Development of micro-clusters in tourism: a case of equestrian

tourism in northwest Iceland

Ingibjörg Sigurðardóttir & Runolfur Smari Steinthorsson

Introduction
The focus of this article is to report on the development of an emerging micro-cluster within, and
related to, equestrian tourism industry in Northwest Iceland.
The research was based on a document analysis and open-ended interviews. Through an account
of the development of cluster-related activities and by drawing up a cluster map of both core and
related equestrian activities in the Northwest, the study reflects on the impact and character of
the cluster development.
The conclusions reveal a progression towards a micro-cluster, intertwined with business
activities and lifestyle.

1. (Buchmann, 2017; Helgadóttir & Sigurðardóttir, 2008; Notzke, 2017): Despite increased
research on equestrian tourism and the horse industry; research in those fields is still
insufficient.
2. (Elgåker & Wilton, 2008, p. 43): there is limited insight and lack of research on “the
ecological, social, and economic functions of horse keeping in rural areas”.
3. (Sigurðardóttir & Helgadóttir, 2015b):
- The Icelandic horse is the only equine breed on the island, and the number of horses per
inhabitant is high compared to other European countries. For example, overall there are
240 horses per 1000 persons in Iceland.
- In some areas of Iceland, this ratio is even higher, as for example in the Northwest of
Iceland, the research area of this study, with 2.6 horses per person which equals 2600
horses per 1000 persons.
4. (Liljenstolpe, 2009): the highest ratio in EU countries is in Sweden, 31 horses per 1000
persons.
Horse riding is a popular leisure activity among local residents and foreign visitors in the
Northwest, as well as in Iceland in general.
I. Notzke (2017): defines travel on horseback as the core element of equestrian tourism.

II. (Sigurðardóttir & Helgadóttir, 2015b): Riding tourism in Iceland offers journeys of
varied extent, ranging from half-hour riding tours to ten day excursions. Besides, other
forms of equestrian tourism are increasing and include horse shows, horse theatre, and
farm holidays.

III. The immense growth of tourist arrivals in Iceland has in recent years gained researchers’
increasing attention, among other things focusing on:

a. persistence and seasonality (Gil-Alana & Huijbens, 2018)

b. maximum tourist level (Kristjánsdóttir, 2016b)
c. foreign direct investment (Kristjánsdóttir, 2016a)
d. wilderness, national resources, power production (Cságoly, Sæþórsdóttir, &
Ólafsdóttir, 2017; Sæþórsdóttir & Saarinen, 2016)
e. development and analysis of the Icelandic tourism satellite account (Frent, 2018a,
2018b)
IV. (Michael, 2003): Networks and clusters within tourism have been seen as one of the
drivers of the development of tourism destinations in rural areas.
V. (Jóhannesson & Lund, 2017, p. 8):
a. The life-style orientated entrepreneurs [as horse entrepreneurs] are of great
importance for tourism development, not least in rural areas.
b. They act as pioneers in introducing new services in areas where more market- and
growth-driven entrepreneurs are reluctant to act”.
VI. (Moseley, 2003):
a. Equestrian tourism in Northwest Iceland shares many similarities with rural
development in general, relating, as it does, to the process of improving quality of life
and economic well-being among the inhabitants of relatively isolated and sparsely
populated areas.
b. Applying the cluster approach to analyze equestrianism and equestrian tourism in
Nordic countries is a fairly new and beneficial procedure for the purpose of defining
further opportunities of those industries; particularly in relation to rural tourism
development as is the case in this paper.
VII. Clusters are seen as:
a special kind of industry network (Maskell & Lorenzen, 2004)
well as a group of competing and (Porter, 2008)
cooperating businesses and institutions
involved in similar activities in a
geographically defined area
stimulate positive externalities of (Ketels, 2013; Porter, 2008)
economic and social nature, strengthening
industrial innovation, competitiveness and
social factors within regions

VIII. (Michael, 2007, p. 33): “Micro-clusters are identified as a development mechanism that
fosters the ability to build a local level of specialization and competitive advantages for a
small tourism destination”.
IX. (Michael, 2007, p. 3): Lack of research on micro-clusters in small niche tourism markets
has been pointed out as, “while the notions of location and clustering are well understood
in strategic planning, the same cannot be said about the forces that initiate and enhance
the process of clustering in micro-environments”.

Understanding of operation and innovation in rural tourism, with a focus on

equestrianism.
(Hjalager, Kwiatkowski, & Larsen, 2018, p. 5):
- Knowledge has been identified as one of the drivers of innovation but a “knowledge gap
occurs when firms do not tap into knowledge resources and do not access wider markets
and network associations to enhance chosen trajectories”
- The role of knowledge flow and networking for innovation and development of the
cluster of equestrian tourism in Northwest Iceland, is among the contributions of this
paper.
Clusters in tourism

As strong local connectivity within clusters leads to spillover effects throughout companies
and industries:
I. (Porter, 2008, p. 229):
- A cluster can be defined as “a system of interconnected firms and institutions
whose value as a whole is greater than the sum of its parts”.
- Clusters are seen as a particular form of an industry network.
II. Maskell and Lorenzen (2004) (p. 3):
- Claim that networks and clusters are usually both characterized by “close
interaction between organisations, which are in some sense related, but not joined
together by any common ownership or management”.
- The clusters are restricted in space and often operate at a local or regional level.
- The focus is on connections and networks within the equestrian (tourism) industry
in a geographically defined region and on the networking of the equestrian
tourism industry with other related industries in the region.
III. (Helgadóttir & Sigurðardóttir, 2008; Hjalager et al., 2018): Those networks are
industry specific, particularly because of the characteristics of the equestrian and
tourism industries as lifestyle industries operating on a micro-scale level in a rural
region.

