GaWC Research Bulletin 212

(A)

Clusters and Pipelines, Commuters and Nomads: Business Travel in the Irish Software Industry

A. Vecchi and J. Wickham^*

 

Abstract

This paper uses research on business air travel to analyse the structure and functioning of clusters through a case study of the Irish software industry in Dublin. Whereas most cluster studies have focused on the importance of geographical proximity for knowledge creation within the cluster, the importance of extra-cluster networking has only recently began to receive some attention. Recent work for instance shows that particularly successful clusters are able to build and maintain a variety of “pipelines” with relevant hot-spots around the globe (Bathelt et. al., 2004). However this strand of work tends to “black box” the means whereby such pipelines are created.

By using interviews with a sample of software managers and professionals, our paper investigates the particular forms of business travel generated by the software cluster in Dublin. The interviews generated data on both the role of business air travel for individual firms and on the travelling of the most mobile individuals within these firms. At the firm level our findings show that although international travel is crucial for Irish-owned firms, it is more extensive for foreign-owned firms, confirming the lack of structural division between foreign and indigenous firms in the cluster. At the individual level we differentiate between travellers who are commuters, explorers and nomads. Only the commuters travel along clearly defined “pipelines”; the travelling of both explorers and nomads shows how all elements of the cluster have more complex external connections than proposed by most of the cluster research literature.

INTRODUCTION

For many managers and professional today, to work is to travel. Business travel is now so interwoven with doing business that its apparent continued growth is a matter of common sense. Yet paradoxically, these same business travellers are also intensive users of communication technology (phone fax, e-mail, etc), many will use web based technologies to locate information and even do business, while some will use information technologies to work together with colleagues in distant physical locations. Why then the need for physical travel?

The paper examines business travel using preliminary data from an ongoing study of business travel within the Irish software industry. It begins by noting that while air business travel appears to be one of the most visible and tangible implications of globalisation, its importance is only marginally acknowledged within the broad globalisation discourse. The paper then reviews the literature, largely from the interfaces of economic geography, social geography and management studies, which generates hypotheses about the extent of business travel and its relationship to clusters dynamics. We then provide a brief review of the Irish software industry as the site of our research and present our methodology. The research thus uses business air travel to analyse the structure and the functioning of the software cluster in Dublin.

Individuals travel, but they travel (at least largely) on behalf of their firm. In order to analyse the role of travel in clusters and knowledge creation, we therefore examine business travel both at the level of the firm and at the level of the individual traveller.

Firstly, by endorsing the most recent views of cluster dynamics and the varieties of proximity (Bathelt et. al., 2004; Leamer and Storper, 2001), we investigate the importance of business travel at cluster level by looking at the travel patterns of specific firms. In particular we look at how ‘hand-shakes’ occur by investigating whether these travel patterns fulfil any specific task amongst those predicted by the literature, whether they act as “pipelines” or if they contribute to nurture the so-called “local buzz”.Secondly, drawing on the literature on intra-cluster knowledge system and firms knowledge base (Giuliani, 2005; Giuliani & Bell, 2005; Dosi, 1999) we investigate the importance of business travel at by looking at the most travel intensive individuals within specific firms. We use the empirical material to develop a typology of business travellers, from regular commuters travelling regularly between a few destinations to nomads who travel to and from a shifting range of destinations.

Air travel – the missing global link

Although air business travel appears to be one of the most visible and tangible implications of globalisation, it has received surprisingly little attention from academic research on globalisation. This section examines the role of business air travel in relation to firstly, the general literature on globalisation, secondly the question of the interconnection between ‘global cities’, and thirdly the connections between clusters and knowledge creation.. The section ends with a discussion of the knowledge within firms and clusters.

Air Travel and Globalisation

In disciplines as diverse as management studies, economic geography and organisation studies it is taken as axiomatic that the last twenty years have seen major structural changes in the organisation of the economy. Castells for example describes the emergence of a “network society” that is characterized by networked forms of business, as opposed to hierarchical forms, the globalisation and trans-nationalisation of economic and social activity, and greater flexibility and uncertainty in the workplace, contextualised by, and sustaining, the information paradigm and ICT development ‘the process of work is at the core of social structure. The technological and managerial transformation of labour, and of production relationships, in and around the emerging network enterprise is the main lever by which the information paradigm and the process of globalisation affect society at large’ (Castells 1996: 201). The new economic reality is therefore transformative of time and space as a consequence of changing practice and changing organisational structure. On the issue of mobility, and in particular the mobility of people, Castells is less clear of its importance in the development of the “fundamental transformation” of society. Virtual travel, and networks made possible by transportation systems, are described as of great importance (Castells 1996, 2001). The importance of the physical movement of resources and goods and the physical mobility of workers and the quantity of work related travel is rather less emphasised in his work, even though it seems difficult to imagine the rise of the network society without the vast transportation networks or the physical flows of millions of people a year engaged in business across international borders.

The broad globalisation discourse emphasises how, as a result of this rise of the network society,, modern organisations tend to adjust to market uncertainty by adopting different configurations that allow them to minimise perceived risk and instability. The growth of technology which renders remote working possible and coupled with economic developments has forced companies to address the issue of organisational design. Recent research into modern companies indicates that organisations respond to external environmental factors by assuming different configurations: from “the command-and-control organisation” to “the information-based organisation” (Drucker, 1988), Handy’s “virtual corporation” (1995), the “horizontal organisation” (Stough et. al., 2000) and many others.

Again it seems difficult to imagine the emergence of these new forms of organisational designs often informed by geographically loose networks without the aid of transportation technology that allows people to actually travel and to meet up in person. Furthermore, whereas the broad globalisation discourse pays very marginal attention to the role of business travel, the actual traveller is considered to an ever smaller extent.

A remarkable exception to this line of reasoning is provided by Reich’s work. In 1991, Reich published the book, The Work of Nations: Preparing Ourselves for 21st Century Capitalism, in which he proposes the classification of three broad categories of work including routine production services, in-person services, and symbolic-analytic services:

• Routine production services entail repetitive task such as routine supervisory jobs performed by low and mid-level managers who do not come into direct contact with the beneficiaries of their work.
• In-person services also entail simple and repetitive tasks, often work alone or in small teams, they are closely supervised and they are in direct contact with the beneficiaries of their work.
• Symbolic-analysts are “knowledge workers” who identify problems, analyze them, solve them and “broker” information. . Reich estimates these symbolic analysts now represent approximately 20 per cent of the U.S. workforce, up from about eight per cent in 1950. They are rarely in contact with the clients who benefit from their work and their “principle products are reports, plans, and proposals.” According to Reich, teamwork is often critical to them, and ‘when not conversing with their team-mates, they sit before computers, spend long hours in meeting or on the telephone and even longer hours in jet planes and hotels’ (Reich, 1991: 122).

In particular, symbolic-analysts – who solve and identify and broker new problems – are, by and large, succeeding in the world economy. Worldwide demand for symbolic-analytic services is increasing as the ease and speed of communicating them steadily increases. Scientist and researchers, consultants are heavily in demand. The most important reason for this expanding market has been the dramatic improvement in worldwide communication and transportation technologies: ‘symbolic-analytic services can be transported at no cost. When face-to-face meetings are still required, and videoconferencing will not suffice, it is relatively easy for symbolic-analysts to travel and meet directly with their worldwide clients’ (Reich, 1991: 222).

Drawing on Reich’s idea that people travel to different extents according to the knowledge intensive nature of their work, we now turn to the literature on globalisation and dynamic cities where the importance of air travel is more explicitly acknowledged. While Reich’s work as well as the literature on dynamic cities constitutes the “bones” for our literature review, the cluster literature will sketch the “flesh” by identifying the main research questions that this paper seeks to address.

Globalisation and the Interconnections between Dynamic Cities

Globalisation has become a notoriously over-used term, so much so that some writers suggest that it has now lost all analytical purchase. However, one common argument within the literature is that globalisation means a concentration of economic activities into major cities. The implication is that travel between such cities becomes increasingly important.

