urban regions 327

chemical industry, life sciences/healthcare, agro-food, logistics, contact centres, solar


energy, automotive and high tech systems6.

5.1 Institutional quality of Limburg region


After closing the mines (period 1965–1975) and in the context of national regional
development policy (1975–1990), the Limburg region has been through a period in which
it was quite sharply supported by the Dutch national government. Since 1985, the
national regional development policy, however, has made way for a policy that was based
more on the dynamics and strength of regions. In addition, the self-organising capacity of
regions was stimulated. In this period, also, innovation was introduced in the field of
regional development and stimulation. Since the middle of the 90s, spatial planning has
become dominant in regional policy. As a regional development company, the Limburg
Development and Investment Company (LIOF) was given the task to strengthen the
economic structure of the province of Limburg. LIOF was originally established as a
regional (development) institute to implement national regional policy in Limburg.
Nowadays, LIOF focuses primarily on financing companies, advising and supporting
enterprises (development and innovation), recruiting firms and investors and, more
recently, the development of industrial sites. The Dutch state is the largest stakeholder
(94.4%) while the province and municipalities together with the Chamber of Commerce
have a small stake (respectively 5.4% and 0.2%).
Local Limburg organisations have a strong tradition of working together on matters
of regional development, also with national government institutions. For example, the
establishment of the university in 1976 was the result of successful political lobbying
aimed at university training deficit in Limburg (Soete et al., 2000). As a result, triple
helix partnership aimed at regional development is well developed in the region. In a
triple-helix context, LIOF still plays a leading together with the Province Limburg and
the knowledge institutions Maastricht University, Maastricht UMC+ and Zuyd University
of Professional Education. At the moment, the most prestigious project or joint strategy
for the region is the campus master plan, which is part of the broader development
program Brainport 2020. Brainport 2020 is a Cabinet assignment that aims to stimulate
the Southeast Netherlands to become among the top three European top technology
regions and in the top ten on a global scale (Brainport 2020, 2011). In first instance, half
a billion euros will be invested in the accelerated development of the Chemelot Campus
in Sittard-Geleen and the Maastricht Health Campus, with the aim to develop 2,100 new
jobs for knowledge workers and many thousands of additional jobs in indirect
employment in the region (Provincie Limburg, 2012). Under the umbrella of this master
plan, in the coming ten years also many new activities will be stimulated.
The plan of the Chemelot Campus was created by a special public-private partnership
of the Province of Limburg, DSM and Maastricht University/Maastricht University
Medical Center +. Since March 2010, these parties are united in a consortium. The plan
Maastricht Health Campus is the result of a partnership between the Province of
Limburg, the city of Maastricht, Maastricht University/Maastricht University Medical
Center + and LIOF. The master plan includes an acceleration of the campus as
specialised valorisation campus, where activity is being developed from a medical,
neuroscience and health research perspective. The master plan foresees that the campuses
will be controlled by one organisation. The ambitions are big. Limburg wants to be top in
the world in the field of research and new materials and improved health. The plan fits
328 P. van Hemert and P.L. Iske

into the government’s policy to put Southeast Netherlands Brainport on the map.
Brainport is destined to become one of the economic engines of the Netherlands together
with Seaport (Rotterdam) and Main Port (Amsterdam). The Chemelot Campus, according
to a study by the Dutch government, is already a campus of national importance and the
Maastricht campus also has that potential.
Other educational and research institutions (MBO/HBO), local authorities (Sittard –
Geleen, Heerlen and Maastricht) and the regional development agency LIOF are also
involved in the campus development in South Limburg. The Limburg Economic
Development Foundation (LED) is a partnership between local business, government and
education that supports the realisation of the Brainport 2020 program in South Limburg,
whereby LED concentrates in particular on SMEs and on achieving the €5 billion
revenue increase in SMEs in the context of Brainport 2020.

5.2 Economic quality of Limburg region


Background to Limburg’s active participation in the large scale investment program
Brainport 2020 is the realisation that the competitiveness of the region is under pressure.
The region structurally needs to come at a higher pace of development in order to
maintain its economic competitiveness and regional prosperity. This will be an important
challenge, for one because South Limburg traditionally has comparatively less innovative
SMEs than elsewhere in the country (EIM, 2006). Also, in percentages, the total number
of entrepreneurs in the region still falls behind strong entrepreneurial regions like North
Brabant, and North and South Holland (see Table 1).
Table 1 Provincial background of Dutch entrepreneurs in percentages, 2010

