European Cluster Observatory

REPORT

Priority Sector Report:

Digital Industries
Prepared by:

Christian Ketels and Sergiy Protsiv

Ci Center for Strategy and Competitiveness Stock-

holm School of Economics

February 2017

Internal Market,
Industry,
Entrepreneurship
and SMEs
Priority Sector Report: Digital Industries

European Cluster Observatory in Brief

The European Cluster Observatory is a single access point for statistical information, analysis and map-
ping of clusters and cluster policy in Europe. It is primarily aimed at European, national, regional and local
policy-makers and cluster managers and representatives of SME intermediaries. It is an initiative run by
the ‘Clusters, Social Economy and Entrepreneurship’ unit of the European Commission’s Directorate-
General for Internal Market, Industry, Entrepreneurship and SMEs and aims to promote the development
of more world-class clusters in Europe, notably with a view to promoting competitiveness and entrepre-
neurship in emerging industries and facilitating SMEs’ access to clusters and internationalisation activities
through clusters.
The ultimate objective is to help Member States and regions to design smart specialisation and cluster
strategies that will help companies to develop new, globally competitive advantages in emerging indus-
tries through clusters, and in this way to strengthen the role of cluster policies in boosting Europe’s indus-
try as part of the Europe 2020 Strategy.
In order to support evidence-based policy-making and partnering, the European Cluster Observatory pro-
vides an EU-wide comparative cluster mapping with sectoral and cross-sectoral statistical analysis of the
geographical concentration of economic activities and performance. The European Cluster Observato-
ry provides the following services:
■ a biannual ‘European Cluster Panorama’ (cluster mapping) providing an update of and ex-
tension to the statistical mapping of clusters in Europe, including for ten related sectors (i.e.
cross-sectoral) and a correlation analysis with key competitiveness indicators;
■ a ‘European Cluster Trends’ report analysing cross-sectoral clustering trends, cluster
internationalisation and global mega trends in industrial transformation; identifying common inter-
action spaces; and providing a forecast for industrial and cluster opportunities;
■ a ‘Regional Ecosystem Scoreboard’ setting out strengths and weaknesses of regional and na-
tional ecosystems for clusters, and identifying cluster-specific framework conditions for three
cross-sectoral collaboration areas;
■ a ‘European Stress Test for Cluster Policy’, including a self-assessment tool accompanied by
policy guidance for developing cluster policies in support of emerging industries;
■ a showcase of modern cluster policy practice, provided in the form of advisory support
services to six selected model demonstrator regions. The services offered include expert
analysis, regional survey and benchmarking reports, peer review meetings and policy briefings in
support of emerging industries. The policy advice also builds on the policy lessons from related
initiatives in the area of emerging industries;
■ the European Cluster Conferences 2014 and 2016, which bring together Europe’s cluster
policy-makers and stakeholders for a high-level cluster policy dialogue and policy learning, and
facilitate exchange of information through, e.g. webpages, newsletters and videos.
More information about the European Cluster Observatory is available at the EU cluster portal at:
http://ec.europa.eu/growth/smes/cluster/observatory/.

This work has been carried out under a service contract for the European Commission’s Directorate-General for Internal
Market, Industry, Entrepreneurship and SMEs. It is financed under the Competitiveness and Innovation Framework
programme (CIP) which aims to encourage the competitiveness of European enterprises. The views expressed in this
document and the information included in it do not necessarily reflect the opinion or position of the European Commis-
sion.
Internal Market,
Industry, Entre-
preneurship and
SMEs
Priority Sector Report: Digital Industries

Table of Contents
1. Introduction ............................................................................................................................. 1
2. Overview .................................................................................................................................. 2
3. Composition ............................................................................................................................ 3
4. Current Patterns and Leading Regions ................................................................................ 5
5. Evolution .................................................................................................................................. 8
6. Sub-cluster Profile: Digital Business Services .................................................................. 10
7. Selected Cluster Initiatives in Digital Industries................................................................ 11
Appendix: Industry Definition ............................................................................................................. 15
Priority Sector Report: Digital Industries

