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Science parks

economic engines or a real estate concept?

Prof. dr. Jacques van Dinteren – j.vandinteren@royalhaskoning.com University of Groningen, Faculty of Spatial Sciences, The Netherlands

Royal Haskoning, Nijmegen, The Netherlands

Paper for the ERES-conference 2009 Stockholm, 25 – 27 June 2009

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Abstract Given the increased importance of knowledge as a production factor in many companies it is not surprising that there is a growing interest in the development of science and technology parks. These parks often have a high quality. The question comes up whether a science park is a real estate concept or an ‘engine’ that stimulates the exchange of information and innovation. Research results (mainly in the United Kingdom) suggest that for entrepreneurs the importance of proximity to other firms and universities is limited when it comes to strategic knowledge. Being established on a science or technology park can nevertheless be interesting for firms: a stimulating informal circuit can occur and, moreover, the proximity of a university offers possibilities to attract young talent. With regard to attracting people in a labour market that will become more and more stressed in the coming decade, the high quality of the buildings and environment of a science park can be of importance. In that light a science park could be a real estate concept rather than an engine for innovation. If such a high quality development will have success attention has to be paid to, among others, location, market and target group identification, management and customer orientation. In this paper I will elaborate these ideas and I will present the results of research on two science parks in the Netherlands. Are these parks of importance for the regional economy (linkages, innovation) or are science parks mainly a real estate concept?

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1 A RELATIVELY RECENT PHENOMENON

1.1 Differences between European countries

Various definitions are used to describe science parks, also commonly known as research parks, technology parks, etc., but, according to Hansson (2004), they usually have the following elements in common: − physical proximity of a university; − a focus on knowledge and high-tech companies; and − the presence of an organisation that is helpful to start-ups. Sometimes, as in the Association of University Research Parks’ (AURP) definition, there actually has to be a contractual, formal or operational relationship with a university. The basic idea of a science park is that through such a relationship with a university (or possibly another knowledge institution) an interaction will develop between theory and practice, resulting in new products and thus to economic growth. This is why policymakers and politicians are often very keen to create a science or research park in their city or region. A study by the International Association of Science Parks (IASP; 350 members with a strong European representation) among its members reveals that while only one park was started in the fifties, there was a “boom” in the eighties, after which the number of establishments decreased slightly, maybe as a result of the economic situation (figure 1). A quarter of the members started developing their own science parks in the first half of this decade. In the North American research park organisation (AURP), 14% of the parks were set up between 2002 and 2006. Almost three-quarters of AURP’s members began their developments in the eighties or nineties. Figure 1 Start-up year of science park development, IASP membership (2006-2007)

There appear to be quite a number of differences between countries, although this is difficult to establish precisely. The number of parks relative to the size of the population provides some indication (table 1). Pioneers in the field of innovation, such as Sweden and Finland, have a relatively large number of science parks. It should be noted in this context that, in fact, it is not enough to look simply at the number of parks because the size of science parks can differ considerably. Among the AURP members, the smallest park has an area of 1.8 ha. The average size is 200 ha, but this average is brought up by a few large sites. The median size is 46 ha. Figures from the IASP provide a similar picture: 19% of the sites are larger than 100 ha and 40% smaller than 20 ha. Examples of large-scale developments are Sophia Antipolis (2,300 ha) and

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One North in Singapore (200 ha). In these cases, residential areas are also often included on the site and the development takes on multifunctional forms. These figures also do not tell us anything about the functioning of the science parks. For example, Portugal has a reasonable number of science parks but, according to Ratinho et al. (2007), various Portuguese sites are science parks only in name. Table 1 Science parks, an international comparison