Province Share in total entrepreneurs


Groningen 3.6%
Friesland 4.3%
Drenthe 2.6%
Overijssel 6.1%
Flevoland 2.1%
Gelderland 12.0%
Utrecht 7.3%
North Holland 18.8%
South Holland 19.4%
Zeeland 2.3%
North Brabant 15.9%
Limburg 5.6%
Total 100.0%
Source: EIM/Panteia (2013)
According to LED (2014), in 2008 6.5 enterprises were started per 1,000 inhabitants in
the Netherlands. In Limburg, only 5.2 enterprises were started per 1,000 inhabitants. The
region South Limburg falls behind with 4.9 starting enterprises. In 2010, this situation has
remained unchanged. Limburg still falls behind the national average of 7.4 enterprises
with 5.6% enterprises per 1,000 inhabitants (see Table 1). So, although Limburg ranks
Framing KBUD and absorptive capacity of urban regions 329

third behind North Brabant and Utrecht as successful innovation region, analysis shows
that this position is mainly based on the investments in R&D of the multinational
companies. We can therefore conclude that in particular entrepreneurship needs to be
further stimulated in order to successfully boost competitiveness in the Limburg region.
Overall, four investment programs are initiated to achieve the additional increase of
gross regional product in South Limburg (LED, 2014):
• €1 billion revenue increase can be achieved through additional investments that will
take place in multinational companies. An example is the investment of VDL/Nedcar
in the production of the new BMW Mini from mid-2014 in Sittard Geleen.
• €2.5 billion can be realised by the investments of the Province, DSM, Maastricht
University and AZM in the development of the Chemelot Campus and Maastricht
Health Campus.
• €2.5 billion can be realised indirectly as a result of the developments of both
campuses for regional SMEs.
• €2.5 billion can be realised by profit increase of regional SMEs in other leading
sectors.
The knowledge axis Limburg, however, is broader than South Limburg and also includes
North and Central Limburg. Together with the three Brabant areas they form the six
Brainport 2020 sub regions. As a result, Greenport Venlo also forms part of the initiatives
to turn the campuses in the Limburg region into attractive locations with a strong appeal
to existing and new entrepreneurs, knowledge workers and leading research and teaching.
Greenport Venlo is one of the six Greenports in the Netherlands and is regarded as the
most versatile horticultural area of Europe. It is an inter-regional network of
entrepreneurs, research, education and government in the areas of food, fresh flowers
with a strong relationship to logistics and manufacturing industry.
Another more recent campus initiative in the region that has been adopted by the
larger Brainport 2020 program is the Smart Services Hub. The Smart Services Hub is
unique triple-helix cooperation among 18 participants in the Heerlen region. Within this
partnership, smart solutions are developed in the field of HRM and innovation for
financial and business services. Background to this campus initiative is that the current
developments in the field of big data are revolutionary. Never before has it been possible
to collect as much data to analyse smart and other data link. And ultimately translate into
user applications. However, the current knowledge of staff and students does not yet meet
the market demands. The initiators of the Smart Services Hub believe that this
quantitative and qualitative mismatch with the labour market can be averted with new
policies, innovations in curricula and training and retraining.
With the accelerated development of the campuses, Limburg aims to become world
leading in the field of developing and launching new products such as biomaterials in the
market. The campuses already account for 55% of the patents, 45% of private R&D
investments and 35% of the Dutch exports (Provincie Limburg, 2012). The Chemelot
Campus is considered one of the six campuses of national importance.
The Material and Life Sciences Chemelot Campus in Sittard – Geleen has proved
successful in the past period and acts as a magnet. Since its start in 2005, there are
43 new companies, accounting for thousands of new jobs. These are companies that like
to work with multinational companies such as DSM and SABIC, but also global and now
330 P. van Hemert and P.L. Iske

established on campus innovative SMEs. The campus is located on the Chemelot site,
and with 800 acres and 5,500 knowledge workers is one of the largest chemical and
materials complexes in Europe. A short distance away lies the Maastricht Health
Campus, also an economic growth engine with 7,500 employees and a 40 companies,
including renowned players like Medtronic and Boston Scientific.
Public funds for innovative SMEs are also made available. Recently, the formation of
the Chemelot venture fund was completed by the Province, LIOF, DSM and Rabobank.
With a volume of approximately €40 million, it is one of the largest venture funds of the
Netherlands (LED, 2014). Also, it is one of the most prominent examples of quadruple
helix cooperation in the Netherlands, because, at a very early stage, a financial services
provider (here: Rabobank) is co-venturing the financial support of innovative enterprises
in a cluster (Rabobank, 2014). Initiatives for general campus information centres are also
being developed. The Chemelot Campus Experience will be situated in a building called
the ‘Centrecourt’. The project aims to bring technical innovations in the limelight,
interest students for technical education and help SMEs on the campuses.
Similar initiatives have been launched at the Maastricht Health Campus. On 29
October 2013, the Brains Unlimited scanning lab was launched. Brains Unlimited is a
European Centre of Excellence for ultra-high magnetic field MRI and neuroscience in
Maastricht. Through an integrated platform for imaging community, scientists and
companies are better able to find the key to common diseases such as Alzheimer’s,
Parkinson’s, epilepsy and MS and gain more insight into the evolution of human
behaviour. Brains Unlimited also provides knowledge transfer and stimulates
entrepreneurship in the specific field of mental health and cognitive neuroscience. For
this purpose, mid 2012, an incubator was made available.

