ENTREPRENEURSHIP & REGIONAL DEVELOPMENT, 14 (2002) , 155 ± 174
Emergence-based local Economic Development Model:
a way forward in responding to turbulent operating
environments
QUAYE BOTCHWAY
ECOTEC Research & Consulting Limited, Priestley House, 28± 34 Albert
Street, Birmingham B4 7UD, UK; e-mail: Quaye_ Botchway@ ecotec.co.uk
GEORGE GOODALL and DAVID NOON
Centre for Local Economic Development, Coventry Business School, Coventry
University, Coventry, UK
MARK LEMON
International Ecotechnology Research Centre, Department of Enterprise
Integration, School of Industrial Manufacturin g Science, Cran® eld
University, Cran® eld, UK
This paper seeks to present a new approach to the implementation of local economic development policies. It takes evidence from such areas as physics, biology, and management theory
and proposes that a new ` model’ may be the way forward for economic development activities.
The new paradigm is based upon research carried out in the Coventry area of the United
Kingdom (UK). The paper has a ® ve-part structure. Initially, it will provide an overview of
underlying local economic and management trends in the UK. This is followed by an examination of underpinning theories and how these can be used. The third section will report on local
economic development agencies (LEDAs) which operate in and around Coventry. The last two
sections will draw the strands together to propose an Emergence-based local Economic
Development Model.
Keywords: local economic development; industrial dynamics; turbulence; emergence; Coventry
(UK).
1.
Introduction
Since the late 1970s the operating environments of local economies in the UK have
become more challenging to manage (Roberts 1993, Healey et al. 1995, Kearns and
Paddison 2000). For example, the most signi® cant cause of such a challenge, according to Kearns and Paddison (2000: 845), has been the impact of the shift towards
` economic globalisation involving mobile capital investments, the emergence of worldwide economic sectors, international institutions and the emergence of global spectacle’ . Consequently, models for local government have had to adapt towards local
governance (Botchway and Goodall 1999). Several factors are at work here but two
main themes can be detected as relevant to this paper. First, the torrent of legislation
throughout the 1980s and 1990s that aÚ ected the core powers and responsibilities of
local governance. A major eÚ ect was the introduction of a split between the development of policy and its monitoring, and the implementation of policy ` on the ground’ .
Entrepreneurshi p and Regional Development ISSN 0898± 5626 print/ISSN 1464± 5114 online # 2002 Taylor & Francis Ltd
http://www.tandf.co.uk/journals
DOI: 10.1080 /0898562021012507 4
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The consequence for local governance was the introduction of a competitive bidding
model accompanied by greater use of performance indicators towards achieving
greater value for money.
The consequences of these legislative changes led to more intervention by central
government into local governance and Local Economic Development Agencies
(LEDAs) operations . Similarly, Steel and Liddle (1996) argue that the potential for
central government intervention meant that any long-term strategy formulation by
LEDAs would be impossible. Following Stacey (1993), Steel and Liddle (1996: 14)
pointed out that ` the only planning possible for an organisation in a turbulent
environment is short term planning where the future is relatively predictable’ . This
implies that current planning models fall short of meeting the long-term needs of local
economies.
The second theme revolves around changes in the allocation of ® nancial resources
for local economic development. From a system of funding for economic development
based upon social deprivation criteria in the 1980s, the concept of competitive bidding
for resources from central government, which would lead to leverage, was introduced.
Leverage included using capital funds from such sources as the European Union
Structural Funds, the UK National Lottery and the private sector. In the latter
part of the 1990s international economic performance aÚ ected the level of inward
investment into the UK, particularly from mainland Europe and the Far East (Brand
et al. 2000). The decision of the German BMW car maker to withdraw from vehicle
assembly by its Rover subsidiary in Birmingham in early 2000 is a high pro® le example of how LEDAs will have to adapt in a substantial way to withstanding the
shocks generated by a ` turbulent’ operating environment.
It is clear from a UK perspective that many long-term or strategic decisions were
being sacri® ced to pressures to respond quickly to short-term harsh operating environments (Roberts 1993, Steel and Liddle 1996). However, there is a growing body of
academic commentators (Solesbury 1981, Wannop 1986, Lawless 1988, Robson et al.
1994, Fordham et al. 1999, Roberts and Lloyd 2000) who are arguing for the development of longer term strategic approaches. Such approaches, it is argued (Fuller and
Moran 2001: 60), can be explored through ` a metaphorical language of complexity
(which) may provide building blocks for explaining behaviour . . . and modelling
these to explore alternative and plausible future behaviours’ . Thus to address this
development need, it is important that we turn to an examination of the theories of
management practice under complex and turbulent conditions.
2.
Underpinning theories
This section draws largely from JeÚ rey’ s (1997) review of the management literature
under turbulent conditions. Signi® cantly, this has been long associated with uncertainties. Thus it has been suggested, for example, by Simon (1960) and Cyert and
March (1963) that organizations seeking to avoid uncertainties should introduce
stabilizing behaviour including the smoothing and buÚ ering of ¯ uctuations.
Attempts to justify the use of such behaviour was provided by Lev (1975) among
others, who used portfolio theory as a basis for investigating and con® rming such
claims. It was identi® ed that the management style suited to a turbulent operating
environment appears to be that of conservatism, contingency planning and minimizing risk exposure. Consequently, contingency theories and other planning and/or
EMERGENCE-BASED ECONOMIC DEVELOPMENT MODEL
157
management approaches have been used to draw attention to ¯ exibility (Rosenhead et
al. 1987), adaptivity and diversity (Sachdeva 1984) as essential frameworks for addressing problems.