1.2 Innovation and science parks in the Netherlands

The Netherlands does not rank very highly among these countries. The Netherlands has a modern economy, but tends to be more of a service economy than a knowledge one. This is worrying the government, which has set up the “Innovation Platform” in order to change this situation, by means of: − a professional population that is as well educated as possible; − strengthening and making more effective use of our knowledge base; and − strengthening our innovative and entrepreneurial skills. This involves strengthening the entire knowledge chain: from pre-school education and lifelong learning to excellent scientific research and innovative entrepreneurship (KIA, 2009). According to the Innovation Platform, the Netherlands has a good starting position but loses ground to competing countries, such the United States, Germany, Finland, Sweden and Canada, which are currently, during a period of crisis, correctly investing very strongly in education, research, and innovation and entrepreneurship. In addition, it seems that total R&D growth in terms of GDP has been more or less zero since 2000, while in all other European countries there has been growth. As regards the EU member states, the Netherlands belongs to the category of “innovation followers”. This gives the Netherlands a higher score than the European average, but it remains behind the leading group (Sweden, Finland, Germany, Denmark and the United Kingdom; KIA, 2009). The country’s position as “innovation follower” is perhaps the reason (or one of the reasons) for the existence of a relatively small number of science parks in the Netherlands. If we take another look at the comparison between countries above, we see that Finland, for example, has eleven times as many science parks (in proportion to its population), while Sweden has four times as many and the United Kingdom twice as many.

Country Umbrella organisation of science parks

A: population size

(millions)

B: number of parks /

affiliated science parks

B:A

Netherlands None 16 10 0.6 United Kingdom

United Kingdom Science Park Association (UKSPA)

60 70 1.2

Finland Finnish Science Park Association (TEKEL)

5 33 6.6

Portugal Portuguese Association of Science and Technology Parks (TECPARQUES)

11 12 1.1

Italy Italian Association of Science and Technology Parks (APSTI)

60 31 0.5

Sweden Lindelöf and Löfsten (2003) 9 23 2.6 Spain Spanish Association of Science

and Technology Parks (APTE) 45 69 1.5

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The first initiatives for science parks in the Netherlands were launched in the eighties: the Bio Science Park in Leiden and the Business & Science Park Twente. These were later followed by Zernike Science Park (Groningen), Delftech Park (Delft), Business Science Park (Wageningen), Mercator Technology & Science Park (Nijmegen) and Amsterdam Science Park. Recent years have seen the development of the High Tech Campus (Eindhoven), the Technopolis Innovation Park (Delft) and the Science Park Utrecht. All of the science parks have been located in university cities. The two smaller university towns of Tilburg and Maastricht do not have a science park. 2 CHARACTERISTICS OF SCIENCE PARKS

2.1 Environment

Where are the science parks found? On the basis of the definition, one might expect to come across them in the vicinity of universities. But “vicinity” is an elastic term. As regards sites bordering or coinciding with one another, this is true for only 36% of the parks affiliated to the IASP. 37% of these science parks have at least one university within a radius of 50 km. 60% have at least six universities within reach within this radius and no fewer than 21% have more than 20. It can also be noted that a good two-thirds of the science parks affiliated to the IASP are located in a town and 27% in the vicinity of one. The size of the town appears to be less relevant, since four of the ten science parks are situated in or near a city with over 1 million inhabitants and a more or less identical number in towns with fewer than 500,000 inhabitants. The type of region is also relevant. A strong regional knowledge economy has a positive influence on the functioning of science parks and the businesses located there. They have almost twice as many patent applications as companies at science parks located in areas with less well developed regional knowledge environments (ANGLE, 2003). A well-chosen region and location are important. In Portugal, you can find examples of science parks that are not functioning well because these factors have not been taken sufficiently into account. For example, there may be no genuine link with a technical university. The university in question may be focused on economics rather than on technology, or the region in which the park is located may have no clearly developed technology or knowledge sector (Ratinho et al., 2007). 2.2 Interaction

The essential goal of science parks is to generate economic growth by entering into and extending relationships between knowledge institutions, generally a university, and the businesses established in the region – science parks as meeting places. These relationships do not develop as a matter of course. They even seem to be conflict with the link that exists between the quality of information and the willingness to travel long distances for it. The underlying idea here is that of different levels of work and contact within organisations, varying from the more routine contacts at the lowest level to the strategic contacts at the top level. In the latter case, it is a question of so-called “orientation contacts” that have to supply information for strategic long-term decisions. Knowledge is a crucial factor here and communication at this level primarily takes place via personal contacts and over long distances. Travel is a necessary component. Dutch ICT and life science companies principally look beyond their own region for the pertinent knowledge required to solve technological and organisational problems. Regional knowledge contacts appear to be more transient and less relevant knowledge is exchanged (Weterings and Ponds, 2007). Another study found that the cooperation between universities and businesses in the Netherlands has chiefly a national orientation (Ponds and Van Oort, 2006). In the United