5.3 Socio-economic quality of Limburg region


Approximately 30 years ago, a transition of the workforce occurred in Limburg that was
not only tinted by the closure of the mines but also by the concomitant rise of the ‘new
industry’ of that time. Government and the province, jointly responsible for the
restructuring process, proposed themselves the task of working away the difference
between the regional and rural unemployment rate. Additional budgetary interacted for
financing of new initiatives and projects. Within the framework of the dispersal of
government services the transfers of government institutions such as the ABP Pension
Fund (ABP) and the Central Bureau of Statistics (CBS) to Heerlen meant a considerable
amount of new, mainly administrative, jobs (Hamer et al., 1991). Important for the
employment rate was also the founding of the University of Limburg in 1976.
At the moment, the Limburg province is the province with the highest proportion of
over-45s (50% of the total population) and over-65s (over 20%). As a result,
entrepreneurs in the region increasingly face the changing labour market. Both the
retention of experienced staff and attracting new talent into the future will play an
important role. Already, there is a great need for knowledge workers in Limburg. To cope
with the mismatch between demand and supply of higher educated personnel, companies
like DSM are compelled to attract talent from outside the region.
An important condition for the success of the Brainport 2020 scenario is thus that an
adequate supply of quality and staff at all levels is ensured. Approximately 75% of the
work will be at lower secondary and vocational levels. Staff at university and college
level, as well as knowledge workers (WO/HBO with years of experience) will have to be
Framing KBUD and absorptive capacity of urban regions 331

recruited at the national, regional, Euroregion and international level (LED, 2014).
Socio-economic focus of the Brainport 2020 policy for Limburg is therefore focused on
the exploitation of the cross-border opportunities, both in terms of the development of
new knowledge institutions in the field of labour. But focus is also on increasing the
participation of the regional workforce and the stimulation of the number of students
choosing for a study and career in engineering and other strategic sectors in the region.
Already, Maastricht UMC+ et al. (2013) have realised projects in the field of
development of new knowledge and training, in line with the needs of the business.
Examples of new knowledge projects are Brains Unlimited, Bachelor Science Degree,
CHILL, EIZT and Neber. The ‘knowledge axis (Kennis/As)’ policy initiatives have given
these developments an additional (financial) boost. Also, other important steps have been
the development of the Maastricht Aachen Institute for Biobased Materials (AMIBM)
and the Institute for Science and Technology (Inscite). The vocational courses work on a
quality improvement in the field of technical vocational (Top Technology in Business) in
line with the national Technology Pact to fulfil the needs at subject level. On a
government level, the central government, but for the most part the province, are
financially heavily involved in these large-scale investment programs.
Due to the strong emphasis on attracting talent, the region is also aware that housing
issues (housing and living environment) should be higher on the agenda in order to
increase attractiveness of the region and improve ‘quality of life’. So far, however, a
stronger focus on housing issues has only been addressed as a recommendation for South
Limburg for their 2014 program by public result, an urban development bureau that
assesses the progress and implementation of the economic program in South Limburg
(LED, 2014). According to public result, such a ‘quality of life’ housing policy should
also actively involve the smaller municipalities in the region.

5.4 Enviro-urban quality of Limburg region


According to an ING (2012), Limburg offers plenty of space for the establishment of new
companies. There is enough space for the creation of new business areas and there is
hardly any traffic congestion, as is the case in the Randstad. Also, for foreign
entrepreneurs, the region offers opportunities. According to figures from the Netherlands
Foreign Investment Agency (NFIA), as many as 15 foreign companies settled in 2011.
Many infrastructural developments are already taking place on a national level, or as
part of the Brainport 2020 vision. The A2 motorway from Amsterdam via Utrecht and
Eindhoven Maastricht is considered the knowledge axis of the Netherlands. The urban
and economic development in this area is good. Fast and appropriate connections
between the economic zones along the A2 and transportation nodes in the city centres are
considered essential on a national as well as regional level, but the intermediate green
landscapes (such as countryside and the river landscape and the green forest) should be
explicitly kept open, in order to keep the quality of life intact.
Several priority tasks for area of Brabant and Limburg, as included in the regional
agendas of the Multi-Annual Program for Infrastructure and Transport (MIRT) are
speeded up. For the MIT program Limburg, this means that various large infrastructural
developments are achieved, for example, a railway access for the supply and delivery of
raw materials and chemical products of CHEMaterials Park, a direct rail link to the new
RWTH campus, and the TGV station in Aachen, an outer ring for better connections with
surrounding areas and Germany.
332 P. van Hemert and P.L. Iske

Figure 3 NFIA results 2011 (see online version for colours)

In addition to the local developments, a study will be conducted to international


(economic ) opportunities of the entire development axis A2 Amsterdam-Maastricht. This
study also includes care for current and future mobility needs along the A2 zone. This
will have a relationship with the Olympic main structure, timetable-free driving, the
extension of intercity trains to Aachen, Düsseldorf and Liège (rail network from 2015 to
2025) and long-term ambition of a high-speed train through Southeast Netherlands
announced in the Randstad 2040 vision (Gebiedsagenda Brabant, 2010).
On a project level, logistics is also one of the economic spearheads of Limburg. This
currently revolves around two axes: North Limburg and to a lesser extent, South
Limburg, especially in and around the multimodal hub Born. Numerous projects are
initiated by LIOF, LED and Greenport Venlo Innovation Centre to strengthen the
logistics sector by means of innovation in clusters consisting of companies and research
institutions, to more contingent projects aimed at strengthening the physical infrastructure
– particularly rail and water – as well as the knowledge and education infrastructure and
labour.
In the same respect, another economic spearhead, leisure, is considered to add value
to the ‘quality of life’ in particularly the South Limburg region. Target for the leisure
sector is mainly to achieve a substantial growth of residential tourism in South Limburg
by extending the stays and improving occupancy especially on weekdays and during
weak months (LED, 2014). The possible developments for this sector have been explored
in 2012 and 2013. For 2014, the aim is to further mastermind the 8 strategic focal points
that vary from focus on landscape development, sustainability and local products to the
development of South Limburg into an urban entertainment zone like Orlando in Florida,
US.
Framing KBUD and absorptive capacity of urban regions 333

