The Urban Turn: From regional clusters to creative cities Session IV: From Creative Clusters to Creative Cities Innovation Systems Research Network Seventh.

The Urban Turn: From The Urban Turn: From regional clusters to creative regional clusters to creative

citiescities

Session IV: From Creative Clusters to Creative Session IV: From Creative Clusters to Creative CitiesCities

Innovation Systems Research NetworkInnovation Systems Research NetworkSeventh Annual Meeting, Toronto, May 5-6 2005Seventh Annual Meeting, Toronto, May 5-6 2005

Bjørn Asheim, Universities of Lund and OsloBjørn Asheim, Universities of Lund and Oslo

Perspectives on innovative Perspectives on innovative regionsregions

• The firm/cluster perspective: Clusters of The firm/cluster perspective: Clusters of related and supporting industries related and supporting industries operating as geographically operating as geographically concentrated collections of interrelated concentrated collections of interrelated firms in which local sophisticated and firms in which local sophisticated and demanding customers and strong demanding customers and strong competition with other firms in the competition with other firms in the same industry drive the innovation same industry drive the innovation process (Porter)process (Porter)

Why do firm cluster?Why do firm cluster?

• Clustering captures efficiences Clustering captures efficiences generated from tight linkages generated from tight linkages between firmsbetween firms

• Positive benefits of co-location Positive benefits of co-location (spillovers)(spillovers)

• Activities that require face-to-face Activities that require face-to-face contactcontact

Why do firm cluster?Why do firm cluster?

But according to Florida, these are only But according to Florida, these are only partial answers. More importantly, partial answers. More importantly, companies cluster in order to draw companies cluster in order to draw from concentrations of talented people from concentrations of talented people who power innovation and economic who power innovation and economic growth. The ability to rapidly mobilize growth. The ability to rapidly mobilize talent from such a concentration of talent from such a concentration of people is a tremandous source of people is a tremandous source of competitive advantage for companies.competitive advantage for companies.

Innovative regionsInnovative regions

• A second view focuses on the role of A second view focuses on the role of human capital – that is, highly human capital – that is, highly educated people. It argues that places educated people. It argues that places with higher levels of human capital with higher levels of human capital have a larger share of high-tech have a larger share of high-tech industries and, thus, are more industries and, thus, are more innovative and grow more rapidly and innovative and grow more rapidly and robustly over time (Lucas, Glaeser)robustly over time (Lucas, Glaeser)

Talents and knowledge Talents and knowledge generation in innovative generation in innovative regions regions • In a knowledge economy, the ability to In a knowledge economy, the ability to

attract and retain highly skilled labour is attract and retain highly skilled labour is crucial to the current and future prosperity crucial to the current and future prosperity of innovative regions as well as nations of innovative regions as well as nations

• In a knowledge economy – in contrast to a In a knowledge economy – in contrast to a learning economy – new knowledge learning economy – new knowledge generation is becoming increasingly generation is becoming increasingly important for innovation and the important for innovation and the construction of regional advantage construction of regional advantage

Innovative regionsInnovative regions

• A third view emphasizes the role of A third view emphasizes the role of creative capital, arguing that certain creative capital, arguing that certain underlying conditions of places, such underlying conditions of places, such as their ability to attract creative as their ability to attract creative people and be open to diversity, people and be open to diversity, inform innovation and inform innovation and growth ):creative cities/city regions growth ):creative cities/city regions (Florida, Cushing) (Florida, Cushing)

The Urban turn: Creative The Urban turn: Creative citiescities• Constellations of talents and creative people Constellations of talents and creative people

are most commonly found in large city are most commonly found in large city regions where the diversity of urbanization regions where the diversity of urbanization economies is more abundant. This, together economies is more abundant. This, together with other factors such as labour markets with other factors such as labour markets characterised by high demand for qualified characterised by high demand for qualified personnel, cultural diversity and tolerence, personnel, cultural diversity and tolerence, low entry barriers and high levels of urban low entry barriers and high levels of urban service, largely determine the economic service, largely determine the economic geography of talent and of creativity, both of geography of talent and of creativity, both of which display concentration to large cities.which display concentration to large cities.