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Kingdom, 41% of the companies at science parks have a relationship with a university or knowledge institution. In 90% of cases, this is a university or knowledge institution in the area of the place of business. This seems inconsistent with the results of the Dutch study, but looking more closely it appears that this mostly concerns no more than informal contacts. Only one-quarter of the relevant entrepreneurs report the existence of strong relationships (ANGLE, 2003). The limited number of structural, close relationships may perhaps be disappointing, but the existence of an informal circuit at science parks may, according to Capello and Morrison (2005), produce substantial positive effects. They state that science parks are particularly important for setting in motion spontaneous mechanisms of knowledge transfer in a regional economy. Small businesses in particular may benefit from this. 2.3 The concept

On the basis of the results of studies, it may be assumed that there are either no strategic relationships between companies and between companies and the local university/universities or that such relationships are not very strong. The added value of a science park is therefore not to be found in this context. Perhaps then we should view a science park primarily as a real estate concept. Not in the narrow sense of the word (property development) but more widely, so that the facilities, etc., are also included in the concept – a development that differs from other commercial sites by its high level of spatial quality and facilities. A science park really wants to be more than a business park by offering facilities associated with the presence of a university and a university community. The IASP population yields the following figures: − 65% of the parks utilise specific services together with universities; − 54% of the science parks share infrastructure (e.g. laboratories) with universities; − 72% of the parks host university research teams; and − a transfer office (industry liaison office) is located on 27% of the sites. In addition, “business incubators” are frequently found on science parks, including professional support for start-up companies. At the same time, special regulations may be in place for subsidies and attracting risk capital. It is therefore a specific and high-quality real estate concept that is involved and one that is very attractive to companies in the knowledge sector, partly because of the informal contacts but also because a specific working environment is on offer (facilities, workplaces, environment, ambience) that may help to attract and retain highly qualified personnel in an employment market that is becoming increasingly tight (Van Dinteren, 2007). However, a concept such as this will only be successful if it is rigorously adhered to and the selection criteria for interested entrepreneurs are strict. ‘If someone rang and said “I want to put up a 10,000 sqm building”, I would ask which professors they are working with. If they couldn’t answer the question I’d tell them to go to one of the colleges. It’s not an open season science park. You have to demonstrate links with the university to be here’ (David Adamson, director of Estate Management, Cambridge University in Property week, 12-08-2005). A committee is often set up with particular responsibility for checking (potential) links with the university. This takes place in one way or another with all members of the AURP. This selection results demonstrably in occupancy by companies that subscribe to the ideas of a science park. In the case of the AURP population, the sectors represented on the science parks are biotechnology/pharmaceuticals, software/ICT and computers/electronics. The picture at the science parks in the United Kingdom is virtually identical. The nature of the activities carried out by the science park companies in the UK is also known: R&D and new product design make up the main tranche (about half of the companies), followed some distance behind by consultancy services.

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2.4 Regional economic added value

If there are doubts as to the strategic nature of the relationships between companies, universities and knowledge institutions at and around science parks, the question also arises as to whether a positive effect on the regional economy may be expected. Various researchers commonly debate the positive effects of science parks on the functioning of companies, the innovative strength of a region and on regional economic development (Hansson, 2004). For example, studies show that there are no significant differences between companies within or outside of science parks in terms of chance of survival, employment growth, numbers of patents, new products, etc. (Westhead and Storey, 1994; Westhead, 1997). Wallsten (2004) confirms that there are no differences in terms of employment growth, numbers of companies or the ability to attract risk capital between counties with and without science parks. However, differences are sometimes found in other specific subareas. Siegel et al. (2003) showed that companies at science parks display greater research productivity. The underlying factors are however not taken into account in this study. The ANGLE study, on the other hand, finds more significant differences. It reveals that companies at science parks display stronger growth, develop twice as many new products and have a far greater proportion of qualified scientists and engineers than similar companies (by sector and size) that are not located at a science park (ANGLE, 2003). The absence of an unequivocal picture in this area is possibly the result of the fact that the research methods used, variables selected, scale levels (e.g. companies or counties), etc. are totally divergent. Hansson (2004) believes that too much attention is paid to traditional economic variables and that far more emphasis should be placed on the different aspects of knowledge. It should perhaps also be added that science parks are possibly too heterogeneous in terms of employment environments for definitive conclusions to be drawn regarding their effects. 3 HIGH TECH CAMPUS AND BIO SCIENCE PARK