Interest in cluster theories emerged with an increase in urbanization in the beginning of the
nineteenth century:
I. Marshall’s (1920):
- Early contributions were concept of “industrial district”.
- The fortunes of groups of skilled workers who are gathered within the narrow
boundaries of a manufacturing town” (p. 156)
II. Perroux (1955): term “pôle de croissance” (growth-pole) which explains the theory
of polarized development within regions.
III. After Porter (1990, 1998, 2003, 2008)
- did put forward the cluster concept and a way to map clusters through a cluster
map; that is, provide a graphic representation of a cluster in a specific area
(Austrian, 2000).
- Clusters affect cooperation and competition in three ways: First, by increasing
productivity of constituent businesses or industries; second, by increasing their
capacity for innovation and thus for productivity growth; and third, by
stimulating new business formation that supports innovation and expands the
cluster.
Cluster analyses in tourism:
I. (Novelli et al., 2006): are new and only limited studies exist.
II. (Hjalager, 2000; Perles-Ribes, Rodríguez-Sánchez, & RamónRodríguez, 2017):
- The complexity of defining cluster analysing methods for tourism clusters.
- Lack of collaboration among tourism companies.
- The fact that the sector is based on leisure and thus often not considered to be
“serious”.
III. (Pavlovich, 2003): great variety of economic sectors and organizations are highly
involved in the whole industry, as well as in the development of a positive tourist
experience.
IV. Hjalager (2000): tourism clusters are important for regional development, as tourism
goes far beyond cluster borders and has an effect on many other related clusters
and/or industries (e.g. agriculture, transportation, health sector).
V. Huijbens, Jóhannesson, and Jóhannesson (2014) (p. 68) follow Porter’s definition
and define tourism clusters as “a spatially concentrated group of related service
companies and supporting institutions, focused on a tourism product, drawing non-
resident attention”.
VI. (Novelli et al., 2006): The purpose of tourism clusters is, in general, “to highlight the
availability of certain activities in one destination or region and to get SMÉs that
would normally work in isolation to cooperate and build a successful tourism product
in the locality”
VII. (Rutelione & Hopeniene, 2016): Cooperation based on inter-organizational relations
is crucial in tourism clusters since tourism providers share the same resources,
consumers, infrastructure, and distribution channels.
The approach of micro-clusters:
Porter’s approach has more often been linked with clusters in large regions within or across a
national context; where gaining competitive advantages through various means, including
economies of scale, is of importance. As this may not be possible in small rural regions – where
the benefits of economies of scale may not be as visible.
(Grimstad & Burgess, 2013; Michael, 2007): a new approach of “micro-clusters” was
introduced to analyse the growth of specialized niche tourism activities in regional and rural
locations.
(Michael, 2007, p. xviii): The approach of micro-clusters does reaffirm cluster principles, such
as that economic benefits derive from multiplier effects, but the novelty “lies in the development
of a holistic model for application to micro-scale economic environments, where small
communities create their own regional competitive advantage while retaining control of the
development process”.
(Grimstad & Burgess, 2013, p. 68): The micro-cluster approach is seen as appropriate for
analyzing industries in rural agricultural regions where the businesses are family-based and “the
close-knit community provides social norms that may have detrimental impacts on business
operations, economic structures and political decisions”.
(Salvador, Lúcio, & Ferreira, 2010, p. 13): To create a true competitive net of firms and
institutions collaboration and networking is needed, but networking of the micro cluster
stakeholders within an area “is usually one of the keys to make a cluster strategy a success”.
(Grimstad & Burgess, 2013, p. 68): “successful micro-clustering is based on competitive and
community advantage through expansion and diversifying markets for products and services
provided locally, and not so much based on competition between businesses to reduce prices on
products offered”.
(Salvador et al., 2010): Niche tourism services, such as equestrian tourism, are examples of
tourism products developed within micro-clusters and marketed among particular target groups.
Equestrian tourism
Equestrian tourism has, in most cases, developed from an operator’s passion for horses and is
identified as a lifestyle industry
I. (Helgadóttir & Sigurðardóttir, 2008; Sigurðardóttir, 2015): it hard to distinguish
between their hobby and livelihood.
II. (Helgadóttir, 2006): Equine tourism activities in Iceland are based on heritage and a
former culture of the everyday use of horses.
III. (Helgadóttir, 2006; Helgadóttir & Dashper, 2016; Schmudde, 2015): the Icelandic
horse plays an important role in the image and marketing of Iceland.
IV. (Sigurðardóttir, 2016): Icelandic equestrian tourism has been identified as the
greatest opportunity for the future development and economic prosperity of the horse
industry.

Equestrian tourism businesses in Iceland

I. (Sigurðardóttir, 2015):
- Equestrian tourism businesses in Iceland are commonly small and family run.
II. (Helgadóttir & Sigurðardóttir, 2008):
- The operators usually have a strong horse-related background, while economic
issues have been shown to be of less interest to them than handling horses.
III. (Sigurðardóttir, 2018, in press)
- Parallel with increased demand for leisure activities in Iceland the number of
equestrian tourism businesses open all year around has increased; providing more
jobs in general than only for the operators’ families.
- Various growth opportunities have been identified within the equestrian tourism
industry in Iceland; however, the small size of most businesses and the many-
sided roles of the operators are among the obstacles when it comes to innovation
and product development.