In order to stimulate cooperation between the campuses, several smaller and larger
infrastructural projects are considered to contribute to further exchange, like the
construction of the A2-tunnel. In Maastricht, for two kilometres the A2 is interrupted by a
motorway (with traffic) and is called N2. The N2 runs through Maastricht and regularly
causes congestion, door and noise. After years of lobbying by the municipality, the road
will be tunnelled over several years. The tunnel will be placed under the current
trajectory of the N2, which will become a green zone in Maastricht. Also, the tunnel
consists of an upper part (traffic) and a lower part (through traffic), each with 2 × 2 lanes.
The tunnels will be constructed above the other. The highest point of the tunnel will be
1.5 metres below ground. Above that is the green zone.
There thus appears a strong realisation that good connections between the knowledge
clusters are essential, as well as good connections between cross-border knowledge
regions like Aken, Luik and Leuven. Therefore, focus lies on improving the (inter)
national accessibility of the central cities and economic clusters in particular through
public transport and road network, as well as promoting cross-border commuting in
favour of employment and education (Gebiedsagenda Limburg, 2011).
With regards to the communication infrastructure, a roll-out strategy is designed to
accelerate and broaden the construction of the digital infrastructure in Southeast
Netherlands. These are so-called next generation access (NGA) networks: digital
networks with blazing speed, including fibre glass. At present, approximately 15% of the
homes and businesses in Southeast Netherlands have connection to NGA broadband
networks (Brainport 2020, 2011).

5.5 Absorptive quality of Limburg region


The campus developments of the Chemelot Campus, the Maastricht Health Campus and
Greenport Venlo are considered key for the future of the Limburg region. Investments in
the campus developments, in particular research facilities, a capital fund-ups, education
and real estate are thus considerable, adding up to about half a billion Euros for the
coming ten years (Provincie Limburg, 2012).
Focus lies on open innovation, which creates spin-off with new products that can be
put quickly into the market. Companies, organisations and governments who collectively
believe in the future are considered necessary to make the program successful. But also, a
good environment with the right organisational conditions and space for venture capital is
needed.
LIOF currently plays a central role in the creation of networks and clustering
between the campuses and between campuses and the business sector. In 2012, for
example, LIOF has developed and €22 got million approved. This innovation was 15%
above the project’s target of €19.1 million. Approximately, 60 Limburg (SME)
companies participated in the projects, in addition to several dozen (SME) enterprises
outside Limburg, knowledge and educational institutions and other parties (LIOF, 2013).
Innovation projects took the form of network meetings, workshops and symposia to bring
parties from different regions together and to support the development of collaborative
projects in the fields of healthcare, materials, systems, logistics and agro/food, and to a
lesser extent energy.
For the South Limburg region, LED also plays an (additional) role in bringing parties
together, but focuses more in particular on involving local SMEs. According to LED,
what SMEs need most in this area is support in making knowledge available and finding
334 P. van Hemert and P.L. Iske

the right partners. The latter is essential. During a stakeholder conference consisting of
200 partners of LED on 18 December 2013, it was agreed that for 2014 strengthening the
involvement of regional SMEs should become top priority (LED, 2014). Also, an in line
with the previous recommendation, it was agreed that further commitment is necessary to
strengthen the chain density as a condition for increasing the innovativeness of SMEs.
Compared to Eindhoven, the development of business networks and supra regional
contacts falls behind in the (south) Limburg region. Companies apparently find each
other too little and work less than elsewhere together to develop new products and bring
these products to market.
During the LED stakeholder conference the importance of the chain density was
explained as follows: the regional economic desired effect is strongly dependent on the
extent to which companies within one and the same region work together in the chain,
innovate together and produce for each other. This effect is further enhanced when the
staff also comes from the region and the wage income is spent in the same region.
So far, chain density is stimulated mainly through so called ‘acceleration tables
(versnellingstafels)’, stimulating active participation of SMEs in the innovation projects
of LIOF and LED, and the Limburg makers program.
In the coming years, the ‘acceleration tables’ must both lead to quicker and more
specific project proposals, and also increase the number of SMEs participating in campus
projects. ‘Acceleration tables’ usually consist of a relatively small group of five or six
people with an external consultant, from different disciplines, but with enough interfaces.
In a short time, about four sessions, the idea is to get some innovative ideas on the table
and to become acquainted with different methodologies, leading to concrete projects for
participating SMEs. These projects are then presented to LED for core funding. In this
way, the acceleration tables are the breeding ground of new products and business
activity.
The Limburg makers program aims to structurally reinforce the competitiveness of
the manufacturing industry in Limburg. The ambition is to use a mix of activities and
tools to stimulate the creation of new products or services over a period of three years to
achieve execution ready business plans to support performance improvement and actively
strengthen or realise one or more networks of industrial enterprises, knowledge and
educational institutions. Networking is stimulated in workshops and ‘bootcamps’ and
also subsidies are made available to gain access to knowledge in other companies or
knowledge institutions.
According to the stakeholders present at the LED conference, what SMEs in the
Limburg region need is support in making knowledge and finding the right partners. The
latter is essential. Several other studies highlight the positive relationship that exists for
SMEs between cooperation with (large and/or foreign) firms and product innovation
(Hessels, 2012). To turn ideas into innovation, SMEs will thus have to find knowledge
partners, preferably large or foreign. There are already various programs for specific
sectors in which the parties are brought together, but an important objective is to involve
SMEs more explicitly in Brainport 2020 and LED initiatives.
Framing KBUD and absorptive capacity of urban regions 335