The rather vague argument that the world economy comprises a network of cities often involves the claim that such cities are now relatively disconnected from their hinterlands. Whether this actually is the case remains disputed, but the argument also has two rather versions. One argument is that globalisation enhances the possibility of ‘geographic differentiation and locational specialisation’ (Scott, 2001: 813). A rather different argument is that a few ‘global cities’ are now “command and control centres” (Sassen, 1991), where the headquarters of multinational corporations, giant banks, and new supranational economic institutions (trade organizations, development banks, etc) are located. These world cities become the increasingly dominant centres of progressively more integrated, hierarchical world city system (Beaverstock et. al., 1999; Smith & Timberlake, 2001).

Some attention has been paid to the worldwide distribution of air passenger flows within this discussion, since ‘because of its relatively rapid capacity to reply in terms of supply and demand, air traffic provides a pertinent indicator in the quest to evaluate the international character of cities’ (Cattan, 1995: 303). Thus Witlox et. al. (2004) show how European cities appear to be more strongly linked by air travel than cities in other regions: Europe is the only region where the first five intra-regional connections exceed the threshold of one million passengers. In relation to intra-European flows, the largest intra-European connection (Milan-Rome) is only slightly more important than the second one and the importance of the ranked connections diminishes very gradually (see Table 1).

Table 1: Annual intra-European air passenger flows in 2004

When analysing the number of passengers departing from, and arriving in, each city, Witlox et. al. notice that London dominates the scene, closely followed by New York, Paris and Los Angeles. Dublin ranks between 4-6 million with much larger cities such as San Paulo, Mexico City and Bombay (see Table 2).

Table 2: The 150 cities with the largest number of arrivals and departures

In the case of Dublin, the high ranking is presumably partly a consequence of the fact that the only alternative to air travel involves sea travel, although according to the authors, certain relations between cities can be attributed to historical ties such as the presence of colonies, while others are the consequence of FDI or far-reaching economic integration that stimulates international trade (Witlox et. al. 2004). Yet, to what extent the actual amount of business travel undertaken reflects FDI or other patterns of international trade is not clear.

The attempt to use gross data on air traffic movements to analyse business travel is problematic, since air travel data does not allow any distinctions to be drawn between business and non-business travel¹. Given that business travellers for some time have been using economy class and/or budget airlines, it is impossible to use class of fare or type of airline as a proxy for business travel, while business and non-business travel are frequently intertwined (Davidson, 1994). Although the global cities literature stresses the importance of air travel, it says surprisingly little about who travels and for what purpose, beyond the rather simple hypothesis that business travel will be between cities as “nodes” of the world system (a claim which is more plausible if it is accepted that cities are at the same time disconnected from their hinterlands). Presumably what we have termed the division of labour argument would suggest that air travel follows the flows of trade between the different specialist cities, while the “command and control” argument suggests that business travel is about co-ordinating the activities of the enterprises.

Clusters Dynamics and the Varieties of Proximity

A related strand of literature stresses that the propensity of many types of economic activity, manufacturing and service sectors alike, to gather together in dense regional clusters or agglomerations appears to have been intensifying in recent decades. There is a now extensive literature on “clusters”, “industrial districts” and “agglomerations” all of which in different ways stresses the importance of collective propinquity or permanent proximity. It is argued that in the current epoch of globalisation such proximity becomes more important, in particular for activities which are at the cutting edge of economic innovation, ranging from sectors as divergent as high-technology production, neo-artisanal manufacturing, cultural-products industries, the media, business and financial services. All of these usually assume the form of intricate networks or systems of producers bound together in relations of specialisation and complementarity with diverse synergies appearing at points of mutual interaction (Cooke and Morgan, 1998; Scott, 1998). These features are associated with a number of far-reaching geographic consequences: where the multifaceted transactions costs associated with these networks are high per unit of distance (above all where they involve frequent, unpredictable, and constantly shifting face-to-face meetings), producers will have strong incentives to locate in close proximity to one another; by contrast, it is often the case that the distribution of the final products of these sectors incurs only low costs per unit of distance, which means that they can span a relatively extended geographic scale.

In particular, this literature has linked clustering to innovation through the alleged importance of tacit local knowledge. Flows of knowledge in clusters are often conceived as leaks of knowledge which tend to be highly localised and often conducive to learning and innovative output. In particular, what makes geographically bounded spaces highly conducive to knowledge spillovers is the fact that they allow tacit knowledge which is “sticky” and highly localised in principle (Nelson & Winter, 1982). While this implies that technical and creative industries are clustered in a relatively small number of locations, this does not in itself imply anything at all about the nature of international business travel. It might even be inferred from such trends, that exports or FDI can rise, while the actual amount of physical travel can fall, as the agglomeration of skills continues.

Although the lack of a clear account on the importance of business travel, within the work on clusters’ knowledge creation an increasing theme is the importance of connections from the cluster to the outside world. In particular, t he importance of extra-cluster networking has been increasingly highlighted by the cluster literature in both developed and developing countries (Rabellotti, 1997; Humphrey & Schmitz, 2002; Bathelt et. al., 2004; Giuliani, 2005) and several contributions have now explored the processes by which the integration of extra-cluster knowledge and intra-cluster knowledge occurs (Giuliani, 2005; Iammarino & McCann, 2006). R ecent work for instance shows that the particularly successful clusters are the ones that are able to build a maintain a variety of channels for low-cost exchange of knowledge with relevant hot-spots around the globe.

By looking at how clusters enhance their knowledge creation capabilities, Bathelt et. al. (2004) argue that innovation in clusters depends not only on local tacit knowledge, encapsulated in what they term the “local buzz” (the local informal exchange of information gossip and ideas) but also on linkages through “pipelines” to selected providers located outside the local cluster, often in other vibrant centres of new knowledge. Such connections ensure that knowledge elsewhere is also accessed on the basis of tacit shared understandings. As Bathelt et. al. stress, this challenges the local/global tacit/codified distinction, since pipelines involve the creation of shared understandings and tacit knowledge across space.

In this sense Bathelt et. al.’s contribution is extremely important, but like so much of this literature, it essentially ‘black boxes’ the means whereby such pipelines are created. The obvious suggestion is that pipelines predominantly involve air travel, since shared understandings and shared tacit knowledge can be assumed to be more easily created through face to face communication. In other words, the permanent proximity of the cluster has to be supplemented by the temporary proximity of the business meeting. The importance of temporary proximity helps explain the paradox that business travel and the use of ICT by business have not only grown in parallel, but appear to be in general complementary rather than substitutes (for review of the small technical literature, see Mokhtarian, 2003). Thus while Leamer and Storper (2001) differentiate between businesses that require a ‘handshake’ for the conduct of their activities and those that merely require a ‘conversation’, which can be conducted with the aid of ICT at a distance, they assume that handshakes require permanent proximity. They argue that the increased complexity of design and production increases the need for face-to-face contact, while the inevitable incompleteness of contracts will always imply the need of handshake transactions and regular face-to-face contacts. While such arguments provide a rationale for permanent physical proximity through clustering, they also provide a rationale for high levels of temporary proximity through travel. After all, it is normally visitors and not neighbours who shake hands…

Unlike the global cities literature, this development of the cluster literature does generate some arguments about the extent and purpose of physical travel. However, it raises three problems. Firstly, it simply assumes that temporary proximity allows the creation of tacit knowledge and shared understandings, there is no analysis of how (or even if) handshaking occurs. In other words, it continues the curious lacuna of this tradition of deducing social relations rather than documenting them, and suggests the need for much more ‘close up’ and even ethnographic research.

Secondly, the relationship between business travel and its contribution to the intra-cluster knowledge system is unclear, although Bathelt et. al. do suggest that it cannot be simply assumed that knowledge ‘imported’ via the pipelines will automatically transfer within the cluster firm, let alone with the local cluster. This issue will be more exhaustively explained in the next section when discussing the theoretical assumptions on intra-cluster knowledge system and firm knowledge bases.