3.1 Characteristics

There are no studies like those mentioned above concerning the Dutch situation. For this reason, an investigation was started at the University of Groningen with the aim of obtaining more insight into the functioning of science parks in the Netherlands. The investigation began with the Bio Science Park in Leiden and the High Tech Campus in Eindhoven. The former is located in the economic centre of the Netherlands, the Randstad, and the latter in what is known as the “intermediate zone” (between the Randstad and the peripheral area). The number of businesses on these science parks is limited. The High Tech Campus houses 60 companies and the Bio Science Park 73. In total, 32% and 43% respectively of the management of these companies responded to the survey carried out. This yields a fairly small response population of a total of 50 companies. The results of the investigation presented here must therefore be regarded as indicative and do not per se reflect the whole population. The two parks differ from one other in various respects. Table 2 summarises the most important of these. In the Netherlands, it is quite common for the local authority or a university to take the initiative to start a science park. It is less common for a company to take this initiative, as in the case of the High Tech Campus. There are two underlying reasons for this. The Philips electronics group wanted to compensate the Eindhoven region for moving its head office to Amsterdam. But Philips was itself aiming for a new development that would be able to propagate the idea of “open

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innovation”. Initially it was only for Philips subsidiaries and direct suppliers, but since 2002 it has been open to all relevant businesses. Table 2 Individual characteristics of the two science parks studied

3.2 Environment

Both parks are located in an urban environment. A university is situated on site or close by. Both developments therefore fit in with the general picture. The choice of the region was determined by historic inertia for approximately one in three companies. The presence of a university and knowledge institutions is the most important regional location factor. For Eindhoven, there is also the image of an innovative region. Comparable to this to some degree (but with a slightly lower score) is the fact that companies at the Bio Science Park consider the presence of other companies in the same line of business in the region to be important.

Table 3 Regional characteristics of choice of location (percentage of the entrepreneurs who named the relevant factor; most important factors with a score of over 25%)

High Tech Campus, Eindhoven Bio Science Park, Leiden

Start 1999 1984 Target group High-tech R&D companies Life sciences Initiative Company (Philips) University and local authority Development Deliberately set up and developed

as a specific concept Gradual growth without following a defined municipal concept

Size 103 ha 145 ha Number of companies/employees

60/6,000 73/3,100 (excluding knowledge institutions)

University on site No, technical university in the city Yes, to some extent “Business incubator” Yes Yes Facilities Clean rooms, laboratories, test

facilities, design and fabrication support for product prototypes, meeting rooms, restaurants, Media Research Center, Centre for Technical Training, Operating Materials and Supplies Island, shops, sports facilities

Central, multifunctional space, natural history museum, networking meetings

High Tech Campus Bio Science Park

Proximity to university/knowledge institutions 53% 52% Innovative region 53% Geographical location 35% 38% Easy to reach 29% 38% Presence of companies in the same line of business in the region

38%

It turned out that way for historic reasons 29% 38%

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3.3 Interaction

The opportunities to enter into relationships and achieve lasting cooperative links should be a characteristic of science parks. From the list of location factors, it would seem that this was one of the reasons for the companies at the two science parks selecting their relevant locations. We gave the entrepreneurs a number of statements (table 4) to obtain more information on this.

We can confirm – on the basis of the findings – that greater knowledge productivity within the company is not guaranteed by the presence of knowledge institutions and other companies in the immediate environment. Some results are positive, others are not. The respondents from the Bio Science Park disagree with this statement to a greater degree than those from the High Tech Campus. The statement that being located at a science park is principally a good opportunity for profiling the company yielded more or less the same picture. Unsurprisingly, there is a marked negative relationship with the first statement: those who said for the first statement that knowledge productivity is not encouraged were more likely to say for the second statement that being located on a science park is a good way of profiling the company. The idea expressed earlier in this paper that the exchange of knowledge is certainly not primarily linked to a science park is emphasised here. The majority of the entrepreneurs would be prepared to travel very long distances for crucial information.

