Finding Business Partners in Bulgaria : Strategies Used by SMEs and Things the Government Should Do to Support SME Clustering

The various stakeholders in national innovation systems are interested in clustering for different reasons. The relationship between Bulgarian firms has been evolving through complex organizational partnerships. These partnerships seek either to increase competitiveness or avail themselves to funds for the formation and development of clusters. Policymakers mimic trendy EU or global policies, and utilize funds to support favourable regions, sectors or party allies. Some business associations or business leaders promote themselves by rebranding their activities through clustering discourse. Academic entrepreneurs see clustering as a fast track to research commercialization and so on. However, little attention has been paid to the actual practice of finding business partners and the evolution of productive partnerships that later institutionalize into sustainable organizational networks. This paper presents the author’s practical experience in nurturing and assisting Bulgarian firms’ search for business or research partnerships domestically or internationally (Bankova and Yalamov 2011). It will draw on institutional knowledge (such as the ARC Fund and Enterprise Europe Network – Bulgaria) and quantitative data from national representative innovation surveys. It will be posited that cluster policies in Bulgaria are ineffective and naturally induce firms’ opportunistic behaviour. Real clustering only emerges as a market response to demands of foreign companies. By examining innovation partnering, which is central to the form of business partnership leading to the establishment of clusters, it will be demonstrated that innovation in Bulgaria is rather a closed or close proximity phenomenon. In other words, innovation is driven by embedded social networks rather than institutions or clusters. This paper concludes with recommendations to the government and other national and international stakeholders as to the ways they should modify their support for SME clustering in Bulgaria