Thirdly, the fascination with innovation assumes that the purpose or at least the function of travel is the transfer of knowledge between clusters. Yet while we know that such contacts with customers or suppliers can be important for innovation (Rabellotti, 1997), it hardly follows that the needs of innovation is an adequate explanation for all business travel.

Intra-cluster Knowledge System and Firm Knowledge Bases

Recent contributions have expressed their conceptual discontent with the externally-driven approach of cluster capacity to learn and innovate as discussed in the previous section. Some of them have pointed out the need to bring firm level learning into the analysis of clusters’ innovation (Maskell, 2001). A fairly balanced view is offered by Giuliani who craftily combines the two different level of analysis by providing a more rigorous explanation of their interplay. This contribution in particular is very important for our attempt to understand why networking occurs both within and outside the cluster and most of its assumptions can be extended to business travel.

Giuliani (2005) for instance argues that the dynamic growth of a cluster depends on its absorptive capacity of companies to absorb external knowledge and diffuse it into the intra-cluster knowledge system. In its definition cluster absorptive capacity entails two interrelated aspects: a) the formation of linkages with extra-cluster source of knowledge and b) the structural characteristics of the intra-cluster knowledge system. To this end, the intra-cluster knowledge system is defined as the flows of knowledge linking cluster firms by virtue of not too dissimilar knowledge bases². In particular, she argues that it is because of the presence of firms with different knowledge bases within the cluster that firms tend to establish knowledge linkages at intra-cluster level, according to the absolute and relative distance of their knowledge bases (Giuliani, 2005). The knowledge bases of firms must be sufficiently different to make interaction worthwhile, hence allowing learning process to take place. At the same time, if the cognitive distance becomes too great or the knowledge base too dissimilar any incentive to engage in learning will cease. In this specific occasion, according to Bathelt et. al., when it is not worthwhile to engage in local interaction, firms seek to build external networking (Bathelt et. al., 2004).

Within this context of persistent heterogeneity of knowledge bases amongst cluster firms, great interest has been recently expressed in the technological gate-keeping process of cluster firms (MacDonald & Williams, 1994; Giuliani, 2005; Giuliani and Bell, 2005). Gate-keeping is relevant at two different level of analysis. At the firm level of analysis, MacDonald & Williams (1994: 123) define technological gatekeeper as ‘an individual who funnels information into an organisation from the outside world’. In this context, technological gatekeepers are professionals who due to their higher propensity to search for new knowledge from outside the firm, become acknowledgeable reference points for other people inside the firm to go for advice. At the cluster level of analysis, Giuliani (2005) defines gatekeepers as firms which channels extra-cluster knowledge into the local, intra-cluster knowledge system.

Although this bulk of literature only marginally acknowledges the importance of business travel, it is very important for our discussion for several reasons. Firstly it provides a solid rationale for both intra and extra cluster networking (i.e. different firms’ knowledge bases); secondly it sheds light on the complex interplay between the extra-cluster absorption of new knowledge, the intra-cluster knowledge system and firms’ knowledge bases, both by more rigorously analysing their interaction as well as by identifying the crucial players (i.e. the gate-keepers).

Researching business travel

The Research Site: The Irish Software Industry

The ICT sector in Ireland comprises sub sectors such as software, hardware, some forms of telecommunications and a range of other services. The whole sector contributes more than 10% of Ireland’s GDP. According to ICT Ireland, an IBEC (Irish Business and Employers Confederation) supported lobby group, the ICT sector as a whole comprises more than 1,300 firms, employing around 100,000 people, and contributes 25% of Irelands exports ( ICT Ireland 2002: 1). Accurate figures for the whole sector are problematic, as there is some degree of double counting, some ICT firms are enumerated under other categories, while electrical appliances and media content are sometimes included as ICT outputs.

The largest ICT sub-sector is the software sector and although there is somewhat more consensus over its total size, problems of definition remain. Software accounts for an increasing proportion of the costs of all ICT development and strict lines of demarcation between the software sector and computers, telecom and related business services, do not exist. The profile of the sector is both export driven and location sensitive. The software sector, as with the ICT sector in general is heavily dependent upon exports, with a total export value of €16bn. Of this total market, around €1bn of exports, i.e. less than 10% of the value of exports, are supplied by indigenous companies. This sector and can be divided among the 140 foreign multinational companies, which employ around 12,700 workers, and the 750 or so indigenous companies, which employ around 11,250 workers, but which tend to be much smaller firms, indeed their combined production accounts for only 10% of the total sector (O’Riain, 2004).

This remarkable divide is the outcome of the historical perception of the sector as possessing the greatest potential to contribute to Ireland’s ongoing economic development. Although the role of FDI in Irish industrial policy has been discussed elsewhere (Breathnach, 1998; O’Riain, 2000) it is worth mentioning that IDA Ireland specifically identified software as an internationally traded service possessing significant employment potential. As a result, it began targeting American companies that required large workforces and lacked any other pre-existing European manufacturing or R&D facilities. Moreover, they were sought firms whose product did not require any spatial proximity to their customers thereby overcoming the problem presented by Ireland’s peripheral location (White, 2004). Initial success included three main inward investments (IBM in 1983, Lotus in 1984 and Microsoft in 1985) and acted as a catalyst for the emergence of the software industry. In addition to providing relatively cheap skilled labour and a favourable tax regime, Ireland was also offered as a platform from which to sell packaged software into the European, Middle Eastern and African (EMEA) markets.

Broadly speaking two different software industries emerged in Ireland – one dominated by large MNCs and a smaller one, a more niche-oriented indigenous industry. The emergence of this divide in the software cluster has been described by O’Riain as A Tale of Two Globalizations (O’Riain, 1998). By the end of the late 1980s and early 1990s, the multinational sector shifted from a focus on manufacturing packaged software and evolved by moving up the value chain to include software localisation (White, 2004). Today as many MNCs have added sales and marketing functions, activities are no longer restricted to manufacturing and localisation. Many Irish-based affiliates are becoming European corporate hubs and now occupy a more important role within their corporate hierarchies than during the early years. This trend has been coupled by a massive relocation of back office activities such as remote sales, customer service and technical support (Breathnach, 1998).

By contrast, the evolution of the indigenous sector has been very different³. Whereas a few Irish firms can traced back to the 1970s, it was the late 1980s before the term “industry” was applied to software in Ireland. Characteristics of the indigenous industry until 1990 included reliance on service (mainly bespoke software development), low profits and few exports ( Enterprise Ireland, 2004). From then onwards a major switch took place from services to products, and from servicing the local market to exporting.

Today, the major bulk of Irish companies is product oriented: they invest in the development of intellectual property rights and derive revenue streams for related services. The nature of the software industry in Ireland, in particular the indigenous firms, is one with many specialist companies, with much of the industry depending upon the specialist market, which is a particularly international client based. The products and services developed by Irish companies are not generally “off the peg” and this is reflected in the high price for a particular product and the small number of clients that a supply company needs to service to be a viable business ( Enterprise Ireland, 2004).

Until 2000 growth in Irish software firms had been much higher than foreign firms in both revenue and exports, which reversed by 2000. However the latest statistics for the software industry show that for the first time since 2000, both revenue and export value for indigenous software firms has grown faster than for the foreign multinationals. In particular, skills shortage is forcing indigenous companies to move up the value chain. This implies deploying scarce resources on high value activities such as innovation and design and farming out other activities where possible. This has led to some Irish firms establishing development centres in countries that still have an availability of software developers, especially India.

As for innovation, the software cluster has built its success largely on the basis of applying imported technology, rather than by creating its own. The recent allocation of significant sums of money for basic research through Science Foundation Ireland is aimed at addressing this weakness and may result in the development of original technology ( Enterprise Ireland, 2004).