1. Introduction
Digital Industries are one of the key thematic orientations of applications and selected cluster projects
for new industrial value chains (INNOSUP-1) under Horizon2020 and of the thematic priorities of re-
gional smart specialisation strategies.
The European Cluster Panorama 2014 defined Digital Industries in a broad sense covering several
related segments of cluster categories. The definition was built up using the IT Hardware and Com-
munications as the two base sectors and extending it with a variety of related industries from eight
other cluster categories (see Methodology and Findings Report for a Cluster Mapping of Related Sec-
tors for more details).
This core of Digital industries comprises services related to information technologies as well as manu-
facturing of modern computer hardware and devices for various application contexts. As an increas-
ingly cross-cutting technology information technology has become an important element of most areas
of economic activity. The linkages of this ‘Digital Industry Core’ to other technologies and industries
are the key interest of this report.
Overall, the ‘Digital Industry Core’ is built by the IT sector. Especially, it includes activities from the
1
following areas :
■ Manufacturing of computers and hardware components
■ Programming and publishing of software
■ Provision of digital communication infrastructure
■ Computer related consultancy services
One of the dominant trends in the digital sector is the shift from hardware to software, and within the
software area from product to service. Another key element has been the rapid move from stationary
systems like PCs to multiplatform, wireless user interaction. Digital industries are a highly dynamic
sector not only by growing fast itself but also transforming the ways of production in most other indus-
tries. This finds its expression in the considerable cross-sectoral linkages presented in the following
chapter.