In local economic development, very little empirical data exist that describe occasions where such frameworks have been put to the test. However in Europe there is
evidence which points to the fact that decision-making and project management in
local areas are often constrained by uncertainty (Vazquez-Barquero 1992). Similarly,
in the UK, the separate levels of management involved in the development and
enforcement of policies, lend itself to a form of contingent workforces (Roberts
1993). It is a well-known fact that ¯ exibility of human resources, within the context
of Europe or the USA, means a form of contingent workforces where skills are selected
from a pool of externally located labour as and when required (Belous 1989).
Another signi® cant attempt to investigate the relationship between environmental
turbulence and management practice has come from the Strategic Choice Theory
camp (Child 1972, AckoÚ 1983, Friend and Hickling 1987). Proponents have tended
to concentrate on developing techniques and tools for use in combating the uncertainty phenomenon. For example, AckoÚ identi® ed two approaches for planning
under uncertainty conditions. First, the ` predict and prepare’ , followed by the second,
` control and in¯ uence’ approach, which is characterized by dominance as opposed to
governance.
In the context of local economic development, the ` predict and prepare approach’
was characterized by models for planning in the 1970s that were known for their
ability to predict outcomes rather than exploring the processes at work. For example,
population, housing and employment forecasting was used to predict likely land use
needs (Lee 1972). The period post-1970s witnessed a shift in paradigm from the
deterministic models to probabilistic ones based to some extent on stochastic processes
and scenario generation, results of which are used as a basis to steer policy-makers in a
particular direction (Chadwick 1987). This can be placed within the ` control and
in¯ uence’ approach.
Following the review of the literature above, it is argued that a meta framework
which transforms and reconciles the mutually contradictory assumptions of each
approach would constitute a signi® cant step forward. The complexities inherent in
local economic environments and the consequent shocks that it generates, calls for a
better understanding of the determinants of complex situations.
The authors argue that within the context of local economic development, a socalled emergent approach, which is characterized by the ` control and in¯ uence’ strategies, will be less eÚ ective under conditions of high economic turbulence caused by a
shift in industrial dynamics. To test this hypothesis, a case study of the Coventry area
and its key dynamics in the automotive industry are used.
3.
Coventry: an illustrative case study
Coventry is located in the West Midlands area of the UK. The manufacturing industry in the area has a high degree of ownership by large companies. In the automotive
sector, there have been substantial acquisitions by non-UK companies. Jaguar, for
example, is now owned by US Ford, with the former Rootes Group now owned by the
French Peugeot/Citreon after a period of ownership by Chrysler. These companies
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Source : Botchway (1999).
Figure 1.
The changing centre of gravity of the automotive industry relating to
Coventry’ s industrial dynamics.
have been major employers in the city for many years although that dominance has
declined since 1960 (Healey and Dunham 1994, Kersey 1998).
The decline in manufacturing employment was due in part to central government’ s
` Industrial Development Certi® cate’ (IDC) policy, which operated between 1948 and
1982 (Healey and Clark 1984). Levels of unemployment were low in Coventry
(Healey and Dunham 1994), therefore automotive manufacturers were required to
provide new capacity elsewhere in the UK (Thoms and Donnelly (undated)). More
recently, car assembly has gained importance in other locations. Japanese companies
have constructed plants at Derby (Toyota) and Sunderland (Nissan) with substantial
central government ® nancial assistance. Figure 1 represents these changes. It re¯ ects a
shift in Coventry’ s industrial dynamics, exempli® ed by the creation of ` new capacity’
in vehicle assembly plants (from the 1920s until the early 1980s) to more recent
capacity creation (from the 1980s until late 1990s) in other locations (i.e. Derby
and Sunderland), which have no experience of that type of industry. Although such
areas did have experience of other engineering manufacturing skills, such as shipbuilding, ultimate locations were based primarily upon unemployment considerations.
Figure 1 also suggests a con¯ ict over time, between the planning scale on the one
hand, and spatial and labour market dynamics on the other. Until the 1980s, the
planning scale was restricted to the regional level, yet the ` travel to work’ area was
within a sub-regional level between Coventry and Warwickshire. In the 1990s the
planning scale has shifted back to the sub-regional level, to re¯ ect the labour market
dynamics.
EMERGENCE-BASED ECONOMIC DEVELOPMENT MODEL
159
LEDAs in the city have had to adapt to these changes by the adoption of innovative
approache s to local economic development. To evaluate how the key LEDAs have
responded, semi-structured interviews were undertaken with key actors and agencies
in the area (Botchway 1999). The survey work undertaken sought to examine two
levels of policy responses by LEDAs. First, in relation to the central government and
administrative changes and, second, in relation to industrial dynamics. The results
revealed a signi® cant characteristic of LEDA’ s intervention in the key strategic areas
of the economy as being in the form of emergent rather than deliberate strategies.
Furthermore, such strategies are the broad (rather than exclusive) responsibility of a
range of organizations. These characteristics are examined below.
3.1
Emergent strategies
In this section of the paper we will examine how local economic development strategies have evolved from two perspectives. First, against a background of the administrative changes that have taken place over the period 1990 to 2000 to the way in
which LEDAs have operated. Second, by an examination of the role played by
industrial dynamics in the development of ` emergent strategies’ .
3.1.1 Organizational responsibilities: Prior to 1994, LEDAs in the study area operated
either through individual local authorities, or through a mixture of private/public
agencies (Healey and Dunham 1994). In 1994 Coventry City Council and Warwickshire County Council formed a company that was given the key responsibility
of co-ordinating the economic development activities in their administrative areas.
The company was called the Coventry and Warwickshire Partnerships Limited
(CWP) but renamed in early 2000 as Coventry, Solihull and Warwickshire Partnership (CSWP) to accommodate the Solihull Council area, located between Coventry
and Birmingham.