Dublin is the centre of almost all of the sectors that expanded rapidly in the 1990s, including financial services and professional services⁴, and it is not surprising therefore that it is the location choice for much of the software sector in Ireland. Site location in Dublin is also divided along foreign/indigenous company lines. There are two primary locations for software firms in Dublin, the south central part of the city which tends to attract the specialist indigenous companies, and the business parks centred around the M50 ring road, which provide office space tailored more to the needs of the, generally larger, foreign multinationals.

Approximately 60% of the indigenous companies are located in Dublin⁵, as are most of the distribution, marketing and sales functions of the foreign multinational firms based in Ireland. Indigenous firms, however, generally base their entire supply chain in Ireland. There are, though some Irish companies which have established development centres in countries that have an abundance of software developers, in particular India, to overcome perceived skill shortages in Ireland.

There are other differences between indigenous companies and foreign companies that might contribute to location decisions. The multinationals tend to have few local linkages. Their interaction is predominantly with customers overseas and with other locations of the company in the US, Europe or Asia. The indigenous firms tend to work more in partnerships with local firms and also have more relationships with local knowledge institutions - (Van Winden and Woets, 2003: 16). Indeed in Ireland, the relationship between the indigenous software sector and key sub sectors, such as communications software, banking and finance software and systems software, are particularly strong, which implies a higher level of synergy and interdependence between indigenous software firm and other complementary activities in high-growth and high-value sectors (O’Riain, 2004).

These differences can have an impact on the amount of travel undertaken by managers and other employees of firms as well as their travel profiles, an issue that the research examined in more detail. The literature examined earlier would, indeed, point to there being different travel profiles, however, the question about what these differences are between foreign and indigenous firms, and how factors such as the lack of local linkages impacts on in developing partnerships will be a way to understand the effects of networks on travel much more clearly. While both types of companies within the sector seem to be travel intensive, partly due to their export dependency, different factors other than size and principle location of the firm seem to be important in the amount of physical travel that is required in order to do business.

Research Methodology: Travel Intensive Firms and Travel Intensive Individuals

Firstly, by endorsing the most recent views of cluster dynamics and the varieties of proximity (Bathelt et. al., 2004; Leamer and Storper, 2001), we investigate the importance of business travel at firm level of analysis by looking at the individual business travel patterns of specific firms. In particular we look at how hand-shakes occur by investigating whether these travel patterns fulfil any specific task amongst those predicted by the literature, whether they act as “pipelines” or if they contribute to nurture the so-called “local buzz”. Secondly, drawing on the literature on intra-cluster knowledge system and firms knowledge base (Giuliani, 2005; Giuliani & Bell, 2005; Dosi, 1999) we investigate the importance of business travel at the individual level of analysis by looking at the most travel intensive individuals within those firms. To this purpose, for each software company we had two interviews.

At firm level of analysis, in order to assess how hand-shakes occur we gathered data for each single firm: some basic descriptive data on the number of places visited (company’s reach) and the frequency of travel (average of the days spent away in a week). These findings were related to two main variables: company ownership and the main type of customer served by the company. Company ownership was considered important given the specific role of MNCs within the Dublin cluster. Additionally in order to investigate how the need to travel is related to companies’ different knowledge bases, we differentiated between firms selling intermediate products and firms selling final products to end users. Our underlying assumption is that when firms possess similar knowledge bases, as in the case of firms working on sequential stages of production of intermediate products, the need for business travel is less likely to occur. Vice-versa when firms possess more dissimilar and distant knowledge bases as in the case of firms selling final products to end users, the need for business travel is more likely to arise.

The first interview was with someone knowledgeable about some key characteristics of the company. This first interview was aimed at gathering specific information about the company such as: the history of the company, its size, its ownership (indigenous vs. foreign), its range of activities, the extent of outsourcing, the organisational structure of the company, its market, the company’s external relations, about the amount of business travel undertaken within the company and the adoption of ICT mediated communication. In this interview we wanted to assess the general travel pattern of each individual firm. The respondents were prompted to discuss at company level who are the people who tend to travel the most, where do they go, why do they go as well as the frequency of business travel. These accounts therefore offer some ‘impressionistic’ views of the amount of travel undertaken by the different individuals in the company according to the perceptions of the main respondent. As a result of this first type of interviews some basic descriptive data on number of places visited (company’s reach) and frequency of travel (average of the days spent away in a week) was gathered and the findings were produced in relation to two main variables: company ownership as well as the main type of costumer served by the company.

For the individual level of analysis, a second interview was held with the most travel intensive individual in each company in order to obtain a more accurate picture of their individual travel patterns, both in relation to places that are regularly visited as well as trips that are more infrequent and often undertaken on the basis of ad hoc arrangements. At its simplest, travellers differ not just in the frequency of travel but in their destinations. Here it is useful to distinguish both the variety of destinations and the extent to which these destinations are novel. We could distinguish between commuters, who travel frequently from their ‘home’ to a limited range of regular destinations and explorers who travel frequently to a broader range of destinations at least some of which are new. Both these two types of travellers have a clear base from which they depart and to which they return, from which they are organised and to which they report. By contrast our final type, nomads, are continually on the move and have no clear home: they travel to a variety of destinations some of which are new and in all of which they are potentially at home; this taxonomy was explained in terms of individuals’ functional activity within the company.

Results

Travel Patterns of Travel Intensive Firms

At firm level of analysis, in order to assess how hand-shakes occur we looked at company travel patterns according to company ownership. The previous discussion has noted the existence of a marked divide between indigenous and foreign companies in the software cluster in Dublin; this leads to the assumption that foreign companies display many more outward looking linkages (O’Riain, 1997). Drawing on the main findings from our first type of interviews, Figure 1 shows the travel patterns of the most travel intensive firms, where foreign firms are represented in dark blue while indigenous firms are represented in light blue.

On the Y-axis we measure the scope of travel, according to the company’s reach, while on the X-axis we measure the frequency of travel. Figure 1 clearly shows how foreign firms and indigenous Irish firms tend to undertake different travel patterns: foreign firms travel more frequently and in particular visit many more places compared to indigenous Irish firms.

Figure 1: Company Travel Patterns by Company Ownership

There are two possible reasons for this difference. First, this difference in travel business patterns could reflect the difference in terms of companies’ reach as secondary data shows that foreign firms tend to be larger and possess wider distribution channels than indigenous firms (Breathnach, 1998). Second, our findings tend to the suggestion deduced from secondary data according to which foreign firms tend to display a more pronounced outward looking attitude (O’Riain, 1997). This is probably due to several different factors: first, to the fact that IDA Ireland initially targeted specifically those foreign firms that did not possess any other manufacturing or R&D facilities in Europe; second, because of the promotion of Ireland as a platform country from which to sell software into the EMEA market; third that the foreign companies that were originally targeted where those who did not require spatial proximity to the customers to overcome Ireland’s peripheral location.

By considering the different quadrants of the diagram, the ‘impressionistic’ accounts of S.C., E.K., M.M. and P.K. are particularly emblematic to illustrate four radically different situations described in the diagram above and to a large extent applicable to the population of firms for each quadrant.

Let us consider S.C., working as the CTO (Chief Technology Officer) of an Irish company producing middleware for videogames (Firm G), where the amount of travel undertaken at company level is not particularly intense in terms of frequency and not particularly broad in its scope.

S.C. explained that this has very much to do with the evolution over time of the structure of the company, that was founded in 1998 by two graduates of Trinity College Dublin and has its origins in the computer science department of the university.. In particular, S.C. explained the crucial importance that business travel had for his company at the outset. W hen the company was founded in 1998, all the 25 people working in the company at that time flew over in the US to attend a trade show, the Game Developers Conference at Long Beach, California. S.C. said that, despite the heavy cost he wanted “to have everyone there, from the receptionist to the CEO, because we wanted to look like a big multinational-corporation”. According to S.C., attending the trade show “in bulk was critical to establish some key-contacts with publishers and to look credible to their eyes”. On this occasion an important pipeline was established – a deal with one of the major publisher (i.e. Sony) based in San Francisco.

