Priority Sector Report Knowledge Intensive Business Services March 2009
Priority Sector Report
Knowledge Intensive Business ServicesMarch 2009
Executive summary
• Knowledge-Intensive Business Services (KIBS) is a sector based on parts of four European Cluster Observatory
cluster categories: Education and Knowledge Creation, Business Services, Financial Services and IT. KIBS includes
25 industries in total.
• Regions with strong KIBS sectors exhibit the highest prosperity levels in Europe.
• The presence of a strong KIBS sector positively affects regional innovation performance (patenting).
• KIBS sectors are predominantly urban activities; however, some metropolitan cities in Europe perform better than
others.
• Among the regions of Europe the following ten regions have a KIBS sector larger than expected: Zürich, Stockholm,
Oxford, Inner London, Brighton, Frankfurt am Main, Berlin, München, Stuttgart and Athens.
• Among the 25 largest regions in Europe the following have a KIBS sector smaller than expected: Katowice, Palermo,
Bari, Naples, Marseille, Valencia, Antwerpen, Sevilla and Venice.
• As a share of regional labour market employment, KIBS accounts for the largest shares in Brussels (16.0%), Inner
London (15.2%) and Zürich (14.6%).
• Most growing KIBS regions are small. However, Ireland is a region with a large KIBS sector which is also growing
rapidly.
• The largest growth in KIBS employment is found in Austria (Graz, Bregenz, Salzburg, Innsbruck), Estonia, Lithuania
and Northern Spain/Southern France.
• Some leading innovation regions in Europe, such as Stockholm, Praha and Frankfurt am Main, are experiencing
shrinking KIBS employment.
Europe INNOVA is an initiative for innovation professionals supported by the European Commission under the sixth framework programme.
The fundamental objectives of this initiative fall in line with the policy direction set out within the FP6 priority of 'Structuring the European
Research Area'. In acting as the focal point for innovation networking in Europe, Europe INNOVA aspires to inform, assist, mobilise and
network the key stakeholders in the field of entrepreneurial innovation, including company managers, policy makers, cluster managers,
investors and relevant associations. Additional information on Europe INNOVA is available on the Internet (www.europe-innova.org).
Legal notice
This report has been produced as part of the Europe INNOVA initiative. The views expressed in this report, as well as the information
included in it, do not necessarily reflect the opinion or position of the European Commission and in no way commits the institution.
1 Priority Sector report: Knowledge Intensive Business Services
KIBS, innova-tion and pros-perity
Knowledge intensive business services often
accompany regional prosperity and innovation. The
graphs on this page show the relationship between GDP
per capita, Patent applications and Location Quotient*
representing the relative strength of the KIBS sector in the region†. The size of a bubble in the charts represents the
size of the population of the region.
The strength of the relationship between the concentration
of KIBS in a region‡ and the region’s economic prosperity
is striking. It is evident that wealthy regions typically
support disproportionally high concentrations of KIBS
employment. In fact, with no other factors taken into
account, regional KIBS specialisation explains 59% of
variance in GDP per capita.
The pattern is similar, although less pronounced, when we
look at innovation indicators. The trend is clear: regions
with high concentrations of knowledge intensive business
services exhibit superior patenting activity, and the
opposite is true for regions with little KIBS. In the middle,
however, there are regions with both extremely high as well
as very low patenting. This suggests that there are many
other factors influencing innovation, but the presence of
KIBS makes a difference.
Priority Sector report: Knowledge Intensive Business Services 2
* Location Quotient (LQ) measures teh regional specialisation in the KIBS sector.
† GDP, patenting and population data from Eurostat.
‡ Regions correspond to NUTS II regions across the 27 EU member states plus Iceland, Norway, Switzerland and Turkey. In Belgium, Greece, Ireland, Netherlands and Turkey, NUTS I regions were used due to comparatively small areas and/or size of employment.
0.5 1.0 1.5 2.0 2.5
10000
20000
30000
40000
50000
60000
Knowledge Intensive Business Services
Location Quotient
GD
P p
er
cap
ita P
PP
R2= 0.59
0.5 1.0 1.5 2.0 2.5
-6-5
-4-3
-2-1
Knowledge Intensive Business Services
Location Quotient
Lo
g o
f P
ate
nt
ap
plicati
on
s t
o E
PO
per
millio
n in
hab
itan
ts
R2= 0.324
Size and Focus
Regional size and KIBS rankKnowledge intensive business services are in general a
predominantly urban activity. This argument is confirmed
upon examination of the regions which rank among the top
25 by either population or KIBS employment.