1
See Annex A for a full list of used NAICS respectively SIC codes.

1
Priority Sector Report: Digital Industries

2. Overview

Table 1: Basic Facts on Digital Industries

Indicator Level in Change Share of

2014 since 2008 overall
economy

Employment 9 994 767 1.70% 3.43%

Establishments 1 906 785 16.10% 3.39%

Average Wage 44 949 3.74% 139.84%

Gazelle Employment 148 834 N/A 3.54%

2
Priority Sector Report: Digital Industries

3. Composition
2
Figure 1: Digital Industries industry composition

2
The size of the different boxes is proportional to industry employment

3
Priority Sector Report: Digital Industries

Table 2: Occupational profile of employment in Digital Industries

Occupation Employment Employment Overall

share employment
share

Officials, Managers, Professionals, Technicians 5 193 200 62.0% 43.9%

Information and Communications Technology Professionals 1 434 900 17.1% 1.7%

Business and Administration Associate Professionals 654 500 7.8% 6.7%

Science and Engineering Professionals 539 900 6.5% 2.9%

Science and Engineering Associate Professionals 486 600 5.8% 3.6%

Information and Communications Technicians 467 800 5.6% 0.9%

Business and Administration Professionals 461 300 5.5% 3.3%

Other 1 148 200 13.7% 24.9%

Craft, Trade, Operators, Assemblers 1 834 900 21.9% 21.7%

Metal, Machinery and Related Trades Workers 627 200 7.5% 3.9%

Other 1 207 700 14.4% 17.8%

Clerks 793 000 9.5% 9.0%

Service, Sales, Elementary 549 900 6.6% 25.4%

4
Priority Sector Report: Digital Industries

4. Current Patterns and Leading Regions

3
Table 3: Europe’s top locations in Digital Industries

# Region Region Largest Employ- LQ Avg. Annual Gazelle Stars

Name City ment Wage, PPP Growth Empl.
Share

1 NO01 Oslo og Oslo 69 058 2.38 68 867 15.2% 1.0% 4

Akershus

2 DE14 Tübingen Tübingen 70 901 2.12 56 532 3.1% 4.6% 4

3 SE11 Stockholm Stockholm 86 538 1.62 63 546 5.4% 2.8% 4

4 IL03 Haifa District Haifa 44 155 2.67 24 280 9.2% 0.0% 3

5 DE11 Stuttgart Stuttgart 215 739 2.44 66 434 11.4% 0.7% 3

6 AT13 Wien Wien 68 743 1.91 48 125 26.4% 1.9% 3

7 DK01 Hovedstaden Copenhagen 65 200 1.82 58 260 -5.2% 1.1% 3

8 UKJ1 Berks, Bucks Oxford 102 599 1.77 70 758 -0.2% 0.1% 3
and Oxon

9 CH04 Zürich Zürich 64 523 1.73 75 473 -12.7% 0.6% 3

10 CH02 Espace Mit- Bern 59 442 1.72 79 363 -7.8% 0.6% 3

telland

11 DE21 Oberbayern München 151 964 1.67 66 720 1.4% 0.8% 3

12 DE71 Darmstadt Frankfurt am 118 021 1.58 60 303 -0.7% 0.7% 3

Main

13 DEA1 Düsseldorf Düsseldorf 133 607 1.42 58 197 1.4% 1.4% 3

14 DEA2 Köln Köln 101 449 1.36 57 550 2.8% 1.1% 3

15 FR10 Île de France Paris 341 822 1.31 60 221 8.3% 2.1% 3

16 UKJ3 Hants and Isle Southamp- 51 900 1.29 57 369 6.0% 0.1% 3
of Wight ton

3
We sort locations here and in all following sections by the number of stars, followed by LQ

5
Priority Sector Report: Digital Industries

Figure 2: Leading regions in Digital Industries

6
Priority Sector Report: Digital Industries

Table 4: Strategic profiles of top locations in Digital Industries

Region Region Name Largest City Top 3 Occupations

NO01 Oslo og Akershus Oslo 25 Information and Communications Technology Profes-

sionals
24 Business and Administration Professionals
35 Information and Communications Technicians

DE14 Tübingen Tübingen 72 Metal, Machinery and Related Trades Workers

31 Science and Engineering Associate Professionals
21 Science and Engineering Professionals

SE11 Stockholm Stockholm 25 Information and Communications Technology Profes-

sionals
33 Business and Administration Associate Professionals
24 Business and Administration Professionals

DE11 Stuttgart Stuttgart 72 Metal, Machinery and Related Trades Workers

43 Numerical and Material Recording Clerks
31 Science and Engineering Associate Professionals

AT13 Wien Wien 25 Information and Communications Technology Profes-

sionals
33 Business and Administration Associate Professionals
35 Information and Communications Technicians

DK01 Hovedstaden Copenhagen 25 Information and Communications Technology Profes-

sionals
35 Information and Communications Technicians
24 Business and Administration Professionals

UKJ1 Berks, Bucks and Oxford 25 Information and Communications Technology Profes-
Oxon sionals
33 Business and Administration Associate Professionals
24 Business and Administration Professionals

CH04 Zürich Zürich 25 Information and Communications Technology Profes-

sionals
21 Science and Engineering Professionals
12 Administrative and Commercial Managers

CH02 Espace Mittelland Bern 25 Information and Communications Technology Profes-

sionals
73 Handicraft and Printing Workers
72 Metal, Machinery and Related Trades Workers

7
Priority Sector Report: Digital Industries

5. Evolution

Figure 3: Employment over time, 1996-2014 (2008=100)

Note that there is a break in time series in 2008: all data prior to this date was sourced from the dataset in prior version of the
European Cluster Observatory and adjusted to be compatible with the current dataset.

8
Priority Sector Report: Digital Industries

Figure 4: Annual Growth in Digital Industries (2008-14)

9
Priority Sector Report: Digital Industries

6. Sub-cluster Profile: Digital Business Services

Figure 5: Regions most specialised in Digital Business Services

10
Priority Sector Report: Digital Industries

7. Selected Cluster Initiatives in Digital Industries

Advanced cluster policies conducive to successfully implement regional innovation strategies do not
only provide funding to cluster initiatives or cluster organisations but rather offer a broad set of policy
choices to support the entire framework conditions of the actors in given regions. Such a policy ap-
proach aims to improve cluster-specific business environments that provide optimal conditions for
companies in related industries to raise their productivity and innovation. Creating platforms for collec-
tive action within clusters through cluster organisations can help companies from different sectors to
innovate better and exploit their business opportunities. Cluster organisations can in turn also be a
major partner for the government to design and implement effective policies for upgrading cluster-
specific business environments. However, strong cluster organisations are necessary, managing their
cluster in an excellent manner and being able not only to take up but to proactively influence the re-
gional social and economic development, fully integrated in all relevant communities, the policy mak-
ing, the industrial, the academic, and other relevant ones.
Being awarded with a quality label of the European Cluster Excellence Initiative is a justification for
strengths. In the following sector-related cluster initiatives are listed where the cluster organisation is
holding such a label. Furthermore, two of the GOLD-labelled cluster initiatives are shortly described to
give an idea of their set-up and interesting activities and their effects.