5.6 Performance of Limburg region


On a national policy level, Limburg is increasingly considered part of the larger
economic area Brainport Southeast Netherlands. Also, on an international level, Limburg
is regarded as part of the South Netherlands. The OECD regional database, for example,
gives information about the science and technology performance of the different
European and international knowledge and technology hubs. This OECD data shows that
South Netherlands distinguishes itself from other hubs particularly on the number of PCT
patent applications (Figure 4). However, a closer look at Figure 5 shows that the number
of patent applications is much higher in Noord Brabant than in Limburg. The same
pattern is visible for the regional employment rate in South Netherlands (Figure 6)
compared to the employment rate in Noord Brabant and Limburg (Figure 7).

Figure 4 PCT patent applications per million inhabitants in 2010 (see online version for colours)
450
400
350
300
250
200
150
100
50
0

Note: Fractional count; by inventor and priority year.


Source: OECD Regional Database, selection of peer regions in knowledge
and technology hubs category

Figure 5 PCT patent applications per million inhabitants (see online version for colours)

600

500

400

300

200

100

0
Noord-Brabant Limburg (NL)

Note: Fractional count; by inventor and priority year in Noord-Brabant and Limburg.
Source: OECD Regional Database, selection of peer regions in knowledge
and technology hubs category
336 P. van Hemert and P.L. Iske

Figure 6 Regional employment rate (see online version for colours)

Source: OECD Regional Database, selection of peer regions in knowledge


and technology hubs category

Figure 7 Employment rate in Noord-Brabant and Limburg (see online version for colours)

Source: OECD regional database, selection of peer regions in knowledge and


technology hubs category
When the main features of the policy profile of Limburg are highlighted, it appears that
‘ambition’ and ‘self-consciousness’ have not always been equally strong characteristics
of the region in the past 25 years. The once high dependence on coal (monoculture), the
peripheral location within the Netherlands and the disadvantaged with respect to
education and training determined to a large extent the image of Limburg as weak and
backward region that undeniable needed financial support from national governments.
Limburg has now overcome this image to a significant extent (Soete et al., 2000).
In Limburg as a whole, in 2014 there is slight growth of the regional economy
(0.3%), which is supported by the rebounding exports in industry and logistics (see
Table 2). The growth in Limburg is tempered by contraction in the construction, retail
and the government sectors that, similar to healthcare, decline in volume in 2014.
Flevoland is expected to be the Dutch province with the highest growth in 2014 (1.2%).
North Brabant comes second place and has the highest growth € in absolute terms
Framing KBUD and absorptive capacity of urban regions 337

(€ 300 million). The (+combination of the leading position of the export-oriented industry
in North Brabant and the positive outlook for, in particular, foreign demand is the growth
engine of this province. The three provinces that make the largest contributions to the
Dutch GDP are South Holland (22%), North Holland (18%) and North Brabant (15%).
These are also the three provinces that show the highest economic growth after
Flevoland.
Table 2 Economic growth Dutch provinces in 2013 and 2014

Growth 2013 Growth 2014


Groningen 0.5% 0.1%
Friesland –1.1% 0.0%
Drenthe –1.4% –0.1%
Overijssel –1.3% 0.5%
Flevoland –0.7% 1.2%
Gelderland –1.3% 0.2%
Utrecht –1.1% 0.4%
North Holland –0.8% 0.7%
South Holland –1.1% 0.6%
Zeeland –1.9% 0.6%
North Brabant –1.2% 0.8%
Limburg –1.7% 0.3%
Netherlands –1.0% 0.5%
Source: ING (2013)
Although Limburg saw a slight growth of the economy in 2013, Limburg is faced with
many challenges. In the coming years, the economic growth is likely to be relatively low,
and entrepreneurs will suffer the consequences of the shrinking labour market. At the
moment, unemployment in Limburg is rising slightly faster than in the Netherlands as a
whole, causing unemployment rates, that were still below Dutch levels in 2011 and 2012,
to be at the same level as the national level in 2013 and 2014, namely 8.4% in 2013 and
9.0% in 2014 (ING, 2013). As in Brabant, the growth of the number of job seekers is
mainly visible among the highly educated in Limburg. Mostly, these are young people
who struggle to find a first job, despite the fact that more than 3,300 jobs are offered.
However, also in the age groups 27–50 and 50+ years, there are now more people looking
for work than a year ago. The Limburg qualitative mismatch between supply and demand
in the labour market remains strong. Central and especially North Limburg have a lower
unemployment than South Limburg.
In the first three quarters of 2013, the number of start-ups increased compared to a
year earlier. This shows that many entrepreneurs do not see the current economic climate
as a barrier. Apparently, regionally, there are more entrepreneurs who see opportunities
to start a business than nationally. In addition, however, it should also be noted that there
is a large group of starters that, due to a sharply decreased chance of finding a salaried
job, are forced to start as an entrepreneur. Together, these entrepreneurs ensure that
Limburg has 3% more starters in 2013. On a national level, growth was almost 2%. In
particular in industry and retail, in 2013 significantly more companies start than in 2012.
338 P. van Hemert and P.L. Iske