Today, S.C. explains that the company has offices in Dublin, Ireland (Headquarters) and San Francisco, USA (Sales Office) and recently opened an R&D and Technical Support office in Munich. Since the main publishers are based in the US, the office in San Francisco has been opened to maintain physical proximity to them. The R&D and Technical Support Office was opened in Germany because the company bought up a competitor there – a small firm that also produced middleware for game software development. In this sense, the relatively limited reach of the firm can be explained by the combination of the limited spread across a few locations of the different divisions of the company (organisational design) and by the limited dispersion of the main customers.

When prompted to identify the most travel intensive individuals and their current amount of travel undertaken on an individual basis, S.C. explained that in his company:

“The people who travel the most are the CEO, the CTO and the Sales Director. Either myself or the CEO travels every two weeks to our R&D facility in Munich. We all travel to the US ( San Francisco) every six weeks to meet up with the publishers and when they go, they stay there at least for a week. The technical staff also travels quite intensively both as trouble-shooters (to San Francisco) and to undertake specific training (mostly in Munich)”.

If at a first sight, this amount of travel can be thought to be relatively extensive for the majority of us, less mobile individuals, it is actually very little if compared for example with the amount of company travel described by E.K. By contrast with Firm G, Firm E.’s travel pattern involves many different places (high on Y axis) and frequent journeys (far right of X axis). Working as a senior Marketing Manager for an international company with its Irish subsidiary in County Wicklow, Ireland (Firm E), E.K. provided an even more travel-intensive account of the business travel occurring in her company. Beside being involved in frequent travel, the company’s reach broadly covers the UK, various destinations in the US, France, Sri Lanka, Singapore as well as “manyother foreign countries”.

To justify the frequent and broad travel pattern of the company, E.K. explained for instance that the company is large, with a combined subscriber base with access to the company product suite exceeds 150 million users with over 1,000 merchants utilizing the company’s merchant integration technology. The type of products they make are software enabled PIN number security recognition. The company is also the leading provider of payments infrastructure for electronic and mobile commerce. E.K further explained that the company is almost exclusively international, with almost everything they produce sold to foreign companies. This also informs the company’s external relation strategy, which has a wide range of strategic partnerships with large international companies (such as Hewlett Packard, IBM, Alcatel, Accenture), and a few local strategic alliances on specific projects (such as TIS), which are only of limited significance. They are also directly involved with larger partners or groupings (such as Nokia, ISA, Paycircle), and industry standards groupings. These were deemed to be significant in developing more strategic networks as well as determining the broad scope of the business travel undertaken.

E.K. identified within the company a large number of very mobile individuals, including E.K herself, though she identified the CEO as the most travel intensive individual. The CEO was described by E.K. as “spending half of his time away, much of which is for short periods and everywhere the company is based” implying not just a lot of business travel but a large amount of long haul travel.

Other senior executives were also described to travel extensively as well as most senior decision-makers:

“For example, the international sales managers might be based in one continent, such as in the USA or in Europe, but they travel extensively within this zone or have responsibility in another area, such as the middle East, where there is less of a presence and thus not requiring full time sales management support”.

Overall, as it was for S.C., the relatively wide reach of firm E can be explained by the organisational design of the company with different divisions spread across many location, by its international networking strategy in terms of strategic partnerships and alliances, as well as by its dispersed customer base.

M.M., working as R&D Manager for a large multinational corporation (firm H) in the telecommunication sector, provided a different account of the travel undertaken within his company. Overall the travel pattern of his company seems not as intensive in terms of frequency but very broad in its scope, involving trips to Sweden, Canada and India as well as many ad hoc trips to several destinations in Europe and in the US. M.M. travels to about as many places as EK, so is equally high on the Y axis, but travels less frequently, so is near the origin of the X axis.

According to M.M., this has to do with the company structure. M.M’s company is a Swedish owned multinational, perhaps best known for its mobile phone handsets, but is active in many areas of research and development, telecommunications and other related technology, and is also the largest software company in Ireland. In Ireland, the company’s research and development and software production is based primarily on two sites, Dublin and Athlone. The Dublin site employs 350 people, while the Athlone figure is around 500. The Dublin site specialises in systems development for 3 rd generation technologies, radio access, software for radio network controllers. Total production is focussed on global markets in the corporate domain. At Athlone, development is specialised in the area of operation support systems for mobile telephone networks. The site has formal responsibility for the product development unit, responsible for operations for Sweden, Canada and India. The Ireland research and development outputs are, more specifically for the development of program and systems for incorporation into hardware systems for the world market.

To provide a more substantive account of the value of business travel for the company M.M. explained that the company employs around 850 people in research and development and yet its travel budget is in excess of 3.6 million Euro, or more than 4,000 Euro per person per year. This figure accounted for around 4% of the firm’s total costs in 2004, the fifth biggest cost item for the company after wages, ISIT, buildings and BETE. Of this €3.6 million, more than one million is spent on flights, €1.5 million on accommodation and €0.75 million on subsistence payments and other expenses. There is no breakdown, however, for the proportion of this travel spent on international travel as opposed to domestic travel.

The majority of the travel spending, possibly in the range of 80%, is on project meetings. This travel is often for ad hoc meetings, but there is a routine of business travel associated with product launches which explains why the company’s spending on travel is so important for the introduction of new products.

“Each product introduction involves sending a minimum of 3-5 people to any product launch and are retained locally until the product is fully signed off, so that if there are any problems, there are trouble shooters on hand to resolve them. The team is made up of a team which include someone who can handle problems with customer relations, broad troubleshooting knowledge, a product developer, and someone with abroad knowledge of the product as possible. Sometimes these skills are embodied in a team of just two or three individuals and such individuals are in demand everywhere, skills required up to one hundred times a year”.

M.M. stated that if the product is developed in USA or Canada, then everything required for the product would be centred there. However if it is centred in Athlone or Dublin then the Irish office would do the bulk of work on it and this involves detailed product development which must be understood in every detail, and so someone from Ireland will be sent from research and development and not someone from sales. For an introduction that is an update of an older series this is not always necessary. The travel pattern of firm H can be explained as follows: the broad reach could be determined by its relatively dispersed customer-base alongside with the decentralised organisational design of the company (i.e. multi-division units located in several countries), while the flexibility due to the extensive deployment of team-based projects could explain the relatively low frequency.

Conversely P.K., working as a Customer Relation Manager for an Irish company (Firm J) providing business solutions for the finance sector, provided a very different account of the amount of travel undertaken at company level. Overall the travel pattern of his company seems very intensive in terms of frequency but not very broad in its scope.

P.K. explained that in his company the people who travel the most are “everybody”:

“Project teams generally spend 50% of their working time on site. At the beginning of each project and for final testing before the project goes live. Out of a project of six months they will be spending on site more than three months. The Support Team, made up of 18 people amongst which developers and leading support personnel travel for 40 % of their working time. Developers are responsible for quarterly reviews on site, where leading support personnel travel slightly more – 5-6 times per year for each project. The Main destinations are the UK and Germany, but for a small amount. Finance, marketing and sales director travel quite a lot – 40 trips per year – the Customer Relations manager (myself) – 20 trips per year – to visit existing clients”.

Again, the travel pattern of Firm J could be explained mostly in terms of organisational design of the company and by the limited dispersion of its customer base. The employment of team-based projects does not allow for improved flexibility (as it was for Firm H) by reducing the frequency of business travel. This could be mainly due to the bespoke nature of the product that need to be highly customised and tailored to the needs of the customers.

Overall, by considering travel patterns in relation to firm ownership, our findings tend to confirm previous studies according to which foreign companies, opposed to Irish firms, display broader reach and their interaction – often involving a large amount of air travel – with multiple locations (Van Winden and Woets, 2003; O’Riain, 2004). In this sense our findings seem to suggest that foreign firms might be actively engaged in extensive extra-cluster networking since they are marginally involved in the intra-cluster network. Given that indigenous firms are engaged in higher value activities, the outward looking attitude of foreign companies might be the result of seeking other firms possessing not too dissimilar knowledge bases outside the cluster.