Cluster Management Excellence Label GOLD – Proven for Cluster Excellence

Name Country www

BrainsBusiness ICT North Den- Denmark http://www.brainsbusiness.dk/

mark

Cap Digital France http://www.capdigital.com/

Cluster TIC Galicia Spain http://www.clusterticgalicia.com

Future Position X Sweden http://fpx.se/

Kosice IT Valley Slovakia http://www.kosiceitvalley.sk

Pole SCS France http://www.pole-scs.org/

Silicon Saxony e. V. Germany http://www.silicon-saxony.de/home.html

Systematic France http://www.systematic-paris-region.org/

TICE.PT Portugal http://www.tice.pt

VDC Fellbach Germany http://www.vdc-fellbach.de/

11
Priority Sector Report: Digital Industries

Cluster Management Excellence Label SILVER – Dedicated to Cluster Excellence

Name Country www

Agrupación Empresarial Spain http://www.aertic.es

Innovadora del Sector de la TIC
de La Rioja (AEI AERTIC)

Baden-Württemberg Connected Germany http://www.bwcon.de/

e. V.

Canarias Excelencia Tecnológi- Spain http://www.canariasexcelenciatecnologica.com/

ca (CET)

ClujIT Romania http://www.clujit.ro/

Cluster de Empresas TIC, Elec- Spain http://www.tecnara.es

trónica y Telecomunicaciones de
Aragón

ELINCLUS - Electronic Innova- Romania http://www.elinclus.ro

tion Cluster

Estonian ICT Cluster Estonia http://www.itl.ee

GEOkomm e. V. Germany http://www.geokomm.de/

INFINIT Denmark http://www.infinit.dk

Info Pólus Software Innovation Hungary http://www.infopolus.hu/

Pole Cluster

Innoskart Hungary http://www.innoskart.eu/

InnoZent OWL e. V. Germany http://www.innozentowl.de/

IT FOR WORK Germany http://www.it-for-work.de/

IT Security - Bavarian IT Germany http://www.it-sicherheit-bayern.de/

Security & Safety Cluster

iTech Transilvania Cluster Romania http://itech.aries-transilvania.ro/

Latvian IT Cluster Latvia http://www.itbaltic.com

LeClust'R Numérique France http://www.leclustr.org

Mazovia Cluster ICT Poland http://www.klasterict.pl/

Polo di Innovazione ICT Italy http://www.poloinnovazioneict.org/

Service Cluster Denmark Denmark http://www.serviceplatform.dk/

12
Priority Sector Report: Digital Industries

Košice IT Valley – developing the IT industry for improving the quality of life in Eastern Slo-
vakia

Website www.kosiceitvalley.sk

Established 2007

Cluster participants (2015) Industry 29, R&D 12, Others 10

Region Košický kraj (region Košice, south-east

Slowakia)

Cluster Manager Pavol Miroššay

The vision of Košice IT Valley cluster initiative is to create a regional partnership of IT companies,
education institutions and regional authorities that will contribute to the extension and quality increase
of educational programs, the creation of a broad portfolio of job opportunities for qualified work force
and the elaboration of a common strategy. This is necessary for achieving prosperity of the region of
Eastern Slovakia and thus ensuring gradual increase of quality of life of its citizens.
The mission is

 to create a business friendly environment stimulating all forms of cooperation and innovation
within the region of Eastern Slovakia and thus strengthening the sustainability and competi-
tiveness of the local IT companies globally,
 to bring jobs with high added value to the region in close cooperation of all parties involved,
 to offer educational programs needed for these jobs and motivate the youth to study and work
in IT and Robotics,
 to contribute to the elaboration and implementation of knowledge economy and information
society strategies using the concept of „learning region“ and to implement a digital ecosystem.
Activities concentrate on education, innovation and collaboration. Over the years the original main
focus on education stays as one of the priorities, but the scope of the cluster itself has gone beyond.
Innovations, research and development and support of collaboration within the cluster and support of
investments become an integral part of the cluster.
In the development of the IT industry in the Košice region the cluster initiative Košice IT Valley plays
an important role. The association today forming the cluster initiative was established in 2007 as a
joint initiative of educational institutions, government and leading IT companies. In 2015 Košice IT
Valley was certified with the “Cluster Management Excellence Label GOLD” as the first cluster organi-
sation in central Europe. The cluster initiative managed to support the creation of 9000 new working
places in IT in less than 10 years of its existence by reaching 10 000 employees in early summer of
2016. The cluster organisation and the cluster members operate a variety of educational, R&D and
collaboration activities in the region of Eastern Slovakia and thus enable the development and growth
of the IT sector in Slovakia.

