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Getting an Edge

Frank Allen

The Irish Edge: How Enterprises Compete on Authenticity and Place, by Finbarr D Bradley and James J Kennelly, Orpen Press, 174 pp, €15, ISBN: 978-1909518-001

Ireland’s limited success in developing indigenous firms that compete on a world stage is a question that has vexed policy-makers, academics and ordinary citizens, concerned about where their families will find worthwhile employment. The Telesis Report made headlines in 1982 when international consultants retained by the government challenged what they perceived as Ireland’s over-dependence on highly mobile multinational corporations.

Telesis believed that competition for a diminishing pool of mobile investment would grow more intense and as “no country has succeeded in developing high levels of industrial income without developing a strong indigenous sector”, the focus of Ireland’s industrial development policy should be to select a limited number of large new companies and concentrate resources to build capability in technology, marketing and finance for these selected firms and their suppliers. Telesis’s focus on “picking winners” needs to be understood in a context of national economies where large-scale enterprises accounted for high proportions of investment and employment, either directly or indirectly.

The Telesis Report reviewed the achievements of Ireland’s industrial policy based largely on policy decisions made during the Whitaker-Lemass reforms of 1952-1958, which ended an era of protectionism and opened the economy to foreign investment. Indeed policy-makers at each stage of Ireland’s economic development, dating back to Arthur Griffith, have approached the question of how indigenous industry could be strengthened from varying economic and policy perspectives. This question takes on greater urgency during periods of high unemployment and economic recession.

Finbarr Bradley and James Kennelly do not claim to have developed an industrial development policy for Ireland in The Irish Edge: How Enterprises Compete on Authenticity and Place. However, their “tales” of successful entrepreneurship in areas such as food, tourism, craft and media, all have a unifying theme ‑ that business ventures based on a harmony between the entrepreneur’s world view and his or her immediate environment are likely to be sustainable for the long-term. It may not have been exactly what Telesis had in mind but the decision in 1983 by Mairín Uí Lionaird and Eithne Uí Shiadhail of Cúil Aodha to establish an artisan jam company using family recipes and gooseberries from neighbours’ gardens has led to the very successful Folláin food company, which is a mainstay of their local economy in West Cork.

The main thesis proposed in The Irish Edge is that in a global economy, businesses compete on difference rather than sameness and that Irish entrepreneurs should recognise the potential for real competitive advantage that exists in culture, authenticity and a sense of place.

The authors argue that at a time when economic challenges are large in scale, the achievements of small-scale indigenous enterprises in peripheral locations risk being neglected by policy-makers and business leaders. This theme of Irish companies selling authenticity and place, which they call the Irish Edge, is developed through interviews with the entrepreneurs about what inspires them to innovate and how they meet the challenges of a global market place from what appear to be peripheral locations.

The interviews with entrepreneurs such as Tarlach de Blacam of Inis Meáin knitwear company in the Aran Islands and Philip King of Other Voices music festival in Dingle, Co Kerry, develop the authors’ interesting thesis into inspiring stories of how Irish business can compete for shelf-space in high-end department stores in New York and Berlin or for music audiences broadcasting from a tiny two-hundred-year-old church in Dingle.

These stories should challenge policy-makers’ faith in the agglomeration effect of economic development, which argues that firms thrive in locations that attract multiple employers drawing on similar skills and based on shared infrastructure. The technological advances that allow a seisiún in a Dingle church to be broadcast to venues around the town and the world in high-definition sound or allow buyers in fashion capitals of the world to access on-line the rugged beauty surrounding Inis Meáin’s workshops may have transformed the economic significance of the periphery. It also means that with investment in appropriate technology, small communities can compete on their own terms and relate directly to an international market rather than depend on intermediaries in their metropolitan areas.

Bradley and Kennelly are careful not to argue that the model of innovation described in the case studies undermines the requirement to attract mobile international investment to Ireland. The agglomeration benefits sought by information and computer technology, pharmaceutical and other large-scale enterprises, inevitably attract them to large centres of population. Communities that are peripheral in terms of spatial planning and the economy are more likely to be sources of the authentic, which the authors see as the basis of competitive advantage for place-based businesses.