It was recognized by CWP that strategies are the responsibility of a range of
organizations , and to this end it accepted that one of its key roles involved networking
with those organizations. This network is illustrated in ® gure 2. What is revealed, is
that each of the LEDAs is in turn embedded in its own hierarchy of functional
institutions which, if continued, would escalate the fragmentation of eÚ ort involved
in managing local economic development and regeneration. Also, the possibilities exist
for confusion and competitive outbidding (Roberts and Lloyd 2000).
Furthermore, the connections in the management of the economic regeneration
process in the Coventry sub-region (as represented by ® gure 2) reveal potential constraints at spatial and organizationa l levels that are capable of rendering local economic development policies ineÚ ective. Such constraints (represented by numbers 1±
6) arise out of a mis-match between the local economic planning scale and the
dynamics of the local economy (® gure 1). The diÝ culties that are generated by
such constraints have led to a more aggressive stance by LEDAs towards controlling
their economic environment. These are discussed below at two spatial levels.
3.1.2 Organizational and local level constraints: The constraints at this level are exempli® ed mainly by the dynamics of the automotive industry. For example, since 1987
Jaguar and Peugeot have been the largest individual employers for the whole of the
Coventry and Warwickshire sub-region (Healey and Dunham 1994, Kersey 1998).
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Source : Botchway (1999).
Figure 2.
Location of potential constraints in managing the local economic
development agenda.
This makes them an important dynamic in¯ uence on that economy even though
they are directly controlled by decisions made outside the local area, as represented
by 1 and 2 in ® gure 2. A decision by a parent company to close down a branch
plant might disrupt the policy objectives of LEDAs. Thus, LEDAs face a situation
where potential shocks from large manufacturing employers in the automotive industry could make their role in the economic regeneration of the sub-region less
eÚ ective.
In addition organization s external to a local area can limit LEDA activities. For
example, UK government-create d organizations such as Training and Enterprise
Councils (now called Learning and Skills Councils) and Business Links, now operated
through the Coventry Chamber of Commerce (The Chamber), a private sector organization, are in¯ uenced by central government policies that are changed frequently (for
example, see Hart et al. 1996, Huggins 1997, Bryson and Daniels 1998). In addition
capital support for regeneration in the study area, provided by the European Union,
are constrained by a supranationa l organization’ s policies (numbers 4, 5 and 6 in
® gure 2).
3.1.3 Regional level constraints: UK regional economic planning has had a long history, and has been organized largely through central government in a top down approach. Its latest manifestation has been the introduction of Regional Development
Agencies (RDAs) in 1999. These organizations have their terms of reference speci® ed in legislation, although their key role is to produce a Regional Economic Strategy (Roberts and Lloyd 2000).
In the West Midlands Region, the organization is called Advantage West Midlands
(AWM), and the Regional Economic Strategy vision is for the West Midlands to be
recognized, within 10 years, as a premier European location in which to live, work,
EMERGENCE-BASED ECONOMIC DEVELOPMENT MODEL
161
invest, visit, and be regarded internationally as a location for world class production.
The vision is to be delivered through creating wealth through enterprise and through
promoting access to opportunity. There are four pillars to the strategy. First, developing a diverse and dynamic business base. This is to be achieved through encouraging innovation and the use of Information and Communications Technology (ICT),
the development of high-tech clusters and industries new to the region such as medical
technology, and continuing to attract Foreign Direct Investment (FDI). The second
pillar is promoting a learning and skilful region, through developing a highly skilled
and adaptable workforce and developing a culture of lifelong learning. The third
pillar is creating the conditions for economic growth, which include transport
improvements and the provision of appropriate sites and premises for businesses.
The fourth pillar is regenerating communities, which is to be achieved, inter alia,
through the development of a number of sub-regional regeneration zones
(Advantage West Midlands 1999a).
Innovation is recognized as a signi® cant input to AWM’ s regional economic strategy as evidenced by the publication of a regional innovation strategy (AWM 1999b).
In a comparative assessment of three UK regional innovation strategies for
Strathclyde in Scotland, Humberside and Yorkshire, and the West Midlands regions
in England, Thomas (2000) distinguished AWM’ s approach as the most comprehensive for attempts towards the ` network paradigm’ . This paradigm is de® ned as building on the actual or potential association within sector groupings, in order to help to
develop production linkages and also to maximize opportunities for technology sharing, and technology transfer mechanisms (Cooke and Morgan 1993).
An essential component of AWM’ s innovation strategy has been the adoption of
` Foresight’ methodology as a means to understanding the forces, processes and factors
that may have a long-term eÚ ect on the region’ s industrial dynamics. Foresight is
about anticipating the future, identifying potential needs, threats and opportunities,
and taking action now to ensure that people and organizations are better placed to
respond and learn eÚ ectively in the future (Martin and Johnston 1999). As part of its
Foresight activities, AWM has set up sector panels and workshop sessions, organized
and facilitated by consultants, to build scenarios, with key personalities from private
and public sector organizations across the region. No evaluation of the eÚ ectiveness of
this approach has yet been undertaken, but early indications are that there are limited
resources and co-operation from all the participants involved. For example, it is clear
that resources are not available to undertake primary research deemed necessary by
some of the sector panel members. Also, there were suspicions that some panel members were using the Foresight platform to protect and/or promote their own interests.
Furthermore, the process of selecting panel members has been questioned by some as
lacking transparency. All these shortcomings con® rm the fact that it is ` virtually
impossible to get Foresight right the ® rst time’ (Martin and Johnston 1999: 52).
