He who pays the piper

Support organisations for ecosystems (valley bureaus, economic boards, cluster organisations or triple helix organisations) are often set up with a substantial injection of public funds. Not surprisingly. These are usually new initiatives, of which for many it is not yet clear a priori what they are going to contribute. As a result, other, non-public financiers are usually not queuing up to participate financially at the same time.

As time goes by, we see that a dilemma often arises here. A frequently used principle is that the person who ‘pays the piper also calls the tune’. Only, in this case, governments actually prefer not to call the tune. After all, the intention is usually for an ecosystem to flourish further, in which the government plays only a limited, facilitating role. But if you don’t want to determine, why should you continue to pay in the long run? It is therefore not surprising that, over time, regular talks are held with the organisation in question about phasing out government funding and thus financial independence. One argument that is often used is that if companies sufficiently value what is happening, they should also be prepared to pay for it.

Unfortunately, this reasoning usually fails in practice. One explanation is that many of the activities carried out by such organisations are aimed at groups of companies and less at one-to-one support of individual companies. This usually limits the willingness of companies to deposit large amounts of money for this. Perhaps more importantly, SMEs and start-ups tend to benefit most directly from these initiatives. Unfortunately, they also tend to have limited budgets to contribute financially. An alternative would be to focus their activities primarily on supporting larger, more affluent organisations. Unfortunately, such a choice seems to ignore the original intended purpose. This is a major dilemma for many of these initiatives: those who benefit most from a well-functioning ecosystem are often not the parties who can also fund the support. This asymmetry between the size of the companies and their financial capacity proves difficult to solve in practice. If all goes well, the ecosystem organisations in fact tackle imperfections that the market allows to run, simply because they are not sufficiently commercially attractive. Think, for example, of the difficulties experienced by small companies in gaining access to international markets or available knowledge. That fact in itself always justifies public support, not just in the early stages of an initiative. Incidentally, this does not mean that, in order to ensure that the target group is ‘listened to’ sufficiently, no financial commitment should be required from companies. On the contrary, it is in many cases, a highly effective tool to ensure the relevance of the work.

Published on FoodMountain.nl – 2019/06/13

  • Countries

  • Topics

  • Roles