Construction, wholesale and care are currently less popular. In absolute numbers, South
Limburg has the highest number of starters, but the strongest growth is in North Limburg.
The number of start-ups in North Limburg shows a clear growth in the first three
quarters of 2013. In the Netherlands, their number is growing by 1.9%, while the number
of new businesses in North Limburg is more than 12% higher than a year earlier. In
Central Limburg, the number of start-ups increased in 2013. In the first three quarters of
2013, growth was almost 4%, nationwide the increase was 2%. Most new businesses in
North and Central Limburg start in business services, also many people start a business in
the retail sector (both stores and online shops) or care. South Limburg is the only
Limburg region that saw a slight decline (1.1%) in the number of starting companies in
the first half of 2013. This may indicate a decline in confidence to start business.
However, also a decrease in the (working) population can lower the number of new
companies. Nevertheless, in total, South Limburg has more start-ups than North and
Central Limburg together. Overall, when compared to the Netherlands, in Limburg
especially entrepreneurs in industry and retail saw opportunities to start a business.

6 Results

Based on the above analysis, the following strengths, weaknesses, opportunities and
threats are identified for the Limburg region (see Table 3).
Table 3 SWOT analysis of KBUD initiatives in the Limburg region

Strengths Weaknesses
• Strong (triple-helix) partnerships • Involving non-members
• Joint strategy • Communicating benefits
• Incubation • (Informal) meeting spaces
• Entrepreneurial culture
• Public funds for SMEs
• Finance and advice
• Adaptation of university programs
• Technical training
• Formal projects for collaboration
Opportunities Threats
• Quadruple helix partnerships • Social housing
• Encouragement of new activities • Attracting talent
• IP ownership
• Marketing centres
• Skill database
• Accessibility
• Local communication Infrastructure
• Public transport
• Alternative planning policies
Framing KBUD and absorptive capacity of urban regions 339

Limburg has shown a remarkable economic recovery in the past 30 years. Due to the
strong supportive role of national and local government, triple helix cooperation is
traditionally well embedded in the region’s development culture. More recently, the
active participation of Rabobank in the investment programs of the LIOF, has further
strengthened innovation cooperation in the direction of a quadruple helix. The presence
of development companies like LIOF and LED in the region seem to have increased the
effectiveness of the Brainport 2020 initiatives that have been developed over the past
years, although the Province and the knowledge institutions Maastricht University and
Hogeschool Zuyd are in the lead. Although many initiatives are still in a start-up phase,
the region seems well equipped for successful KBUD from a local university-industry
knowledge community perspective (Blazek and Zizalova, 2010; Etzkowitz, 2012; Gertner
et al., 2011; Kasabov, 2008). However, not much is known yet about how to actively
build these communities in places to stimulate KBUD (Benneworth and Ratinho, 2014a),
particularly given the fact that these local knowledge communities are themselves
embedded in wider networks that can be conceptualised at a variety of scales, including
networks of practice, epistemic communities and knowledge collectivities, or even
imagined communities (Amin and Roberts, 2008). There is a strong realisation that the
attraction of international innovative firms and talent are highly important for bringing in
external competences and knowledge. Increasingly, developments to improve
enviro-urban and socio-economic quality are also receiving more attention.
In 2014, Limburg shows a slight economic growth (ING, 2013). However, the
sudden growth of the unemployment level indicates that particularly the province’s
socio-economic quality is still somewhat unstable. The current labour market conditions
are mainly responsible for a decrease of the interest in young people for the workforce.
However, also in the age groups 27–50 and 50+ years more people are looking for work
than a year ago. Attracting new talent and retaining experienced staff should therefore be
one of the main focal points of a KBUD for the Limburg region. Our case study shows
that this is indeed the case. Good examples are the projects in the field of development of
new knowledge and training that have already been realised by Maastricht University and
Hogeschool Zuyd, like Brains Unlimited and the Bachelor Science Degree. Besides
adaptation and innovation in the university programs, new vocational courses are set up
to improve the level of technical training in the region. Also, the current investment
programs of LIOF and LED in the campuses and related business development are
expected to create a considerable amount of new jobs in the region. The performance of
the chemical industry may serve as an example here.
Overall, a limited number of sectors is leading the recovery. The manufacturing
industry and the chemical industry clearly benefit from the solid demand from abroad
(ING, 2013). This also applies for logistics and related services. Growth is thus mainly
present in the north of the province; Central and South Limburg are doing relatively less
well. This is partly due to the more positive contribution of the population development
in the north compared to the south, but North Limburg also benefits from the higher
presence of companies in the engineering and electrical industry. South Limburg, on the
other hand, has the highest number of start-ups, although in the first half of 2013 the
number of start-ups slightly declined. To a certain extent, the relatively high
unemployment level may have positively affected the number of start-ups in Limburg.
This may also explain why Limburg traditionally has less innovative SMEs than
elsewhere in the Netherlands.
340 P. van Hemert and P.L. Iske