The Foresight activity is new to the region but an ongoing process, leaving ample
scope to iron out diÝ culties that may be experienced from time to time. Only time will
tell whether the outcome of such activities will support or raise problems for LEDAs in
their abilities to bring about changes in the local economies of the West Midlands
Region.
However, it is clear from ® gure 2 that although the West Midlands RDA will be
operating at a higher spatial level (6) than CWP, many elements of the dynamics of
the local economy are directly controlled by a hierarchy of spatial levels above the
regional level, as represented by 1, 2 and 3 in ® gure 2.
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Q. BOTCHWAY ET AL.
Accepting that such a regeneration mechanism is desirable, two questions still
remain unclear. First, whether the RDA is operating at the appropriate spatial
level to address the divergent dynamics of the Coventry area’ s economy. Second,
whether the economic development activities of CSWP will be strengthened or weakened. Discussion of the implications of organizationa l responsibilities on the production of ` emergent strategies’ will be presented in section 5.
3.1.4 Industrial dynamics and enterprise: However good a LEDA is in organizationa l
terms, it has to be recognized that any policies it may have cannot be implemented
without the co-operation of individual ® rms (Roberts 1993, Cooke and Morgan
1998, Brand et al. 2000, Fuller and Moran 2001). This assertion must be viewed
within the context of organization s characterized as ` independent entities existing in
relationship to and dependent on other entities in the socio-economi c sphere’ (Fuller and Moran 2001: 50).
This section will draw upon the way in which the then CWP ` Economic Strategy for
Coventry and Warwickshire, 1995± 1998’ (CWP 1995), has been implemented to
encourage enterprise. CWP identi® ed, in 1995, ` world class pursuits’ as an issue to
follow in support of Small and Medium-sized Enterprises (SMEs). This was aimed at
building company capacity through a range of incentives and support mechanisms,
drawing upon the world class product reputation of the larger ® rms. CWP built upon
an existing organization ± the World Class Partnership (WCP), which had appointed
a manufacturing excellence oÝ cer in 1994. The aim of the WCP was to select SMEs
that could, after grooming and learning, achieve ` international levels of excellence’ .
The process involved a number of elements for selected SMEs, including identifying
common needs, de® ning a common vision, organizing eÚ ective ways of working collaboratively, and sharing good and best practice.
Progress of SMEs was monitored through a bench-marking system that enabled a
framework to be implemented to facilitate a ` world class standard’ of performance to
be achieved. Six broad performance measures were identi® ed: value added to employees; stock holdings; delivery on time; quality; training; and absenteeism. It was recognized that companies would have to choose which measures could be oÚ ered to other
companies. Through this type of support, one company was able to reverse its economic fortunes by improving delivery times. This was achieved by using a computer
simulation model. The result was a sales increase of 25%, and new overseas markets
developed because of being able to meet delivery dates. This example demonstrate s
the advantage s of networking, which led to the sharing of best practice ideas and the
encouragemen t of technology transfer. Such a mechanism for knowledge transmission
conforms to the much acclaimed ` network paradigm’ and/or ` associationalism ’ (Cooke
and Morgan 1993, 1998), which underpins the West Midland’ s regional policy of
assistance to indigenous enterprises. The key element of this paradigm are:
.
.
.
.
.
.
Reciprocity ± a predisposition towards exchange
Trust ± faith in the reliability of others
Innovation/Learning ± know-how is transferable and usable
Partnership/association ± preferential reciprocal relationships
Empowerment ± inclusion in deliberation
Environmental sustainability
By adopting a variation of this paradigm, CWP’ s strategy presuppose s that learning
by interacting with the world’ s best provides an eÚ ective way of developing the
EMERGENCE-BASED ECONOMIC DEVELOPMENT MODEL
163
domestic manufacturing base as a whole (Eltis and Fraser 1992, Morgan 1996a,
Barrell and Pain 1997, Buxton et al. 1998, Brand et al. 2000).
The CWP strategy also saw the necessity of having a total package of measures.
This led to Coventry City Council broadening its inward investment activities by
adding ` training resources’ and ` manufacturing investment’ to the portfolio.
Coupled with a new name, ` Coventry Centre for Investment’ (CCI) ± the revamped
organization was able to increase the ability of ® rms to achieve ` world class’ status.
What CCI also realized was the need to consider what the future held for companies,
and how emerging factors needed to be addressed to foster enterprise. These included
the need to be aware of a company’ s strategic plans, including organizationa l changes,
for product development, the consequent training requirements to overcome skill
shortages, and the availability of land or premises to facilitate company development.
From a policy perspective, it is clear that sensitivity to the microeconomic reality
underpins CWP’ s design of enterprise support. Furthermore, CWP considers interactive learning between ® rms as a way forward to maintaining ` world class’ levels.
Finally, CWP sees itself as a facilitator of a new governanc e approach (between the
private, public and voluntary sectors) to the Coventry and Warwickshire sub-region.
The evidence from places such as Emilia Romagna and Baden-WuÈ rttemberg suggests
that CWP’ s approach, which constitutes a signi® cant step towards innovative performance (Cooke 1996, Morgan 1996a, Cooke and Morgan 1998), will avoid the
mistakes of the past (D’ Arcy and Guissani 1996) and support and/or focus on emerging networks (Johannisson 1998).
3.1.5 Discussion of the case study: From the evidence obtained from the case study,
® ve distinct elements appear to underpin the activities of LEDAs in the Coventry
area.