Clusters, localisation economies (efficiency) and urbanisation economies (creativity):

• Localisation economies - Specialisation achieving efficiency through incremental innovations in industries with synthetic knowledge bases (e.g. industrial districts)

• Urbanisation economies - Diversity promoting creativity resulting in radical innovations in industries based on analytical knowledge bases (e.g. “creative cities”/geography of talent)

Creative cities – policy Creative cities – policy implicationsimplications

• Florida argues that it is not enough to attract Florida argues that it is not enough to attract firms: the ’right’ people also need to be firms: the ’right’ people also need to be attracted. He calls for complementing attracted. He calls for complementing policies for attracting firms (business climate) policies for attracting firms (business climate) with policies for attracting people (people’s with policies for attracting people (people’s climate). This suggests that the attention of climate). This suggests that the attention of politicians and planners should be directed politicians and planners should be directed towards people, not companies, i.e. away towards people, not companies, i.e. away from business attraction to talent attraction from business attraction to talent attraction and quality of place.and quality of place.

Creative cities – policy Creative cities – policy implications implications • This demonstrate that ’quality of place’ must be This demonstrate that ’quality of place’ must be

understood in broader terms than traditionally understood in broader terms than traditionally accustomed to: while the attractiveness and accustomed to: while the attractiveness and condition of the natural environment and built condition of the natural environment and built form are certainly important, so too is the form are certainly important, so too is the presence of a rich cultural scene and a high presence of a rich cultural scene and a high concentration of people working in cultural concentration of people working in cultural occupations as well as diversity and openess to occupations as well as diversity and openess to newcomers (tolerence). The presence of such newcomers (tolerence). The presence of such an environment or milieu attracts other types of an environment or milieu attracts other types of talented or high human capitals individuals, talented or high human capitals individuals, which in turn attracts and generates innovative, which in turn attracts and generates innovative, technology-based industries.technology-based industries.

Knowledge bases, clusters and RIS:

• The relevance of different perspectives on innovative regions must be placed in a context of the knowledge base of various industries

• Innovation processes of firms are strongly shaped by their specific knowledge base

• Three types of knowledge base:a) analytical (science based)b) synthetic (engineering based)c) symbolic (creative)

SyntheticSynthetic AnalyticAnalytic

Innovation by application or Innovation by application or novel combination of existing novel combination of existing knowledgeknowledge

Innovation by creation of new Innovation by creation of new knowledgeknowledge

Importance of applied, problem Importance of applied, problem related knowledge related knowledge (engineering) often through (engineering) often through inductive processesinductive processes

Importance of scientific Importance of scientific knowledge often based on knowledge often based on deductive processes and deductive processes and formal modelsformal models

Interactive learning with clients Interactive learning with clients and suppliersand suppliers

Research collaboration Research collaboration between firms (R&D between firms (R&D department) and research department) and research organisations organisations

Dominance of tacit knowledge Dominance of tacit knowledge due to more concrete know-due to more concrete know-how, craft and practical skillhow, craft and practical skill

Dominance of codified Dominance of codified knowledge due to knowledge due to documentation in patents and documentation in patents and publicationspublications

Mainly incremental Mainly incremental innovation/process innovationsinnovation/process innovations

More radical More radical innovation/product innovationsinnovation/product innovations

Creative cities – ’buzz’ and Creative cities – ’buzz’ and face-to-face contact (F2F)face-to-face contact (F2F)

• Storper argues that face-to-face contact Storper argues that face-to-face contact represents the most fundamental aspect represents the most fundamental aspect of proximity, which favours urban of proximity, which favours urban concentrations and agglomerations. He concentrations and agglomerations. He argues that F2F is particularly important argues that F2F is particularly important in environments where information is in environments where information is imperfect, rapidly changing, and not imperfect, rapidly changing, and not easily codified; key features of many easily codified; key features of many creative activitiescreative activities

What is ’F2F’ (face-to-face)?What is ’F2F’ (face-to-face)?

• F2F refers to the communicative F2F refers to the communicative advantages of physically co-present advantages of physically co-present communication, i.e. when two or more communication, i.e. when two or more persons are physically co-present in a persons are physically co-present in a way that allows for mutual visual and way that allows for mutual visual and physical contact, not just co-location in physical contact, not just co-location in the same cluster or city (e.g. concrete the same cluster or city (e.g. concrete user-producer relationships). In general user-producer relationships). In general the existence of social capital will the existence of social capital will promote F2F. promote F2F.

What is ’buzz’?What is ’buzz’?

• Storper and Venables (2004):Storper and Venables (2004):

’ ’...a highly efficient technology of ...a highly efficient technology of communication; a means of overcoming communication; a means of overcoming coordination and incentive problems in coordination and incentive problems in uncertain environments; a key element of the uncertain environments; a key element of the socialisation that in turn allows people to be socialisation that in turn allows people to be candidates for membership of ’in-groups’ and candidates for membership of ’in-groups’ and to stay in such groups; and a direct source of to stay in such groups; and a direct source of psychological motivation. The combined psychological motivation. The combined effects of these features we term ’buzz’.effects of these features we term ’buzz’.