Figure 8 Overview of most important weaknesses and threats for the Limburg region in the
KBUD model (see online version for colours)

Performance
Turnover
Firms Weaknesses i.e.: -better
Jobs involvement in campus
initiatives and investment
programmes – encouragement
of supra regional partnerships

Combinatoric quality
a) formal projects for collaboration

b) involving non-members
c) communicating benefits
d) (informal) meeting spaces

Socio-economic quality Economic quality


a) finance incubation Enviro-urban quality
a) adaptation of a) accessibility
university programmes b) stimulate
entrepreneurial culture b) local communication
b) skill infrastructure
c) attracting talent c) public funds for SMEs
d) finance and advice c) public transport
d) technical training e) IP ownership d) alternative planning
e) social housing f) marketing centre policies

Threats i.e.: -long-term perspective


Institutional quality
focused on improving housing
a) strong (triple-helix)
quality – stimulate career
partnerships
(entrepreneurship) possibilities of
b) joint strategy
youth c) encourage new
activities

Although the economic quality in Limburg is stimulated to an increasing extent through


incubation activities, entrepreneurship education and training, public and private funds,
etc., the above economic developments underline the current mismatch between the
economic developments that are taking place on and around the campuses and local
economic development. Benneworth and Ratinho (2014a), in their study of the
technopole developments in Enschede in the eastern Netherlands, likewise argue that it is
not enough merely to bring globally connected actors together, but that active work
developing the conncetivity of actors (and creating new actors embedded in these
communities) also has value. Here, the mismatch may be partly caused by the weak
development of business networks in the region compared to Brabant (LED, 2014).
According to LED, local SMEs find it difficult to make knowledge available and find the
right partner. Better involvement of local SMEs in the campus initiatives and investments
programs may lead to more business activity and more innovative start-ups. Also, supra
regional partnerships should be further encouraged as Limburg is an important exporting
region. The combinatoric quality of the region thus needs further stimulation, mainly
through the better involvement of non-members (i.e., local SMEs) in formal projects for
Framing KBUD and absorptive capacity of urban regions 341

collaboration, better communication of the benefits to local SMEs and accessible and
informal meeting spaces (see Figure 8).
Several initiatives have already been undertaken to improve involvement of local
SMEs in the current innovation projects, for example by means of the ‘acceleration
tables’ and the Limburg makers program. These programs are mainly set up to help
SMEs participate in innovation projects of LIOF and LED and finding partners to
cooperate with. Focus is on SMEs that are active in the field of manufacturing. As of yet,
there are no studies that have evaluated these programs longitudinally. In the future, such
a study could give better insight into the success and fail factors of these and other
initiatives and the specific (changing) needs of local SMEs in this respect. As 25% of the
SMEs in Limburg are active in the services industry and another 24% in the retail sector7,
the (socio-)economic quality of the region could also benefit from a more specific focus
on innovation initiatives specifically targeted towards the service and retail sectors. An
interesting initiative in this respect may be the Smart ServicesHub8, which is currently
setting up an ‘Expertise and Innovation Center for Smart Services and Business
Intelligence’ around the financial and administrative business activities that are strongly
represented in South Limburg including AZL, CBS, APG, de Tax and Customs
Administration (Belastingdienst) and various European shared service centres. The Smart
Services Hub will focus on supporting spin-offs and start-ups that focus on the
implementation of financial accounting processes, with the underlying idea that the
presence of high-quality financial and administrative processes may also further
strengthen the interrelationship between the different campuses in the region.
At the moment, the different campuses in Limburg are working on developing
individual meeting spaces, under the umbrella organisation Brightlands. Brightlands
offers accommodation, business and talent support, and a community focused on
innovation in a global context9. In 2016, an important meeting space will be realised at
the Brightlands Chemelot Campus, i.e., the Brightlands Chemelot Campus Center Court.
The Court is set up to become the heart of the Chemelot Campus. Center Court will
accommodate Chemelot Innovation and Learning Labs (CHILL), the Maastricht Science
Programme (University of Maastricht) and the DSM Innovation Center. Also, a service
boulevard will be housed there, as well as extensive conference facilities, a meeting
place, and location with extensive sports and exercise facilities. Another meeting space
will arise in 2017 at the Brightlands Maastricht Health Campus, Mosae Vita, which will
be a meeting space for the population and health practitioners to experience and be
involved in the development of innovative products and services that help people lead a
conscious healthy lifestyle. Brightlands Campus Greenport Venlo has an innovation
centre that serves as a network location for firms in the region. So far, there are no plans
to develop an informal meeting space with a specific bridge function between the
different sector-specific meeting spaces in order to better reach the non-innovative SMEs.
An informal network space for freelancers and SMEs active in the service sector, retail,
etc. could be of added value for the region, since, regionally, these are sectors where
many start-ups are active.
Investment in social housing is another important condition mentioned in the 2009
OECD report that has not been actively addressed by the Province and municipalities.
Already, the importance of housing for the region was highlighted by Public Result in
their assessment of the economic program of LED (2014). Also, the issue is addressed in
the regional agenda of the Province (Gebiedsagenda Limburg, 2011), but at the moment
there does not seem to be national financial support available. It is believed that the
342 P. van Hemert and P.L. Iske