First, the nature of external in¯ uences. These come from a variety of governmental
sources, and indicate that LEDAs are always under pressure to respond. The pressures
appear in the form of legislative or ® nancial constraints, and require LEDAs to seek to
gain control of the various forces, factors and processes impacting on their designated
areas. Knowledge-based strategies, which have emerged, can be characterized as a
` control and in¯ uence approach’ . The formation of CWP, with its co-ordinating role,
is indicative of a partnership response to this approach. However, what is apparent is
that the predecessors to CWP all failed to anticipate changes in the chosen locations
for new automotive developments, after the winding up of the IDC programme. The
changes in the centre of gravity of automotive assembling dynamics away from
Coventry continued to be encouraged by both UK government and European
Union policies aimed at alleviating unemployment. Retraining, rather than building
on the existing skills, was seen as being an acceptable consequence.
Second, a further external in¯ uence upon the location decisions of the Japanese car
manufacturers was the availability of green® eld sites that were capable of future
expansion. The lack of component suppliers did not appear to in¯ uence location
choice (Altshuler et al. 1984, Sayer 1986). It can be argued that LEDAs in the
Coventry area could have recognized and relied upon the inherent strengths of the
pool of skilled labour and component suppliers (Healey and Dunham 1994), yet were
unable to anticipate the Japanese move. If alternative scenarios had been considered
carefully, the emergent phenomenon (i.e. locating automotive assembling away from
Coventry) would have been less of a shock, and the responses more timely. This raises
a further question relating to the determinants of the observed style of knowledge-
164
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based strategies. It is evident that LEDAs could have been more robust with their
strategies to respond to emergent phenomena.
Third, the in¯ uence of external governmental policies has been noted in respect of
training. Both the TEC and Business Link were part of national organizations that
had the dual mandate ± implementation of national policies, but in a local area
(Morgan 1996b, Huggins 1997, Bryson and Daniels 1998). It is clear that both organizations derived more direct bene® ts and stronger protection from their national
networks than oÚ ered by the sub-regional level (Bennett 1995, Morgan 1996b).
The case study evidence indicated that there was an inherent tension between
national and local allegiances of LEDAs.
Fourth, a dual picture emerges. First, a complex set of organizational relationships
(and spatial contexts) between a range of actors; second, between the actors operating
at diÚ erent levels of spatial hierarchy. According to Healey (1997), such a situation
leads to a loose connection between people and places. Moreover, the city can be seen
as ` a locus of overlapping webs of relations on diverse spatial scales’ (Healey et al. 1995:
04). This complexity in relationships is exacerbated by political and governance
factors. Local authorities may not only respond to central government, but also
exist within a political context (Roberts 1993), which is in¯ uenced by the media
and pressure groups.
Fifth, given these competing forces, the question that develops relates to how
LEDAs can encourage enterprise to re¯ ect emergent phenomena. The evidence
shows that links between companies (often from diÚ erent manufacturing backgrounds) are important components of enterprise (for example, see Morgan 1996b,
Brand et al. 2000, Fuller and Moran 2001). These links demonstrate that to be eÚ ective a LEDA must be concerned with monitoring and aftercare if their strategic aim is
to achieve and maintain world class standards. Up-to-dat e knowledge is an important
facet of both enterprise and individual dynamics, and LEDAs can use this to in¯ uence
strategy reviews (Cooke and Morgan 1998).
It is clear from this discussion that knowledge is all important, as it provides a
framework that will help to encourage an improved awareness and subsequent management of potential shocks in local economic development. Thus a knowledge-based
model that can be used to in¯ uence strategy reviews by LEDAs would be a signi® cant
step in both practical and scholarly terms.
4.
Case study implications
In the discussion of management literature, it was clear that uncertainty was an
important concern. This was characterized by the development of probabilistic models. The case study has highlighted the importance of knowledge. However this needs
to be placed into a broader context, through the examination of natural sciences, and
then consideration of the concept of emergence from systems thinking.
4.1
Towards understanding complex situations
It has long been recognized that a better understanding of complexity lies in a qualitative shift in our understanding of natural science. Traditionally, the basis of this
understanding has been through the mechanical model (Rosen 1974, 1987), which
EMERGENCE-BASED ECONOMIC DEVELOPMENT MODEL
165
involves classifying and identifying its components and the causal links, or mechanisms
that act between them. In physical systems, the fundamental laws of nature such as
the conservation of mass, momentum and energy govern these mechanisms, and
determine entirely what must happen. By isolating or closing a system so that no
new matter or energy can ¯ ow in to disturb it, such limits are placed on possible
behaviour that classical physics was able to predict the properties of the ® nal state
quite generally for almost any physical system, however complex. The ® nal state was
that of thermodynami c equilibrium, and the properties of matter that would characterize it could be calculated in a very wide range of problems. Despite the success of
this breakthroug h in classical science, its application to the human sciences was misguided (Allen et al. 1992). According to Hillier (2000: 33) energy within the context of
human sciences consists of both activity and the capacity for moving objects against
forces. In developmental terms ` the planning system directs, prevents, and stimulates
such ¯ ows in various directions, based on some, often unarticulated, concept of the
public good or public interest’ . The consequence in economic development terms has
been discussed under the ` predict and prepare’ approaches.
A shift in paradigm was recorded by Prigogine from a physics perspective in the
® eld of non-equilibrium thermodynamics (Prigogine and Stengers 1984). Prigogine
sought to explain the existence and development of order in the world ± as opposed to
the ongoing deteriorating and rundown of systems implied by the second law of
thermodynamics. Rather than viewing the world as essentially static, with equilibrium
only occasionally disturbed, Prigogine regarded the world as dynamic and characterized by systems in which normal Newtonian laws may apply, but only in a minority of
situations. The implication is that while such systems can exist in equilibrium, change
and transformation are associated with non-equilibrium conditions, which are subject
to a diÚ erent set of laws. The evolution of non-equilibrium systems is in¯ uenced by a
combination of a complex network of non-linear system relationships and random
developments, which combine to create new system con® gurations in a way that is
largely indeterminate. In extreme cases, the system can be so far from equilibrium that
the structure breaks down and the system becomes chaotic. In such circumstances, the
operation of simple rules in conjunction with non-linear processes can give rise to the
` emergence’ of new, qualitatively diÚ erent structures.