Region Largest citySize rank
KIBS rank
Île de France (FR) Paris 1 1
Lombardia (IT) Milan 2 4
Andalucía (ES) Sevilla 3 24
West-Nederland (NL) Amsterdam 4 3
Cataluña (ES) Barcelona 5 7
Vlaams Gewest (BE) Antwerpen 6 27
Rhône-Alpes (FR) Lyon 7 16
Campania (IT) Naples 8 47
Madrid (ES) Madrid 9 5
Danmark (DK) Danmark 10 10
Düsseldorf (DE) Düsseldorf 11 12
Lazio (IT) Rome 12 9
Mazowieckie (PL) Warszawa 13 19
Sicilia (IT) Palermo 14 60
Provence-Alpes-
Côte d'Azur (FR)Marseille 15 43
Slaskie (PL) Katowice 16 69
Veneto (IT) Venice 17 29
Outer London (UK) Outer London 18 18
Valencia (ES) Valencia 19 45
Köln (DE) Köln 20 13
Piemonte (IT) Turin 21 26
Oberbayern (DE) München 22 8
Emilia-Romagna (IT) Bologna 23 22
Ireland (IE) Ireland 24 14
Region Largest citySize rank
KIBS rank
Puglia (IT) Bari 25 65
Stuttgart (DE) Stuttgart 27 15
Attiki (GR) Athens 28 17
Darmstadt (DE)Frankfurt am
Main30 6
Berlin (DE) Berlin 39 23
Inner London (UK) Inner London 46 2
Surrey, E and W
Sussex (UK)Brighton 59 21
Berks, Bucks and
Oxon (UK)Oxford 82 11
Stockholm (SE) Stockholm 98 25
Zürich (CH) Zürich 160 20
However, the relationship of the size of the region and
employment in KIBS is not always direct: some regions
have a KIBS sector much larger than expected, while
others score lower.
The following ten regions have a KIBS sector larger than
expected: Zürich, Stockholm, Oxford, Inner London,
Brighton, Frankfurt am Main, Berlin, München, Stuttgart
and Athens.
Among the 25 largest regions in Europe the following have
a KIBS sector smaller than expected: Katowice, Palermo,
Bari, Naples, Marseille, Valencia, Antwerpen, Sevilla and
Venice.
Labour market focusThe map to the right exhibits the share of a region’s labour
force employed in KIBS (“KIBS focus”).
The largest share of KIBS employment is typically
concentrated in the capital regions of the respective
countries. The most notable exceptions from this rule
include Germany, where regions in the South and West
focus on KIBS even more than Berlin; and the UK, where
the whole belt of regions around London as well as
Manchester/Liverpool and Edinburgh exhibit high relative
KIBS employment.
3 Priority Sector report: Knowledge Intensive Business Services
Focus
2006
less than 4%
from 4% to 6%
from 6% to 8%
more than 8%
Source: European Cluster Observatory 20090 500 1000 km
KIBS
Region KIBS Employment KIBS Focus
Brussels, BE 122,731 16.0%
Inner London, UK 472,940 15.2%
Zürich, CH 138,797 14.6%
Darmstadt (Frankfurt am Main), DE 231,492 13.4%
Île de France (Paris), FR 788,496 13.3%
Berks, Bucks and Oxon (Oxford), UK 174,599 12.7%
Luxembourg, LU 27,961 12.2%
Hamburg, DE 108,454 11.8%
Berlin, DE 134,930 10.9%
Bratislavsky kraj (Bratislava), SK 39,362 10.9%
Priority Sector report: Knowledge Intensive Business Services 4
Growth
Based on the longitudinal data available§, the average
annual growth rate of KIBS employment between 2001
and 2006 was 1.7% compared to 1.2% increase in total
employment in Europe.
The regions exhibiting the largest growth include much of
Austria, the Baltic states, Northern Spain/Southern France
and Ireland, as seen from the map and table on the
opposite page.
