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August 21, 2017

What and why meso organisations?

The previous Article 1 (Annual Reflection 2017) explained the importance of the meso level to achieve competitive regions and sound economic development. It also differentiated between meso policy and meso space. This article looks at the meso space, which is the group of public and private organisations that are tasked with strengthening the competitiveness of a locality. The meso space is an expression of the current and past meso policy, combined with self-organised structures resulting from collaborations between public and private actors on the micro level.

Table 1 lists typical organisations in the meso space. It is, however, often difficult to allocate organisations to the meso space. For example, an ordinary commercial bank is part of the micro level since it is basically just another company, which operates in a competitive market, and central banks are elements of the macro level. However, government-sponsored microfinance organisations or government-guaranteed local banks are part of the micro level as they are commercial operations, but they are also an instrument of meso policy, and are therefore part of the meso space.

The meso space is a dynamic entity. Some meso level organisations are permanent inhabitants of the meso space because they will never be organised as business operations. This applies to organisations that supply public goods such as education or public infrastructure, or provide services with very strong external effects. Many meso level organisations are only temporarily part of the meso space, such as testing and quality assurance service providers. These services can be taken over by private service providers. Another example is start-up promotion and incubation services, which are often semi-public or highly subsidised in the early stages of economic development and only later – and under certain conditions – become self-sustainable enterprises.

Table 1 Typical meso level organisations

Public

Hybrid / either-or

Private

Centres for research and development

Public education and training institutes

SME promotion agencies

Development banks

Metrology institutes

Accreditation bodies

Industrial or agricultural extension

Metrology laboratory

Certification agencies

Incubators

An industrial park with specialised infrastructure, e.g. cold storage

Local development agency

Chambers

Industry associations

Foundations

NGOs

 

Meso policy not only addresses the meso space but also could, for instance, aim to promote the concept of the fourth industrial revolution, which is all about connectivity, data exchange, digitisation, etc. This requires changes in how a society thinks about such aspects (the meta level). At the same time, on the micro level, it requires firms to start thinking differently about how they connect their enterprises and processes to Internet, and how they integrate various suppliers into their internal systems to allow data exchange (the micro level). This clearly shows that the different levels of the Systemic Competitiveness framework (see Article 1 ‘Meso level, meso space and the relation to territories’) are dynamically interconnected.

A meso organisation can be a completely separate legal entity, or it can take the form of a programme implemented by a hosting organisation. For instance, standards bodies are often legal entities, with the government as the main shareholder. A technology transfer centre at a university could be a separate legal entity, or it could be configured as a programme. 

The creation of a competent meso space is a means to strengthen the competitiveness of a region. Not all meso policies automatically lead to the establishment of a meso organisation or to adding a task to an existing organisation. For instance, a meso policy that aims to prioritise the development of local enterprises through public procurement does not necessarily need a new organisation; it could simply shape the criteria of the respective public procurement processes.

The role of meso organisations

Meso policy alone does not change incentive structures and performance on the micro level. For certain services to be delivered, it is necessary to create a dedicated organisation or add a mandate to an existing one. Such services are often not provided naturally by the market, either because their function is to provide public goods or because trust in an institution needs to be established first. For all these reasons, individual businesses are disincentivised to invest in these services. Table 2 lists typical activities of meso organisations.

While these examples of typical activities are directed towards actors at the micro level, meso organisations also play an important role in advocating for policy change and shaping public sector strategies (at both meso and macro levels), based on their insight into the incentives and behaviours of enterprises. Very often these organisations must balance the requirements of the micro-level actors with the priorities of policy makers or funders.

Table 2 Typical activities of meso organisations

 

Technology

Education and training

Finance

Infrastructure

Foreign trade

Entrepre-neurship

Business membership associations

Basic functions

Measurement, standards, norms, quality assurance

Secondary and higher education in basic disciplines

Credit, Investment capital

Basic infra-structure: roads, water, electricity, telephony

Basic foreign trade transactions

Awareness raising on potential of entrepreneurship

Elementary services

Ad hoc lobby

Advanced functions

Technology transfer

Vocational training in specialised disciplines

Develop-ment banking

Micro-finance

Collateral banking

Reliable, efficient, high-quality infrastructure

Export financing

Export credit insurance

Entrepre-neurship training, business skills training

BDS market facilitation

Specialised services

Business networking

Specialised functions

Specialised R&D

Highly specialised, high-quality training courses

Specialised, innovative financing

Venture capital

Specialised, innovative infrastructure

Advice and support for market research, design, packaging, etc.

Business incubation, business acceleration

Comprehen-sive services

Active role in locational policy

 

Meso organisations are typically part of various networks of organisations. To find opportunities for improvement, or to address binding constraints, these organisations must typically work with other stakeholders, conduct all kinds of diagnostic processes, and formulate improvement processes over the short, medium and longer term. An example is a standards body that assists enterprises to meet international and national standards.

Challenges for meso organisations

Meso organisations often struggle to learn and adapt in order to respond to the continuously changing economic environment, industry structure, framework and market conditions. Reasons for this can be micro-management by their funders or policy makers, under-resourcing, applying too narrow indicators for performance management and evaluation, or because they are trying to do too much (or too little).

Another challenge for a meso organisation is that it might lose its purpose and has to struggle for survival, since a particular underperformance in the market, which it was initially established to address, was only of a temporary nature. A private firm at the micro level can now offer the organisation’s service or it is no longer demanded by enterprises. If external funding for such a meso organisation is secured, there is typically a tendency towards inward orientation and to continue operation as usual, without benefiting the enterprise sector any longer.

Inward orientation is a general issue of meso organisations that receive external funding and are thus able to offer their services to firms at highly reduced prices or even free. The market then cannot properly assess the quality of services, service design does not consider the real needs of enterprises and marketing efforts are neglected.

Meso organisations and the support system they are part of need to rise to these challenges and carefully assess what change and adaptation are needed to continue creating value for the enterprise sector at a high level of efficiency and effectiveness. Meso organisations therefore need to be innovative and adaptive in order to respond to continuously changing demands (see Article 6 ‘Meso organisations need to be innovative and anticipate future trends).

Marcus Jenal (mj[at]mesopartner.com)
Christian Schoen (cs[at]mesopartner.com

This article is part of our Annual Reflection 2017

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