The biological approach to an explanation of complexity was focused on processes
of adaptation and the conditions under which a new order is created. While the exact
form of emergent structures cannot be predicted, the range of broad possibilities is to
some extent contained within a set of simple rules that was applied to generate the new
order. Thus the attention was not on the ` emergence’ of order from chaos but on the
continual adaptation of systems on ` the edge of chaos’ (AckoÚ 1983, Kaufmann 1993,
1995).
4.2
Emergence in local economic development
The discussion of management literature, and the implication to be drawn from the
natural sciences and the case study, demonstrates that the development of probabilistic models does not re¯ ect adequately the concept of emergence. This will be developed in this section.
Emergence refers to the phenomenon whereby causes at one hierarchical level
generate qualitatively new characteristics at greater levels of complexity. Checkland
166
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Source : Adapted from Seaton (1997).
Figure 3.
Issues leading to emergent phenomena.
(1981) implied that in local economic development, problems are caused by complex
interactions between technological (T), natural (N) and social (S) systems across both
time and space. Figure 3 (adapted from Seaton 1997) represents this view.
Subsequently, Had® eld (1997) has identi® ed three types of emergence. First, physical
emergence where novel patterns of relationships and/or outcomes are generated; second,
knowledge emergence whereby physical relationships may not change but human understanding of them changes; and third, perceptual emergence in which although the physical
relationships and the overall sum of human knowledge about them may not change,
nevertheless the perceptions of some observers and/or participants may change.
EMERGENCE-BASED ECONOMIC DEVELOPMENT MODEL
167
Within the context of local economic development all three types are relevant. In
physical emergence, spatial and temporal impacts generate new types of relationships
between LEDAs. For example, attracting inward investors to a particular location in
order to ease the high unemployment levels will over time produce changes in other
locations or adjacent towns, such as the need for more housing and educational
facilities to cater for the needs of the investors. Such a scenario will necessitate a
rede® nition of LEDA’ s relationship with the relevant agencies outside one spatial
level (D’ Arcy and Giussani 1996, Cooke and Morgan 1998).
The implication here is that if one strategy is changed it aÚ ects the other strategies.
Thus individual parts of a strategy model cannot function in isolation of the others
(Allen 1988). To function eÚ ectively requires human understanding (i.e. knowledge
emergence) in order to address uncertainties generated by the complex interactions of
industrial dynamics, spatial dynamics and local actors. Similarly, ` perceptual emergence’ arises from the existence of multiple constituencies. The impacts which ` physical and knowledge emergence’ have on the lives and perceptions of individuals and/or
groups may change. This may lead to changes in perceptions or the ` culture’ of individuals, groups or society as a whole, and changes in response which may lead to
further repercussions.
Since emergent phenomena of the type now occurring have not been recognized
before, their behaviours cannot be anticipated. Thus a way of preparing ourselves for
the ` shocks’ in store is to handle them conceptually in terms of ` development ethos’
(D’ Arcy and Giussani 1996), ` agency’ (Axelrod 1997, Casti 1997) and through the
` associational ’ approach (Cooke and Morgan 1998). D’ Arcy and Giussani (1996: 172)
have de® ned the process of ` development ethos’ to include ` consensus building
between local and non local actors, the development of an enterprise culture that is
inherently collaborative and the need for the network of participants to change shape
as circumstances decree’ . The concept of agency is paramount to such representation,
as pointed out by Axelrod (1997) and Casti (1997). Agents consist of the population of
the system. Each agent is in receipt of local information, meaning it does not share the
precise information that all agents have in space in which it exists, neither does it have
an overview of the whole of that space. However each agent is intelligent in the way of
devising appropriate mechanisms to serve its purpose and is able to change what it
does, including the rules it follows. In other words partnerships must be established,
but more importantly its members should not be restricted to one geographical area.
Furthermore, mechanisms should be set in place to allow the partnership to evolve,
learning from past experience, improving institutional arrangements, capturing
momentum and identifying new development needs and priorities as they arise.
Similarly, Cooke and Morgan (1998) call for an ` associational framework’ involving
all stakeholder s in and beyond regional/sub-regional level to include national/international participants, particularly large multinational ® rms. The rationale for such a
collaborative approach is encapsulated, by ` emergent systems’ , de® ned by Had® eld
(1997: 23) as a ` co-evolving, hierarchically arranged set of relationships between components and subsystems, existing in overlapping hierachical relationships with other
systems; which can be recognised in combination as generating qualitatively new
unpredictable and unintended phenomena and relationships, and which has not overall been designed by human agency, although some of the components and subsystem s
may have been human-made’ .
These de® nitions imply that searching for insights into emergent phenomena constitute an intellectual response (located within a series of alliances and networks of
168
Q. BOTCHWAY ET AL.
governanc e activity) to the challenges of facing up to new classes of phenomena.
Accordingly (Hillier 2000: 39) the process of addressing such phenomena should
re¯ ect the quality of such relationships, or their ` interrelational capacity’ . Hillier
demonstrates this through a case study of strategic policy-making in Perth, Western
Australia by attempting to unpack the various power plays that may lurk in the
backgroun d behind formal processes of land-use decision-making. These ® ndings
highlighted two policy-relevant issues as follows:
. The notion of rationality has its limitation in addressing emergent problems.