This issue was further investigated in relation to two sub-sectors of the software industry on the basis of their typology of products: firms selling intermediate products and firms selling final products to end users. From our findings it emerges that there is another clear-cut distinction between companies selling intermediate products (in green) travelling less extensively in terms of frequency than companies serving the end users (in blue). This difference again is significant when considering the four cases described earlier.

S.C., working as the CTO of an Irish company (Firm G) producing middleware for videogames (i.e. an intermediate product), further explained that the relatively limited frequency of travel is nonetheless growing along with more extensive company relations:

“Initially when the company was founded, a lot of travel was done in order to meet up with publishers. Now travel has increased as a result of having more business and knowing more people. Since the company is also bigger now there is more business, therefore the need to meet up more often with partners such as SONY, especially now when the new play-station will be shortly released”.

He also clarified that in general business travel is preferred in exceptional circumstances, for example in relation to big projects and when there are issues with clients. In general terms “getting people in front of other people” is the preferred strategy when issues may arise.

Conversely, E.K., working as a senior Marketing Manager for a multinational company (Firm E) serving end-users, described a very different situation displaying both a higher frequency of travel and a broader company’s reach. When prompted to discuss the CEO’s travel pattern, spending half of his time away visiting an incredible variety of destinations, E.K. explained that this was mainly because the CEO needed to meet directly with customers across the different offices as well as attending a large number of industry events.

According to E.K. when dealing with customers:

“You need to be there face-to-face and sometimes for hours, working things through on the white board, developing relationships with the people. You need to develop these relationships, even over a meal. We can use other ways to communicate but they (customers) want to sit down as a group at a time”.

Figure 2: Travel Patterns by Type of Product

M.M., working as R&D Manager for a large multinational corporation (Firm H) in the telecommunication sector selling software for telecommunications (i.e. intermediate product) whose reach is broad as Firm E but less intensive in terms of frequency, explained this pattern on the basis of how the company nurtures its business networks:

“Business travel is seen as a necessary evil. The company cuts back from time to time but it needs to be done, to create networks, which is how work is often done most effectively. Technical experts can’t really deal with a problem unless they are able to think it through with other people, and can’t deal with a crisis unless they know each other. It is impossible to manage things by e-mail, things get lost, and there are cultural differences, for example sarcasm doesn’t work. There are other cultural boundaries – you really need to meet. The main point is to hold the travel budget roughly the same, rather than to actively try to cut it, as it is necessary and so there is no point trying to set targets. We are trying to reduce it through procurement” .

M.M. continued by explaining that the level of complexity of their intermediate products (as opposed to the majority of less complex intermediated products produced by the some of the competitors) requires extensive face-to-face. In this context M.M. claims that in the sector of software for the telecommunication sector the number and complexity of products can generate large amounts of business travel for key individuals, such as those who detain a very specialised area of expertise:

“For some of the complex and innovative products, they (such experts) can live out of suitcases. The time away can be frequent. We usually have a six month rotation, with the other six months involved in training and other development work. We usually have more than a hundred product launches per year world wide. Each of these has 200-300 man hours of work involved and an 18 month lead in time, so we have a series of parallel projects, for example, every year we have a new version of the main products and a global release. This is mostly “pipeline” management, so if there is a delay there can be a serious knock on effect”.

Conversely P.K., working as a Customer Relation Manager for a medium Irish company (Firm J) providing bespoke business solutions for the end users in the finance sector whose reach is considerably lower than M.M.’s company (the organisational design of the company is very localised and the customer base is spread across the UK and Germany only) but displaying a higher frequency, offered a very different account of business travel in his company. In particular, the high frequency of travel is explained by the high level of customisation that the product requires.

Overall our findings seem to suggest that firms selling intermediate products, because of the “peer-to-peer” nature of knowledge exchange characterised by a close similarity in terms of knowledge bases of the firms involved, tend to travel less frequently. Conversely, software firms servicing the end user market seem to travel more frequently. In this sense our findings tend to support the assumption that business travel can be function of the distance between the knowledge bases of the firms: where the gap is narrow as in the case of “peer-to-peer” exchanges, the need for frequent meeting face-to-face is reduced; vice-versa where the gap is wider as in the case of manufacturer/end user exchanges.

Travel Patterns of the Most Travel Intensive Individuals

As already described, within each firm the most travel intensive individuals were interviewed in order to obtain a more accurate picture of their individual travel patterns. In addition, drawing on Reich’s taxonomy of knowledge intensive workers (Reich, 1991) assessing travel patterns in terms of individual travel reach as well as number of new places allow us to estimate the extent to which the business travel component is part of the normal work routine for different types of workers as well as the freedom they enjoy in determining their itineraries. As a result of this second level of analysis, a taxonomy was produced in relation to different typologies of travellers (commuters, explorers and nomads) and this taxonomy was explained in terms of their individual functional activity for their single firm. Drawing on the second type of our interviews, by taking into account the most travel intensive individuals, Figure 3 shows a graphical representation of their travel patterns. On the Y-axis we measure the number of places that the most travel intensive individuals tend to visit on regular basis (individual traveller’s reach). On the X-axis we measure the number of novel places that for different reasons the most travel intensive individuals happen to visit.

On the basis of these two parameters we mapped out the travel patterns of the most travel intensive individuals for each company. From the figure emerges that travel patterns tend to cluster along three main modalities: commuters, explorers and nomads. By using different colours we represented their different functional activities: red for CEOs and Managing Directors (executives); blue for R&D Managers and CTOs (techies), pink for CRM Managers and purple for Marketing and Sales people. The functional activity seems in fact to partially explain individual travel patterns. Let us consider one traveller for each of the categories of our typology.

R.M., for instance, Marketing Manager of a software company whose main activity is to produce software for the telecommunication sector, is clearly a commuter. He lives in the UK and he travels twice a week to Dublin, where the company’s head office is located. When prompted to discuss his travel patterns he explained that:

“Unlike in other companies, the Marketing Manager [of a company specialised in the telecommunication sector] is part of the communication process rather then meeting to finalise sales”.

Very little business is actually carried out for customers in Ireland, with the exception of a contract for a major telecom provider, and as such the Dublin office is a development centre more than anything else. R.M. described the company as a company divided along different departments, which include the technology office, support services, sales and marketing. The nature of the company means that travel is often regionalised. The sales group are essentially divided into three geographical areas: Europe, USA and Asian pacific. The CEO travels less frequently, but long distances, and goes wherever he is needed:

“Most jobs require a lot of travel but the Chief Technology Officer travels the most. The technology office is like the hub for the intellectual capital and explaining the technology that explains the product is important. We are a technology driven company. Sales people make frequent short trips. They are not salesmen in the traditional sense but provide a range of skills to customers. The service and support people travel less frequently but for longer duration, maybe a few days maybe a week or so.”

Figure 3: Taxonomy of Travellers

When asked about the freedom and discretion he enjoys when deciding his travel, R.M. explained that there was a formal travel policy in place:

“A few years ago travel costs were getting out of hand, and it couldn’t carry on like that. Now all travel has to be authorised, you need to explain where you need to travel to and why. All travel is economy class, well, with the exception of trips to Australasia, and this includes senior managers. The costs have declined dramatically and there is more attention to travel costs, for example a trip that used to involve three people will be just one person: fewer people, travelling more cheaply with maybe slightly fewer trips, though this would be marginal. Since I arrived here, travel has changed a lot. Travel was a lot easier, frequent and less controlled”.

Figure 4: Taxonomy of Travellers by Functional Activity

The same point was reiterated by I.G., working as CRM Manager of a company providing software for universities, who also well represents the stereotype of the commuter: I.G. travels from Dublin to the UK on regular basis (2-3 days per week). I.G. in particular identified the need to travel in relation to the following purposes:

“Project managers and technical stuff travel more often (4-5 days per week on average), where I personally travel ‘only’ 2-3 days per week. They travel to solve practical issues of implementing the software on-site, where I go over more ‘to visit people”.