Creative cities – ’buzz’ and Creative cities – ’buzz’ and F2FF2F• However, ’buzz’ and F2F cannot be generalised to However, ’buzz’ and F2F cannot be generalised to

such an extent as Storper attemptssuch an extent as Storper attempts

• First, ’buzz’ and F2F is not necessarily the same First, ’buzz’ and F2F is not necessarily the same types of phenomenontypes of phenomenon

• The ’classical’ F2F situation is the ’user-producer’ The ’classical’ F2F situation is the ’user-producer’ relationships found in clusters with manufacturing relationships found in clusters with manufacturing industries based on a synthetic knowledge base, industries based on a synthetic knowledge base, and exploiting localisation economies, and where and exploiting localisation economies, and where tacit knowledge is of great importance (e.g. tacit knowledge is of great importance (e.g. industrial districts with the presence of social industrial districts with the presence of social capital and trust). capital and trust).

Creative cities – ’buzz’ and Creative cities – ’buzz’ and F2FF2F• The typical ’buzz’ situation is an informal The typical ’buzz’ situation is an informal

meeting place (bar, pub, hotel lobby in meeting place (bar, pub, hotel lobby in connection with a conferences and fairs connection with a conferences and fairs etc.), where networking is finding place, and etc.), where networking is finding place, and information – not knowledge – is taking placeinformation – not knowledge – is taking place

• The only group which may exchange The only group which may exchange knowledge in ’buzz’ situations is people knowledge in ’buzz’ situations is people employed in creative occupations (incl. employed in creative occupations (incl. advertisement etc.), which is based on a advertisement etc.), which is based on a ’symbolic’ knowledge base, and where ’symbolic’ knowledge base, and where knowledge is highly individualised, and, knowledge is highly individualised, and, thus, social capital is of less importance. thus, social capital is of less importance.

Creative cities – ’buzz’ and Creative cities – ’buzz’ and F2FF2F• Talent working in high-tech industries Talent working in high-tech industries

based on an analytical knowledge base, based on an analytical knowledge base, however, does not exchange knowledge however, does not exchange knowledge in informal ’buzz’ situations. They enjoy in informal ’buzz’ situations. They enjoy F2F when taking advantage of the F2F when taking advantage of the proximity to the diversity of formal, proximity to the diversity of formal, codified knowledge and expertise found codified knowledge and expertise found in leading universities in large cities or in leading universities in large cities or city-regions, and, thus, exploit city-regions, and, thus, exploit urbanisation economies urbanisation economies

Different kinds/types of Different kinds/types of knowledgeknowledge

• Know-who: What is the division of Know-who: What is the division of labour in the process of search?labour in the process of search?

• Know-how: How is search pursued? Know-how: How is search pursued? What is the sequence? How What is the sequence? How formalized is it?formalized is it?

• Know-why: What causalities are at Know-why: What causalities are at the core of the dominant models the core of the dominant models applied?applied?

The importance of ’buzz’ and The importance of ’buzz’ and ’F2F’ for knowledge types and ’F2F’ for knowledge types and basesbasesKnowledgKnowledgee

type/type/

KnowledgKnowledgee

BaseBase

Buzz for Buzz for know whoknow who

Buzz for Buzz for know howknow how

Buzz for Buzz for know whyknow why

F2F for F2F for know whoknow who

F2F for F2F for know howknow how

F2F for F2F for know whyknow why

AnalyticalAnalytical LL LL LL

LL MM LL

SyntheticSynthetic MM LL LL

MM HH MM

SymbolicSymbolic HH HH H H

MM HH HH

Innovative regions/creative Innovative regions/creative cities and social capitalcities and social capital

• Florida argues that ’places with dense Florida argues that ’places with dense ties and high levels of traditional social ties and high levels of traditional social capital (i.e. Putnam/bonding) provide capital (i.e. Putnam/bonding) provide advantages to insiders and thus promote advantages to insiders and thus promote stability (i.e. negative lock-in), while stability (i.e. negative lock-in), while places with looser networks and weaker places with looser networks and weaker ties are more open to newcomers and ties are more open to newcomers and thus promote novel combinations of thus promote novel combinations of resources and ideas’.resources and ideas’.