However, the fastest growing regions are mostly small
ones with little KIBS employment. The only region which is
both highly focused on KIBS (more than 8% employment)
and fast-growing (more than 5% annual growth rate) is
Ireland, which during the first years of the century enjoyed
a boom in software and business services.
Regional Innovation (RIS)Interestingly enough, the regions normally considered
European champions in innovation (here represented by
2006 EU Regional Innovation Survey indicators **) show
varying degrees of growth in KIBS. Stockholm, Praha and
Frankfurt am Main are the fastest decreasing KIBS regions
among the top 20 most innovating regions in Europe.
Region RISAnnual Growth
Stockholm, SE 0.90 -1.52%
Västsverige (Gothenburg), SE 0.83 0.77%
Oberbayern (München), DE 0.79 0.47%
Etelä-Suomi (Helsinki), FI 0.78 -0.22%
Karlsruhe, DE 0.78 1.15%
Stuttgart, DE 0.77 1.17%
Braunschweig, DE 0.76 -0.40%
Sydsverige (Malmö), SE 0.76 -0.20%
Île de France (Paris), FR 0.75 0.80%
Östra Mellansverige (Uppsala), SE 0.74 -0.74%
Berlin, DE 0.74 0.79%
Tübingen, DE 0.72 0.78%
Praha, CZ 0.70 -0.89%
Darmstadt (Frankfurt am Main), DE 0.69 -0.52%
Dresden, DE 0.69 1.16%
Köln, DE 0.69 0.02%
Danmark, DK 0.68 0.62%
Pohjois-Suomi (Oulu), FI 0.68 0.63%
Mittelfranken (Nürnberg), DE 0.68 1.10%
Wien, AT 0.68 4.93%
5 Priority Sector report: Knowledge Intensive Business Services
§ The data is missing for Bulgaria, Cyprus, Greece, Italy, Netherlands, Portugal and Romania.
** UK regions are not shown as RIS was conducted for NUTS I regions.
Annual Growth
2001-2006
less than -1%
from -1% to +1%
from +1% to +5%
more than +5%
no data
Source: European Cluster Observatory 20090 500 1000 km
KIBS
RegionAverage annual growth rate
2001 2006
Steiermark (Graz), AT 22.4%
Eesti, EE 19.7%
Lietuva, LT 15.5%
Vorarlberg (Bregenz), AT 13.3%
Salzburg, AT 13.2%
Tirol (Innsbruck), AT 10.8%
Cornwall and Isles of Scilly (Truro), UK 8.9%
Zapadne Slovensko (Nitra), SK 8.4%
Galicia (A Coruña), ES 7.5%
Del-Dunantul (Pécs), HU 7.3%
Priority Sector report: Knowledge Intensive Business Services 6
About the European Cluster Observatory
The European Cluster Observatory, launched in June 2007, is the most comprehensive database on clusters, cluster
organisations, and cluster reports in Europe. It is managed by the Center for Strategy and Competitiveness (CSC) at the
Stockholm School of Economics and funded by the European Commission's Directorate General for Enterprise and Industry.
The European Cluster Observatory website provides a wide variety of data on clusters in Europe, and is divided into four
main sections:
• Cluster Mapping provides information on 38 cluster categories in 259 NUTS II regions;
• Cluster Organisations offers maps and lists of regional or local private-public partnerships focused on cluster
improvements;
• Cluster Policies collects reports on national and regional cluster policies and programmes;
• Cluster Library archives special Observatory reports, cluster case studies and other cluster-related documents.
In 2009, the Observatory will enter the second phase of development bringing new features and introducing a collaboration
platform for cluster organisations and SMEs.
Please visit the European Cluster Observatory at www.clusterobservatory.eu.
Priority Sector report: Knowledge Intensive Business ServicesPriority Sector report: Knowledge Intensive Business Services
ISBN 978-91-977556-1-0ISBN 978-91-977556-1-0
This report is published by:This report is published by:
Center for Strategy and CompetitivenessCenter for Strategy and Competitiveness
Stockholm School of EconomicsStockholm School of Economics
Box 6501SE-113 83 StockholmSweden
Website: www.hhs.se/cscTelephone: +46-(0)8-736 9630 Fax: +46-(0)8-31 99 27