The complementary nature of the two business models extends beyond the geographical. Multinational linkages to local economies are generally weak and barriers to moving from one location to another are low as relative costs and market attractiveness change. The most successful multinational subsidiaries in Ireland are those that have progressed from lower-skill activities such as product assembly or call-centre management to higher value activities involving product design or market development.

The Irish Edge describes an attitude to innovation that secures the survival of a pottery workshop in Ballyferriter, Co Kerry, during a deep recession or that requires Donegal tweed-weavers to concentrate on design and the high end of the fashion market when mass manufacturers undermine them on price. This ability to adapt to changing market conditions and the courage to innovate are no less important skills in managing subsidiaries of large firms than for family-owned start-ups.

The transferability of a culture of innovation through the wider environment of business, education and the arts may be seen as the true contribution of these place-based businesses. Policy-makers may tend to overlook the contribution of a hand-made jewellery studio on the basis that it is not scalable to a level that would offer hundreds of jobs. The cumulative economic contribution of enterprises such as those described in The Irish Edge however cannot be overlooked and the external benefits of reinforcing community identity and encouraging creativity are enormous.

Bradley and Kennelly strike an appropriate balance between the interesting anecdote and the wider significance of their subjects’ success. While lauding the creativity that is at the heart of all the ventures described, their background as finance professors reminds them that businesses are really only sustainable if they can pay their way.

The case studies in The Irish Edge make a persuasive argument that the challenges of a peripheral location, remote from large markets, can be overcome and may even be turned to advantage by entrepreneurs who recognise the value of place.

However, the question remains why the number of such ventures in Ireland remains small. Kerry Foods, Glen Dimplex and Kingspan have indeed achieved market leadership in their respective fields but their experience appears exceptional in an Irish context. What constrained long-established Irish family businesses such as Flahavan’s Oats, Boyne Valley Honey and Barry’s Tea from becoming international market leaders rather than remaining within the more familiar territory of Irish and UK markets?

The Irish Edge tells the story of Cooley Distillery, established by John Teeling and Donal Kinsella in 1987 and sold to US drinks giant Beam Inc in 2012. Cooley’s founders concluded that the company needed the firepower a company such as Beam with a large market presence to reach the next level of growth and the outlook for the two Cooley distilleries now looks promising. However, it is worth considering why Ireland, which once had twelve hundred independent distilleries now has only four suppliers, all of which are owned by international beverage companies. By contrast, Scotch blended whisky retained a large number of independently-owned suppliers and a larger presence in world markets.

The authors set out to write a book about Irish companies who have achieved success in world markets rather than explain why so few Irish companies have internationalised successfully. However, their interest in business innovation, finance and history would well-equip them to consider this question in future research.

One of the most engaging “tales” related in The Irish Edge is that of Dearbhaill Standún and her husband, Charlie Troy’s, labour of love in establishing Cnoc Suain, an authentically restored hill village near An Spidéal in County Galway. The international Travel and Leisure magazine may now describe Cnoc Suain as “a trailblazer and a powerhouse in promoting sustainability and mindfulness of the earth’s and mankind’s precious resources” but during its early years of existence, the founders were frustrated to find their vision for giving tourists an authentic experience of Connemara listed under “other” in the tourist listings alongside a laundrette and estate agent, because there was no category for culture. The Irish Edge similarly defies easy categorisation, drawing on recent research in business management, industrial policy, and the arts. It would be regrettable if this insightful thesis on how enterprises can compete on what is distinctive in their immediate environment were to languish in the “other” category in bookshops rather than inspire entrepreneurs and challenge policy-makers.
7/10/2013

Frank Allen advises the World Bank on infrastructure development in developing and transitional economies. He was chief executive of the Railway Procurement Agency (Luas) from 2002 to 2012.

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