Table 4 Scores for statements presented

Although 56% of the respondents agree with the statement that, in practice, the science park does not really provide their company with very much when it comes to relationships with knowledge institutions and other companies, nonetheless, at the Bio Science Park, 61% of the respondents state that they collaborate with other companies at the park. For the High Tech Campus the figure is much the same at 65%. However, this includes every conceivable form of relationship. If we look specifically at relationships in the field of R&D, there is a noticeable difference between the two science parks investigated. They were questioned about collaboration in the field of R&D (in terms of capital and man-hours) and the geographical distribution of this. The Bio Science Park yields the expected picture that the contribution of the science park, town and region is

1. Knowledge productivity in our company is significantly higher than it would be in another location because of the companies and knowledge institutions located in the immediate vicinity of our company .

Totally disagree 14% Disagree 32% Agree 42% Totally agree 11% 2. In practice, a science park does not really seem to provide our company with very much when it

comes to relationships with knowledge institutions and other companies. But it is a good way of profiling our company (marketing, image).

Totally disagree 6% Disagree 38% Agree 43% Totally agree 13% 3. Distance is irrelevant when it comes to knowledge that is genuinely crucial for my business. If

necessary, I would travel to the ends of the earth to acquire this knowledge. Totally disagree 0% Disagree 26% Agree 46% Totally agree 28%

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limited and that R&D cooperation operates via the national to international levels (figure 2). The picture for the companies on the High Tech Campus is totally different, with the science park itself and the city playing a far greater role. This may be linked to the highly innovative nature of the Eindhoven region, where the High Tech Campus is situated. In addition, the whole concept underlying the High Tech Campus was designed to stimulate research collaboration. Cooperation with the university is limited. On the High Tech Campus, 29% of the respondents say that they work with the university. The figure for the Bio Science Park is 42%.

Figure 2 Regional distribution of collaboration with other companies in the field of R&D, Bio Science Park, Leiden

Figure 3 Regional distribution of collaboration with other companies in the field of R&D, High Tech Campus, Eindhoven

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3.4 The concept

Table 5 shows the highest-scoring local location factors. On the High Tech Campus, it is more a matter of being able to work together than the mere presence of other companies. The presence of specific facilities is also a contributing factor. This is in line with the results described above regarding major interaction on the site and in Eindhoven. It is interesting to note that at the Bio Science Park the image of the buildings scored particularly highly, while the companies on the High Tech Campus gave a high score to the park as a whole. Table 5 Regional characteristics of location selection (percentage of the entrepreneurs who named the relevant factor; most important factors with a score of over 25%)

With respect to the university in concrete terms, respondents were asked how much they valued the various opportunities that the university could offer to companies. The question concerned the valuation and not the actual situation. The various aspects are listed below in descending order of valuation: - Opportunities for joint research with the university – 60% (very) positive - Access to libraries and information systems – 58% (very) positive - Access to graduate students – 55% (very) positive - Opportunities for university staff to work part-time in our company – 46% (very) positive - Contract research – 38% (very) positive - Academic training programmes for my staff – 34% (very) positive - Access to laboratories or clean rooms – 34% (very) positive - Opportunities for part-time tuition given at the university – 17% (very) positive. It can be established that an above average number of opportunities are seen for cooperation with the university, as well as that the access to new graduates has a notably high score. The two sites also exhibit differences, with the High Tech Campus again revealing that interaction seems to play a somewhat greater role here than at the Bio Science Park. The following opportunities are generally valued more highly at the High Tech Campus than at the Bio Science Park: - Opportunities for university staff to work part-time in our company - Academic training programmes for the staff of companies located at the science park - Access to laboratories or clean rooms.

3.5 Regional economic added value

The investigation into the two science parks focused on the companies located there. No comparison can be made with the functioning of companies located outside the two parks.

High Tech Campus Bio Science Park

Presence of other companies and institutions on the site

61%

Image of the park 71% Presentable buildings 36% Rental and service charges 29% Opportunities to collaborate with other companies close by

35% 26%

Specific facilities for the business process (clean rooms, labs, etc.)