On social capital, human On social capital, human capital and creative capitalcapital and creative capital

• Cushing finds that social capital theory Cushing finds that social capital theory provide little explanantion for regional provide little explanantion for regional growth. Both the human capital and creative growth. Both the human capital and creative capital theories are much better at capital theories are much better at accounting for such growth. Furthermore, he accounting for such growth. Furthermore, he finds that creative communities and social finds that creative communities and social capital communities are moving in opposite capital communities are moving in opposite directions. Creative communities are centers directions. Creative communities are centers of diversity, innovation, and economic of diversity, innovation, and economic growth, social capital communities are not.growth, social capital communities are not.

On social capital, human On social capital, human capital and creative capitalcapital and creative capital

• In a later study Cushing found no evidence In a later study Cushing found no evidence that social capital leads to regional that social capital leads to regional economic growth; in fact the effects were economic growth; in fact the effects were negative. Both the human capital and negative. Both the human capital and creative capital models performed much creative capital models performed much better. Cushing concluded that the better. Cushing concluded that the ’creative capital model generates equally ’creative capital model generates equally impressive resutls as the human capital impressive resutls as the human capital model and perhaps better.model and perhaps better.

On social capital, human On social capital, human capital and creative capitalcapital and creative capital

• According to Florida, the creative capital According to Florida, the creative capital theory says that regional growth comes theory says that regional growth comes from the 3 Ts (Technology, Talent and from the 3 Ts (Technology, Talent and TolerenceTolerence) of economic development, and to ) of economic development, and to spur innovation and economic growth a spur innovation and economic growth a region must have all three of themregion must have all three of them

• While social capital is ’blocking’ economic While social capital is ’blocking’ economic growth according to Florida, who, thus, is growth according to Florida, who, thus, is not talking about: Technology, Talent and not talking about: Technology, Talent and TrustTrust. .

Creative cities – on efficiency Creative cities – on efficiency and equityand equity

• However, increased social and economic However, increased social and economic polarization in American creative cities – the polarization in American creative cities – the living conditions of the ’thinking class’ vs the living conditions of the ’thinking class’ vs the ’serving class’ - represents the greatest ’serving class’ - represents the greatest challenge to retaining US position as the world challenge to retaining US position as the world leader in technology and in its ability to attract leader in technology and in its ability to attract top talent. While attracting talent and top talent. While attracting talent and improving quality of place are easy enough to improving quality of place are easy enough to find support for, more often than not the real find support for, more often than not the real consequences and costs for the low-skilled consequences and costs for the low-skilled serving class (displacement and gentrification) serving class (displacement and gentrification) are neglected and overlooked. are neglected and overlooked.

Innovative regions/creative Innovative regions/creative cities – on efficiency and cities – on efficiency and equityequity• In a new study ’Europe in the creative age’ In a new study ’Europe in the creative age’

(Florida and Tinagli) it is shown that Sweden (Florida and Tinagli) it is shown that Sweden is the top performer on the Euro-Creativity is the top performer on the Euro-Creativity index, outperforming not only all of the other index, outperforming not only all of the other European countries, but the US as wellEuropean countries, but the US as well

• Also the other Nordic countries as well as Also the other Nordic countries as well as northern European countries (Ireland, the northern European countries (Ireland, the Netherlands and Belgium) is performing wellNetherlands and Belgium) is performing well

World Economic Forum Growth World Economic Forum Growth Competitiveness Index (Oct. Competitiveness Index (Oct. 2004)2004)1.1. Finland 7. Singapore Finland 7. Singapore

2.2. US 8. SwitzerlandUS 8. Switzerland

3.3. Sweden 9. JapanSweden 9. Japan

4.4. Taiwan 10. Iceland Taiwan 10. Iceland

5.5. Denmark 11. UKDenmark 11. UK

6.6. Norway 12. NetherlandsNorway 12. Netherlands

Where does Where does SOCIAL CAPITAL SOCIAL CAPITAL matter most?matter most?• The presence of social capital in the form The presence of social capital in the form

of a strong tradition of cooperation in the of a strong tradition of cooperation in the society in general as well as of a social society in general as well as of a social regulation of the labour market specifically regulation of the labour market specifically in the Nordic countries adds to the high in the Nordic countries adds to the high level of human capital in the work force in level of human capital in the work force in a synergistic way (in learning forms of a synergistic way (in learning forms of work organisations). This builds on social work organisations). This builds on social capital rooted in civicness (bonding), but is capital rooted in civicness (bonding), but is further developed through formal further developed through formal organisations at the system level of the organisations at the system level of the society (bridging). society (bridging).