When asked about the freedom and discretion she enjoys when deciding her travel, I.G. explained that the company needs dictate who travels and where and there is also a formal travel policy in place.

The typology of commuters as it has been described seems to replicate within this professional and managerial group Reich’s account of in-person service workers, who engage in simple and repetitive tasks, often closely supervised and they are in direct contact with the beneficiaries of their work. This becomes clear if I.G. is contrasted with, for instance. B.M.. B.M. works as the Commercial Manager in the transport and telecom division of a company specialised in providing bespoke business solutions to corporate clients, is also a commuter but his more central location in the graph deserves some more thorough consideration. B.M. regularly travels to Amsterdam and “other places in Europe and in the US” and on average he is away for three days out of ten. When prompted to discuss his travel pattern, B.M. identified the need to travel for the following purposes:

• Prospect for new clients
• To deliver expertise and consulting
• The need to manage projects at the site of partners and the point of sales to end users,
• The need for regular, though brief, updates in person, checking that everyone is happy with progress or products.
• The need to ensure details are clarified, which could involve customers coming to Ireland, virtual communication, or “though its more unusual, shipping out a few techies over to them”

B.M. also described his job as exclusively to develop strategic partnerships:

“While there is no such thing as a typical week there are certain types of routine things that occur week by week. I spend my time writing proposals, detailing solutions – both on the technical side and the commercial side of developing proposals– then there is a lot of legal stuff, and on the travel side, prospecting and selecting targets, which I have to see in person”

When prompted to discuss freedom and discretion associated with business travel, B.M. explained that he controls his own work travel and this flexibility enables him to organise meetings at convenient times and with stay over that make the trip more enjoyable. B.M. described that the process involved a lot of networking, and might involve “contacts through contacts” cold calling or people with introductions from some of the support organisations, such as Enterprise Ireland. Travel might be arranged around a specific customer who wants to get together, but the trip is then filled up with other contacts, prospecting and networking to make the most of the trip. In this sense by extension of Reich’s argument, B.M.’s travel pattern recalls more the model of the symbolic-analyst than that of the in-person service worker.

Explorers, for instance tend to fit the description of symbolic-analysts more faithfully as well as displaying distinctive travel patterns. For example D.C., working as the CEO of a software company, is clearly an explorer: when prompted to discuss his travel habits he explains that he is based in Dublin but travels to Los Angeles every 3-4 weeks and stays there for at least a week. He also travels to London every two weeks for a couple of days. Most importantly what makes D.C. an explorer is his attendance to two main conferences:

“The people who travel the most are the CEO, the CTO and the Sales Director. The CEO goes to LA every 3-4 weeks and he stays there for at least a week, he goes to London every two weeks for a couple of days. The CTO goes to LA every 5-6 weeks and he stays there for ten days. The Sales Director travels extensively all around the US to meet up with potential publishers and he on average gives a presentation every three weeks. The entire team goes to two main trade-shows: one, the Game Developers Conference in March, which is very technical, therefore the entire team needs to attend ‘to keep everyone in the loop’ the other one, E3 is hold in May in LA and is open to the public”.

Again, when prompted to discuss his travel pattern D.C. pointed out how this has to do with his functional activity along with the company size:

“Obviously when you have simple products, you have easy sales and the amount of business travel that you have to do becomes less but for a small company is very important to have people close to the customers – the CEO and the CTO have to be there, out, all the times next to the bigger customers’. When the partnership with SONY began after briefly discussing a proposal over the phone, they asked to get someone there straight away and they were very impressed by Sean who immediately flew there (LA) on the following day, I think that’s how we got the deal”

He also clarified this point by explaining the importance of business travel for a small company:

“ When I go over as I am the CEO, we all get visibility: sending a senior manager is very important to finalise a deal, to meet customers, to meet potential customers and for networking in general. It has to do with prestige and it makes us look bigger than we actually are”.

When prompted to discuss the freedom and discretion he enjoyed when deciding his travel plans, D.C. explained that both the CEO (himself) and the CTO would actually decide for themselves and for all the others in the team.

Another explorer is P.C., working as a Managing Director of a company which is leading provider of business software solutions. He travels regularly throughout Europe and the US twice per week, but also to China and Asia Pacific for exploratory purposes:

“Most business travel is around Europe, but there is a lot to USA and the amount elsewhere is beginning to grow, particularly to China. The areas of Europe, USA and the Asian Pacific are three zones that are served by individuals that while based in Ireland will travel to and throughout that zone”.

Again when prompted to discuss his travel pattern, he explained that to provide a more professional service required more travel, in particular in two specific areas, it was seen as indispensable in two circumstances:

• Conflict resolution requires that we deal with a customer’s difficulty on a one-to one and face to face basis. This needs a personal touch.
• Contract Negotiations. This needs to be done in person “so you can see the whites of their eyes”

Another factor was to take clients to operations and even to bring them to meet other clients. This was typically between Ireland, the UK and Germany:

“For example, one client we have is a Bank in Ireland, and we arranged for them to meet another customer which, as they need to meet a non competing bank, means that we take them to Germany”

When prompted to discuss the freedom and discretion he enjoyed when deciding his travel plans, P.C. explained that he enjoyed a good degree of discretion over his travel plans but a centralised booking procedure was in place. Everything is booked electronically through a travel company, though where need be, people can make their own travel arrangements either directly or through their office assistants. However, this was considered by P.C. as a cost-controlling measure more than as a mean to more closely supervise employees.

In this sense, the range, the level of sophistication of the different activities that justify explorers’ business travel patterns as well as the freedom and discretion enjoyed seem to recall the features that characterise more closely the work of symbolic analysts.

However, the same distinction between in-person services and symbolic analysts tends to blur when considering nomads. In terms of travel patterns, very different is the travel patterns undertaken by the travel intensive individuals located in the upper right hand side quadrant of the graph.

G.B. is the CEO of a company, which provides a range of software solutions for both the wholesale and retail telecommunications markets. He is a nomad as he regularly commutes between Ireland and the UK (where he lives), and travels to Finland and the US along side with some “ad hoc trips to the usual countries” referring to China, India, Japan and more broadly to the Asian Pacific area.

When prompted to discuss his travel pattern, he explained that while there has been a great deal of change in the sector, and thus lots of change that company has had to adapt to, things have not radically changed for the company in the last few years. The company initially started as a start up, providing software to telecom companies. There has been an evolution of the company and an increase in scale but there has been no real structural change. Part of the evolution of the company is that it now sells to destinations further from its Dublin base. The company is still relatively small, with fifty employees but has been growing steadily, partly through acquisitions, and now has a small research and development centre in Galway and regional offices in USA and Europe. The company also plans to acquire other companies in the near future. They are also attempting to change their business model, which will mean that they will not just sell software but different types of service, with more done remotely, giving less reason to visit clients.

G.B. identified himself as amongst the most widely travelling members of the company, but in addition to himself he identified sales staff as the most travel intensive, followed by project specialists. Sales in particular require business travel:

“With sales, there is a need to visit them, they need to be confident, you need to be able deal with objections and you need to be there to sign contracts and to talk through the contract with the client. The only time you don’t travel if there is a chance of doing business is if there is a sense that the deal is looking increasingly unlikely”.

G.B. also explained that there were cultural issues that implied travel:

“The customer expects the supplier to visit them, if not they don’t think that we can take care of them. Sometimes they need to see the CEO to know you are a serious company; its reassurance for them”.

There are also different cultures of doing business which might have an impact on attending a meeting at even greater distance than might otherwise be expected:

“But it is expected for us to go out and show that we do care. One example, with one partner company in Japan, I met with the CEO of the company when he was in the UK, what annoyed him was that we never meet in Japan, but this account is small and a trip there for a few days considering the loss of other possibilities, the cost, the time, it would be unproductive. With a large account, things would be different, I would be under an obligation to go there. The cost-volume ratio means that there is no excuse to go to Osaka, but there are many Japanese cultural practices and rituals that require doing business by sitting down in the same room”.