13
Priority Sector Report: Digital Industries

Virtual Dimension Center Fellbach - leading competence network for Virtual Engineering

Website www.vdc-fellbach.de

Established 2002

Cluster participants (2015) Industry 46, R&D 20, Others 13

Region Baden-Württemberg, Germany

Cluster Manager Christoph Runde

The Virtual Dimension Center (VDC) is Germany's leading competence network for Virtual Engineer-
ing. Technology and service providers, users, research institutions and multipliers work together in the
VDC network along the entire value chain of Virtual Engineering - namely in 3D simulation, 3D visuali-
sation, product lifecycle management (PLM), and Virtual Reality (VR). The VDC members gain im-
proved innovation activity and a higher productivity by acquiring additional information and cost ad-
vantages.
The VDC is a highly diversified virtual reality network that addresses a huge variety of industrial sec-
tors with specific workshops and information, such as automotive, commercial vehicles, aerospace,
chemical industry, textiles, architecture, medicine, geography and city planning as well as manufactur-
ing systems engineering. The VDC organises more than 40 events (workshops, exhibitions, congress-
es) per year to address all mentioned industries.
One important means for technology transfer are the “VDC whitepapers”. A “VDC whitepaper” de-
scribes virtual reality technologies, their applications and potential benefits of use for certain industrial
sectors (as mentioned) or for a certain application field (such as styling, design, marketing, factory
planning). The whitepapers grant an excellent overview and serve as an entry point for those that are
interested in virtual reality. The VDC has produced more than 20 whitepapers during the last years.
Another example for the work of the cluster management is the virtual reality and virtual engineering
demonstration centre. Various hardware and software demonstrators are permanently visible and can
be tested by the companies. It is also possible to schedule appointments for special demonstrations by
VDC members in the show rooms.
Furthermore, the cluster management organisation is part of the project “Digital Lotse BW” (digital pilot
Baden-Württemberg) that supports companies for the digitisation of planning and development pro-
cesses. Only by means of extensive preliminary simulations and visualisations expensive development
errors can be avoided and development processes can be kept competitive. Automotive industry, me-
chanical engineering, plant engineering, aerospace and others are relevant industrial sectors with
highly complex products being strong locally in Baden-Württemberg. As part of this project, small and
medium-sized companies are informed free of charge about new business opportunities, they are
provided with information and contacts in the field of digitised development processes and kept in-
formed about trends in the areas of virtual reality, augmented reality and digitised development pro-
cesses.

14
Priority Sector Report: Digital Industries

Appendix: Industry Definition

Industry Code Industry Name

22.29 Manufacture of other plastic products

25.61 Treatment and coating of metals

25.73 Manufacture of tools

26.11 Manufacture of electronic components

26.12 Manufacture of loaded electronic boards

26.20 Manufacture of computers and peripheral equipment

26.30 Manufacture of communication equipment

26.40 Manufacture of consumer electronics

26.51 Manufacture of instruments and appliances for measuring, testing and navigation

26.52 Manufacture of watches and clocks

26.70 Manufacture of optical instruments and photographic equipment

26.80 Manufacture of magnetic and optical media

27.12 Manufacture of electricity distribution and control apparatus

27.90 Manufacture of other electrical equipment

28.24 Manufacture of power-driven hand tools

28.29 Manufacture of other general-purpose machinery n.e.c.

28.99 Manufacture of other special-purpose machinery n.e.c.

32.50 Manufacture of medical and dental instruments and supplies

46.43 Wholesale of electrical household appliances

46.51 Wholesale of computers, computer peripheral equipment and software

46.52 Wholesale of electronic and telecommunications equipment and parts

46.66 Wholesale of other office machinery and equipment

46.69 Wholesale of other machinery and equipment

58.11 Book publishing

58.21 Publishing of computer games

15
Priority Sector Report: Digital Industries

58.29 Other software publishing

61.20 Wireless telecommunications activities

61.30 Satellite telecommunications activities

61.90 Other telecommunications activities

62.01 Computer programming activities

62.02 Computer consultancy activities

62.09 Other information technology and computer service activities

70.21 Public relations and communication activities

73.20 Market research and public opinion polling

16
Priority Sector Report: Digital Industries

For further information, please consult the European Cluster Observatory Website:
http://ec.europa.eu/growth/smes/cluster/observatory/

This work has been carried out under a service contract for the European Commission’s Directorate-General for Internal
Market, Industry, Entrepreneurship and SMEs. It is financed under the Competitiveness and Innovation Framework
programme (CIP) which aims to encourage the competitiveness of European enterprises. The views expressed in this
document and the information included in it do not necessarily reflect the opinion or position of the European Commis-
sion.
Internal Market,
Industry, Entre-
preneurship and
SMEs