It is important to recognize and understand the role of ` antagonism’ and
con¯ ict in decision-making. Essentially, we should aim at transforming antagonism (adversarial con¯ ict including mistrust and suspicion) into ` agonism’
(the construction mobilization of diÚ erences towards promotion of democratic decisions that are partly consensual, but which also accept unresolvable
disagreements).
. The need for new models of governance, which focuses on building new relationships with stakeholders and tapping into the ` knowledges’ of their various
networks in a friendly way. Here, a move towards interactive governance , with
a form of leadership that does not seek to dominate but to guide and facilitate,
is suggested.
Such an insight raises the possibility of a new knowledge-based model for delivering
the type of emergent strategies that can eÚ ectively respond to, learn from and manage
changes in the wider industrial economy.
5.
5.1
The Emergence Conceptual Model
Outlining the model
In developing an Emergence Conceptual Model it is suggested that the work of
Checkland (1981), D’ Arcy and Giusanni (1996), Had® eld (1997), Cooke and
Morgan (1998) and Hillier (2000) can be applied to the interactions between technological, natural, and social systems, and used to underpin local economic development activities. A three-level model has been developed. This is outlined in table 1.
For presentation purposes the models in both table 1 and ® gure 3 appear to be linear.
However, we do not consider it to be an inherent con¯ ict between short- and long-term
planning as set out in table 1. For example, at the strategic level (long-term scale)
there is recognition of uncertainties and the creation of structures for robust responses.
In eÚ ect the argument is that one needs a clear strategic direction within which
shorter-term decisions can be taken. We now discuss how to operationalize the model.
5.2
Operationalizing the Emergence Conceptual Model
5.2.1 Strategic level: The creation of RDAs sets a new agenda that seeks to reorganize economic development in larger geographical areas. This marks another turning
point in the introduction of ` shock’ and ` turbulence’ to the operating environments of LEDAs. We have learnt from the earlier discussion on the physicists’
work that such changes and/or transformation are associated with non-equilibrium
169
EMERGENCE-BASED ECONOMIC DEVELOPMENT MODEL
Table 1.
Model level
Emergence-based local Economic Development Model.
LEDA role
LEDA activities
Time scales
Strategic
Foresight, recognition of
uncertainties, antagonism,
time-scales, agenda setting,
forecasting.
Production of long-term
strategic plans, creating
a positive climate for
partnership, identifying
future shocks, creating
structures for robust responses.
10± 20 years
Emergent
positioning
Recognition of consequences
of turbulence, development
of causes of action for
positioning, measurement
of consequences, time-scales.
Monitoring external and
internal changes, developing
proposals for change
management, determining
courses of action for medium
term projections.
5± 10 years
Operational
Monitoring, development of
structures for agonism and
implementation, recognition
of signs of turbulence,
acquisition of knowledge and
understanding of complex
relationships.
Creation of organizational
structures, development of
strategic alliances for policy
implementation, collecting
data, encouraging learning
eÚ ects, mobilization of
diÚ erences towards promotion
of democratic decisions.
Ongoing
conditions, and that the situation can be stabilized by a diÚ erent as opposed to the
normal set of laws.
The way forward is for LEDAs to reassess their economic development status within
the new agenda and to set themselves new horizons. It is clear from the discussion in
section 4.1 that an eÚ ective way in achieving this is through an identi® cation of the
deep structures and rules that underpin LEDA’ s modus operandi.
The old rules that might impede any signi® cant change, for example, defensive
routines, must be outlawed by consensus. Views on structures and rules should normally be articulated through economic development plans. There should be an indication in such a document about the aims and issues it covers, together with an
indication of how, when and by whom it should be updated.
An essential task here is to determine whether LEDAs are supporting the types of
industry that create, and preserve, employment and develop a highly skilled local
labour force. A way forward is for the newly established RDAs to encourage
` Foresight’ activities (currently at the regional level) at a sub-regional level.
Subsequently, attempts should be made to disseminate Foresight to the appropriate
SMEs. It will be important for such attempts to place less emphasis on SMEs themselves and, instead, focus on fomenting a Foresight culture in intermediary organizations such as trade associations and business support services networks. Any emphasis
on SMEs must be geared towards characterizing their attitude to the future. For
example, the ` reactive or uninvolved’ SMEs that are unlikely to respond to
Foresight, contrasted by the ` strategic or involved’ SMEs that appear to be ahead
of the Foresight programme and, ® nally, the ` responsive and open ® rms’ that have the
highest potential to be responsive to Foresight (Major and Cordey-Hayes 2000).
Subsequently, LEDAs can formulate a new deep structure that may involve some,
but not all, of the old rules alongside some new ones. In such circumstances, the
170
Q. BOTCHWAY ET AL.
operation of rules alongside non-linear processes can give rise to the emergence of new
qualitatively diÚ erent structures. It has to be recognized that the development of a
new way of doing things will be questioned by some participants and is likely to
generate con¯ icts, suspicions and/or tensions. Attempts towards promoting democratic decisions will help in this regard, but as pointed out by Hillier (2000), this
should be accompanied by the acceptance of unresolveabl e disagreement.
It is necessary to set a time frame for such activities and LEDAs should develop new
ways of setting longer time scales, which in practice would often run beyond their term
of oÝ ce, for example, 10± 20 years. Finally LEDAs need to raise their pro® les by
intensifying their collaboration with new partners (Hillier 2000) who are operating
at diÚ erent and higher spatial levels (D’ Arcy and Giusanni 1996, Cooke and Morgan
1998).