In this sense, G.B.’s account as representative account for the category of the nomads sheds light on the duality of nomads’ functions: whereas nomads in exceptional circumstances can also recall the work of in-person services, the big majority of their travel echoes symbolic analysts.

Preliminary conclusions and directions for further research

The aim of the paper was to establish a more explicit linkage between business travel and cluster dynamics. In particular, this paper sought to use business air travel to analyse the structure and the functioning of the software cluster in Dublin.

More precisely, the paper attempted to assess the role of business travel in relation to clusters’ new knowledge creation. Whereas most cluster studies have focused on the diffusion and innovation process at intra-cluster level, more limited consideration has been devoted to understanding the process of absorption of extra-cluster knowledge and to less extent the importance of business travel. In this sense, this paper attempted to contribute to the ongoing debate between permanent and temporary proximity in several ways. Firstly, by endorsing the most recent views of cluster dynamics and the varieties of proximity (Bathelt et. al., 2004; Leamer and Storper, 2001), we investigated the importance of business travel at firm level by looking at the individual business travel patterns of specific firms. In particular we looked at how hand-shakes occur by investigating whether these travel patterns fulfil any specific task amongst those predicted by the literature, whether they act as “pipelines” or if they contribute to nurture the so-called “local buzz”.

As it clearly emerged, Dublin software firms tend to undertake different travel patterns with foreign firms travelling more frequently and in particular visiting many places as opposed to indigenous Irish firms. In this sense our findings tend to confirm previous studies according to which foreign companies, opposed to Irish firms, display broader reach and their interaction – often substantiated by large amount of air travel – with multiple locations (Van Winden and Woets, 2003; O’Riain, 2004). The remarkable division between indigenous and foreign firms identified by the literature is therefore even more clearly visible if we take into consideration firms’ business travel patterns.

Additionally, from the comparison emerges that business travel reach is also affected by different forms of organisational design (the geographical spread of the firm divisions), the international collaborative strategy implemented, along with the degree of dispersion of the customer-base. In terms of frequency, it seems to be associated with the deployment of team-based projects as well as different level of customisation of the product. This last feature suggested that the frequent need to have face-to-face contact, via business travel might be associated with the relative distance of firm knowledge bases. In this sense the findings seem to suggest that foreign firms might be actively engaged in extensive extra-cluster networking since they are marginally involved in the intra-cluster network as the literature shows (O’Riain, 2004). Given that indigenous firms are engaged in higher value activities, the outward looking attitude of foreign companies might be the result of seeking other firms possessing not too dissimilar knowledge bases outside the cluster.

This issue was further investigated in relation to two sub-sectors of the software industry on the basis of their typology of products: firms selling intermediate products and firms selling final products to end users. The findings indicate that there is another clear-cut distinction with firms selling intermediate products travelling less extensively in terms of frequency than companies selling final products to end users. Overall the findings seem to suggest that firms selling intermediate products, because of the “peer-to-peer” nature of knowledge exchange, tend to travel less frequently. Conversely, software firms selling final products to end users seem to travel more frequently. As for the value and the complexity of the product, our findings to tend to confirm Leamer and Storper’s theory (2001) according to which the complexity of the product in both markets (intermediate product and final product) is a significant factor in explaining hand shakes. As for the “peer-to-peer” nature of knowledge exchange, our findings tend to support the assumption that business travel can be a function of the distance between the knowledge bases of the firms: where the gap is narrow as in the case of “peer-to-peer” exchange for intermediate products, the need for frequent meeting face-to-face is reduced; vice-versa where the gap is wider as in the case of manufacturer/end user exchanges for final products, there is the need to travel more frequently.

Secondly, drawing on the literature on intra-cluster knowledge system and firms knowledge base (Giuliani, 2005; Giuliani & Bell, 2005; Dosi, 1999) we investigate the importance of business travel by looking at the most travel intensive individuals within those firms. To this end, our taxonomy of travellers distinguishing between commuters (who travel frequently from their ‘home’ to a limited range of regular destinations), explorers (who travel frequently to a broader range of destinations at least some of which are new), and nomads (who are continually on the move and have no clear home) is a meaningful distinction to explain different travel patterns.

Commuters tend to be to a large extent very customer-oriented. CRM Managers and Marketing and Sales people tend to engage in handshakes with customers by moving frequently between a few well-defined nodes of the existing market, wherever the customers – buying either an intermediate product or a final product – might be located. They mainly constitute the public interface of the company, a sort of very mobile front office, as well as its main pipeline into the final market. The typology of commuters tends to echo Reich’s description of in-person services which entail “relatively simple” (i.e. sales and customer service activities as opposed to the strategic planning of the explorers) and repetitive tasks (i.e. commuting across very well defined travel patterns), often closely supervised (i.e. little or no discretion over travel patterns) and they are in direct contact with the beneficiaries of their work (i.e. sales and other customer oriented activities).

Explorers tend to be strategy-oriented, often executives such as Managing Directors, CEOs and CTOs that need to travel in order to successfully conduct deal negotiations, to attend internal meetings or to establish pipelines in distant markets. Most of the travel undertaken by explorers is about “command and control” – coordinating the activities of the firms. In this sense, the range, the level of sophistication of the different activities that justify explorers’ business travel patterns as well as the discretion they enjoy seem to more closely recall the features that characterise symbolic analysts.

Nomads a category are the most heterogeneous and therefore able to fulfil either one or the other task. They equally engage in handshakes with customers and/or with executives. This flexibility often creates complex business travel patterns both in terms of frequency as well as reach. The same duality affects their qualification in terms of similarities with Reich’s taxonomy: whereas nomads in exceptional circumstances can also recall the typology of in-person services, they more often closely resemble symbolic analysts.

Only the commuters travel along clearly defined “pipelines”; the travelling of both explorers and nomads shows how all elements of the cluster have more complex external connections than proposed by most of the cluster research literature where the fascination with innovation assumes that the purpose or at least the function of travel is the transfer of knowledge between clusters. While we know that such contacts with customers or suppliers can be important for innovation (Rabellotti, 1997), it hardly follows that the needs of innovation is an adequate explanation for all business travel. Our interviews indicate that although knowledge creation represents a substantial amount of business travel, not all business travel has to with knowledge creation. Clusters for instance represent a significant point of origin for “pipelines” but not as a destination.

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NOTES

* Alessandra Vecchi (vecchia@tcd.ie) post-doctoral research fellow at the Institute for International Integration Studies (http://www.tcd.ie/iiis), Trinity College Dublin; James Wickham (James.Wickham@tcd.ie) Jean Monnet Professor of European Labour Market Studies, School of Social Sciences and Philosophy, Trinity College Dublin

1. National data is sometimes available (see for example http://www.statistics.gov.uk/ssd/surveys/international_passenger_survey.asp) and there are accurate descriptions of specific national markets (see for example Denstadli & Lian [2004] for a thorough description of the Norwegian business air travel market) but a comprehensive international data set is still missing.

2. The knowledge base of the firm is conceived as a “set of information inputs, knowledge and capabilities than inventor draw on when looking for innovative solutions” (Dosi, 1997: 126). Conversely, This knowledge base is considered the result of a process of cumulative learning, which is inherently imperfect, complex and path-dependent: imperfect due to the uncertain nature of technological change and the the agents’ bounded rationality; complex because learning and innovation are not linear processes; path-dependent because past technological achievements influence future achievements (Dosi, 1997).

3. Some observers link the emergence of the indigenous industry with the presence of MNCs. Enterprise Ireland however affirms that this connection is very tenuous and no link actually exists. Very few Irish firms have been started by ex-MNC employees, nor has there been any history of subcontracting by MNCs. The only real link is represented by the turnover of skilled labour (e.g. staff leaving one company to join another one).

4. Enterprise Ireland uses the term Internationally Traded Services, which comprise ICT, financial and banking software and digital media. The sector accounted for €2.8bn of sales and €1.48bn exports in 2001.

5. There are other smaller “clusters” in Limerick, Galway and Cork but few other ICT companies elsewhere in Ireland.