restructuring assignment in South Limburg and especially Heerlen/Parkstad is so


complex, unique and urgent that a joint action by central government, provinces,
municipalities, community organisations and corporations is inevitable. In particular,
demographic change and the mismatch between demand and supply may in the near
future cause declining home values, rising vacancy, deterioration and social isolation. In
the coming years, more attention should thus be focused on addressing the housing issue.

7 Conclusions

Increasingly, innovation literature argues that in order to improve innovation


performance, firms need to strengthen their AC, while knowledge is often created within
wider networks, making actor’s connectivity critical for enhancing AC an improving
place specific competitiveness (Amin and Roberts, 2008; Coe et al., 2004). The plea by
Benneworth and Ratinho (2014a) for more knowledge community connectivity in
strategic urban science projects is thus a plea for strengthening of urban AC. For the
Limburg region, overall, the KBUDs that have been developed over the years are very
promising. If we look at the developments in Limburg from an AC perspective, however,
there is room for improvement. Unemployment in Limburg, for example, is still
relatively high compared to the other Dutch provinces. This is partly caused by a negative
population development, but also partly by a mismatch between labour market demand
and supply. There seems to be a considerable group that is not (yet) able to benefit from
the economic developments in the region. The current unemployment also seems to
positively affect the number of start-ups in the region. These start-ups are generally not
innovative and a majority of the SMEs in the Limburg region is active in services or
retail. As most of the investment projects of the Province and other triple-helix partners
focus on manufacturing firms, it seems unlikely that they are well able to benefit from the
current knowledge-based developments. Better involvement of these kinds of firms in
formal collaboration projects may increase the overall level of innovation and firm
growth in the region, which may lead to more varied jobs in the area. Recent
developments in the Brightland campuses are promising, but need to be studied in more
detail and for a longer period of time in order to truly grasp their effect on the Limburg
economy.
KBUD is one of those concepts that looks specifically at the contribution of
innovation and knowledge production, often in the form of campuses or technopoles, to
their host cities’ development. The KBUD approach stands out from other approaches in
so far that it has developed a framework that also measures other sub-national conditions
and neighbouring spatial environments that can affect a city’s innovation performance
(Fritsch and Graf, 2011). For this reason, focus has been on the model and theories of
KBUD in this article. In order to analyse how innovative actors interact and affect places’
local innovation dynamics, similar to Benneworth and Ratinho (2014a), we have tried to
apply the KBUD theory to active community-building processes and the dynamics of the
wider knowledge connectivities within which they are embedded. To adequately explore
these local knowledge community-building dynamics, we argue in this article that AC
should be included in future KBUD research. Ideally, AC should be studied both at the
regional level by means of the intensity and proximity of networking, and at the firm
level through firms’ internal capability to learn and improve. In this way, KBUD research
can overcome much of the confusion around simplifying built form, innovation activities,
Framing KBUD and absorptive capacity of urban regions 343

and growth outcomes in urban areas (Forsyth, 2014). Although, we are aware that the
above results are based on qualitative case-study analysis only, we believe that the study
of the Limburg region has shown the potential of KBUD as an instrument for analysing
local knowledge development. In particular, quantitative analysis of survey data can help
to provide yet deeper insight into the mechanisms behind cooperation behaviour and its
effect on innovation performance of firms and regions, whereby innovation performance
in the KBUD model should ideally also include the analysis of sustainable performance
measures like environmental impact, minimisation of required inputs of energy, water
and food, and waste output of heat, air pollution – CO2, methane, and water pollution.

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Notes
1 The creation of trend databases and the forecasting of skill needs were approaches that were
successfully adopted.
2 Good examples of such projects, according to the OECD (Lawton Smith, 2009) are the
Oxford-Cambridge Arc, an organization that focuses particularly on the establishment of
networking in emerging and disruptive technologies, and the UK-Medicon Valley Challenge
Programme, promoting research exchange and interaction between organizations in the
Medicon Valley cluster and the biotech clusters in Cambridge, London, Liverpool-Manchester
and Edinburgh.
3 The OECD (Potter, 2009) refers in this respect to the Metis project in Grenoble, a number of
R&D projects aimed at disseminating micro-nano technologies to SMEs in traditional sectors
such as textiles and paper.
4 The Vienna cluster in particular showed this need to mix policy actions in order to stimulate
SMEs to co-operate. The insertion into national and international networks and collaborations
is considered to be of utmost importance (Tödtling and Trippl, 2009).
5 http://www.sustainablecities.eu/aalborg-process/charter.
Framing KBUD and absorptive capacity of urban regions 349

6 http://www.nfia.nl/province_of_limburg.html.
7 http://www.mkblimburg.nl/over-ons/mkb-limburg/over-ons2/.
8 http://www.smartserviceshub.nl/.
9 http://www.brightlands.com/.