5.2.2 Emergent positioning: Emergent positioning is about ® nding strategic places in
non-equilibrium or turbulent conditions. The quest to positioning is dependent on
how far LEDAs are away from equilibrium conditions. It is important to assess this
in order to know and create the space for the new strategic direction already de® ned by its Foresight activities. Such an approach is likely to take the form of a
qualitative judgement.
The onset of a crisis, either real or precipitated, should involve a fundamental
change in the codi® ed domain, radically altering the way in which things are done.
A mechanism for achieving this, is through a major restructuring exercise. We know
from the earlier discussion on fundamental laws of nature, that the conservation of
mass, momentum and energy can be a determining factor in such an exercise. For
example, within the context of local economic development, these laws suggest that
when LEDAs ® nd themselves in such unfamiliar territory, they develop the tendency
to become open, and develop a capacity to import energy and export entropy. During
this period, a new order based on the new deep structure will seek to impose itself. This
order will re¯ ect the strategic aspirations broadly de® ned by the rules.
It is essential for LEDAs to develop new ways of measuring the development time
by which in¯ uential ® rms lag behind the leaders in the ® eld. Furthermore, they must
be prepared to examine the extent to which such ® rms wish to lead or submerge their
competitors. LEDAs must develop a medium term time-frame to emergent positioning, for example 5± 10 years.
5.2.3 Operational level: As the new order emerges, LEDAs must begin to explore
ways of managing the communication processes. Inevitably, traces of the old order
will remain and might induce pressure to restore the old equilibrium. The biological and some management approaches to this, as discussed earlier, suggest a focus
on the processes of adaptation, agonism and the conditions under which the new order can be sustained.
A way forward for LEDAs will be to look for signs, which are consistent with the
new structure and rules, agreed at the strategic level. Anything that reinforces the new
rules should be encouraged in order that the eÚ ects may be ampli® ed, allowing the
new order to take control. A friction between the forces of the old and new order is
likely to emerge, creating unstable conditions but attempts must be made through
interactive governance to adhere to the new order. The temptation to revert to the old
order will be high but it has to be avoided at all cost, and attempts made to highlight
the disadvantage s of short-term gains.
EMERGENCE-BASED ECONOMIC DEVELOPMENT MODEL
6.
171
Concluding remarks
It has to be recognized that the Emergence Conceptual Model is based on systemic
thinking. It builds on the works of Checkland (1981), through the concept of ` emergence’ , Had® eld (1997) through ` emergent systems’ , D’ Arcy and Giusanni (1996)
through ` development ethos’ , Cooke and Morgan (1993, 1998), Powell and
Doerr-Smith (1994), Morgan (1996a,b) and Hillier (2000), as part of the ` network’ and ` associational ’ models of development. The Emergence Model oÚ ers a
diÚ erent way of thinking about the implementation of policies. Our approach diÚ ers
signi® cantly from the ` joined up’ thinking and its approaches to problems, which
tends to break them down into solvable sub-problems (Mulgan 1998). A further distinction needs to be made between ` emergent strategies’ characterized by the
` control and in¯ uence’ approach and the Emergence Model for addressing economic
development problems. Whereas our model seeks to respond to, learn from and
manage new phenomena (i.e. shocks) in local economic development environments,
emergent strategies have tended to be focused on managing uncertainties arising out
of legislative and ® nancial constraints. We believe that the application of our model
requires certain skills that can be acquired only through training. LEDAs must be
prepared to learn new ways of thinking systemically, for example, in terms of relationships, interactions and multiple levels of causalities rather than ® rst level causality
and predictions. Furthermore, they must seek to develop practical skills through
vocational training (Cooke and Morgan 1998) and also, to enrich their intellectual
capacity by undertaking multidisciplinary rather than single discipline studies. The
complexities of our environment necessitate the use of a range of perspectives and tools.
The integration of such perspectives at the level of both investigation and policymaking is essentially a function of cross-disciplinary co-operation (Seaton 1997).
Training must be undertaken as part of a technology strategy, in the areas of
` knowledge’ , ` skills’ and ` artefacts’ (Botchway and Goodall 1999). Such a base,
developed through training, will help to position LEDAs favourably in the pursuit
for economic regeneration.
It is clear that by adopting the Emergence Conceptual Model as a new paradigm,
LEDAs in particular should consider the implications for their approach to strategic
planning and policy formulation. This suggests a shift towards increased knowledge
and awareness of potential futures and the robustness of strategies to respond to new
phenomena. If alternative scenarios have been considered future unpredictable events
will be less of a shock, and responses will be more considered and timely. To facilitate
this, it is important to think systemically in order to have an improved understanding
of stakeholder perception. Furthermore, it is important to generate scenarios from
systemic thinking in order to learn from emergent conditions.
It must be pointed out that the Emergence Conceptual Model should not be seen as
a rejection of models seeking to address individual uncertainties. However it has to be
recognized that emergent phenomena diÚ er and can have disastrous consequences as
was demonstrated with the Rover case in Birmingham (Bentley 2000). The emergence
approach as described above will enable LEDAs to be more eÝ cient in creating and
preserving employment, attracting entrepreneurial activities and inward investors,
developing a highly skilled labour force and, ® nally, creating and preserving a
more conducive economic environment that could stimulate opportunities within
local economies over a longer a period than has been the case previously.
172
Q. BOTCHWAY ET AL.
Acknowledgements
This paper is based on a Ph.D. study undertaken at the Innovation and Technology
Assessment Unit, International Ecotechnology Research Centre, Cran® eld
University, UK. The assistance of ESRC is acknowledged. The authors would like
to acknowledge the helpful comments received from the Editor of this Journal and two
anonymou s referees on earlier drafts of this paper. The paper has also bene® ted from
comments received at the 2000 Business & Economics Society International
Conference in Los Angeles, USA.
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