29%

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Nonetheless, it is possible to make some statements about the economic importance of the two sites. The added value for the region may be the fact that more employment opportunities are available and that the image is improved. Eindhoven was already referred to as a high-tech cluster before the High Tech Campus was set up, but the High Tech Campus has made a positive contribution to the region and has increased awareness of it as a location. The High Tech Campus, with 6,000 jobs, is also an important employer in the region and, in view of the strong interaction with other companies in the region as mentioned above, it may be assumed that a significant multiplier effect emanates from this science park. About 3,100 people are employed at the Bio Science Park. 4 SCIENCE PARKS: CHIEFLY A REAL ESTATE CONCEPT AFTER ALL?

The general picture to emerge is that mutual strength and strategic relationships are not essential to companies at a science park. Looking at the international study and the results of the study on two science parks in the Netherlands, what is of particular importance is being able to work in a specific environment that is advantageous for the companies involved, strongly geared to knowledge as they are. These advantages arise from the opportunity for informal contacts, the opportunity to share facilities and the presence of large numbers of knowledge workers (employment market, opportunities for exchanges with the university) and new graduates. What is also worth noting is the difficulty of making generalisations about science parks because the parks may be very different from one another. In our study, the High Tech Campus is an example of this, since it seems that the cooperation between companies at the park and in the region is far stronger than average. In general, therefore, it would seem to be far more a matter of a specific, local environment. Science parks will always have a reason for existence because they can serve a specific market segment. In this sense, we can speak of a particular real estate concept. Naturally, the accommodation plays a part in this but the environment on offer and the package of facilities are also far more important than in other concepts. Because the proportion of highly educated people in the companies to be attracted for a science park is very high, extra attention needs to be paid to this. There is no doubt that, in the coming decades, highly educated personnel will become scarcer as a result of demographic changes. For knowledge-intensive companies, being able to attract and retain highly qualified employees will become vitally important. Even now, 26% of Dutch entrepreneurs report having problems attracting staff with qualifications at the university and higher vocational levels (Ministerie EZ, 2005). This results in the “battle for brainpower” trend reported by many people. What we are now seeing is that the working environment and location will be expressly assigned a role in the struggle to attract talented employees. The quality of the work environment is expressed in particular in terms of attractive architecture, optimal organisation of the buildings, social security, landscaping and, without doubt, a broad range of facilities on offer, including recreational opportunities. In all of this, it should be noted directly that while facilities can play a role in the choice of workplace, they will rarely constitute the decisive factor. Nonetheless, a clear shift can be observed towards more qualitative aspects and there is no doubt that increasing numbers of employees are no longer looking just at salary and career prospects. Thus, it is also interesting to see that 73% of the entrepreneurs at the Bio Science Park in Leiden and the High Tech campus in Eindhoven (totally) agreed with the following statement: In view of the increasing scarcity of highly qualified individuals on the employment market, it is essential that a science park offers the optimal work environment to employees. This involves extensive facilities (for instance, shops, hairdressers, catering establishments, fitness studios, etc.) and an

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attractively designed business park with recreational opportunities (walking and running routes, meeting places, etc.). If a science park actually has to be a specific real estate concept, serious attention must be paid to this in various respects. The case of the correct choice of region and location has already been mentioned, as well as the need to closely monitor the companies establishing themselves at the park and to ensure a specific combination of facilities. It is important to avoid development being prompted solely by available subsidies. Failures do a region no good. Local authorities sometimes allow themselves to be too easily persuaded by the availability of subsidies to make plans that are too ambitious. In addition, it is possible for planners to overestimate themselves under the assumption that a science park can be used to create development in a cluster of companies that are as yet very small. Clusters can be, at most, strengthened, but not developed (cf. Porter, 2003; Ponds and Van Oort, 2006). What is crucial is the management and customer orientation (think about customer satisfaction surveys, proactive marketing, etc.). With the concept and target group described, the management must first and foremost “take care of everything” in the short term and have a good strategic vision for the long term. The absence of such a strategy is currently posing problems for science parks in the United Kingdom and leads to limited growth or none at all. Perhaps it is not more science parks that we need, but better ones. The author would like to thank Master’s students Chris de Vries and Anne van der Steeg for their help in collecting and analysing data for the studies on the Bio Science Park and the High Tech Campus. References − ANGLE (2003), Evaluation of the past and future economic contribution of the UK Science Park Movement. Little

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