Innovative regions/creative Innovative regions/creative cities – on efficiency and cities – on efficiency and equityequity• This indicates that it is not only a question of This indicates that it is not only a question of

finding the optimal trade-off between finding the optimal trade-off between efficiency and equity (getting th trade off efficiency and equity (getting th trade off right), butright), but

• That it might be a question of producing That it might be a question of producing synergy between efficiency and equity synergy between efficiency and equity (more equity also results in more efficiency), (more equity also results in more efficiency), found in the Nordic countries, as the best found in the Nordic countries, as the best policy to promote and reproduce creative policy to promote and reproduce creative cities (advantage of coordinated market cities (advantage of coordinated market economies)economies)

Innovative regions/creative Innovative regions/creative cities – varieties of capitalismcities – varieties of capitalism

• Soskice and others convincingly argue that Soskice and others convincingly argue that different national institutional frameworks different national institutional frameworks support different forms of economic activity, support different forms of economic activity, i.e. that coordinated market economies have i.e. that coordinated market economies have their competitive advantage in diversified their competitive advantage in diversified quality production, while liberal market quality production, while liberal market economies are most competitive in economies are most competitive in industries characterised by radical industries characterised by radical innovative activitiesinnovative activities

VARIETIES OF VARIETIES OF CAPITALISM CAPITALISM

Liberal market Liberal market economieseconomies

Coordinated market Coordinated market economieseconomies

Financial regulationFinancial regulation Short-term financial Short-term financial markets, equity financingmarkets, equity financing

Long-term patient capital, Long-term patient capital, debt financingdebt financing

Corporate governanceCorporate governance Shareholder value, limited Shareholder value, limited business coordination; business coordination; antitrust lawsantitrust laws

Stakeholder value, strong Stakeholder value, strong business associations, business associations, intercorporate networksintercorporate networks

Innovation systemsInnovation systems Radical innovation, Radical innovation, involving sharp breaks involving sharp breaks with extant processeswith extant processes

Incremental innovation Incremental innovation involvinf continuous involvinf continuous process developmentprocess development

Capital-labor relationCapital-labor relation Decentralized bargaining, Decentralized bargaining, contentious workplace contentious workplace relationsrelations

Coordinated bargaining, Coordinated bargaining, statutory worker statutory worker representationrepresentation

Training and employmentTraining and employment Basic education and firm-Basic education and firm-specific training, short specific training, short tenure, high turnover tenure, high turnover jobs, high interfirm labor jobs, high interfirm labor mobilitymobility

Vocational training, long Vocational training, long tenure, low turnover jobs, tenure, low turnover jobs, low interfirm labor low interfirm labor mobilitymobility

Talents and innovative Talents and innovative regions/creative cities – what regions/creative cities – what about the ordinary regions?about the ordinary regions?• This problematic has also an inter-regional This problematic has also an inter-regional

(centre-periphery) dimension (i.e. within (centre-periphery) dimension (i.e. within the EU). If cities are the centres of the the EU). If cities are the centres of the knowledge-based economy attracting and knowledge-based economy attracting and retaining most of a nation’s talent, then retaining most of a nation’s talent, then the development of the knowledge-based the development of the knowledge-based economy will be geographically uneven economy will be geographically uneven and knowledge poverty will become a new and knowledge poverty will become a new kind of locational disadvantage.kind of locational disadvantage.

Talents and ordinary Talents and ordinary regionsregions

• In policy terms the focus must be on how, In policy terms the focus must be on how, without destroying what makes cities without destroying what makes cities attractive places to be in, the less attractive places to be in, the less knowledge-based and peripheral regions knowledge-based and peripheral regions can make themselves better capable of can make themselves better capable of retaining and attracting industry that is retaining and attracting industry that is likely to offer qualified, higher value-adding, likely to offer qualified, higher value-adding, more knowledge-intensive jobs for their more knowledge-intensive jobs for their own educated youth and attract other own educated youth and attract other talents as well. Social capital may well play talents as well. Social capital may well play an important role here.an important role here.

Talents and ordinary Talents and ordinary regionsregions• In upgrading peripheral regional economies In upgrading peripheral regional economies

to knowledge-based (learning) economies to knowledge-based (learning) economies the formation of regional innovation systems the formation of regional innovation systems could play a strategic role either defined could play a strategic role either defined narrowly by using local universities as narrowly by using local universities as motors and agencies for change, or through motors and agencies for change, or through a learning region approach based on broad a learning region approach based on broad social participation in a bottom-up social participation in a bottom-up perspective (i.e. a broad definition of an perspective (i.e. a broad definition of an innovation system where the presence of innovation system where the presence of social capital is a structural prerequisit).social capital is a structural prerequisit).

Talents and ordinary Talents and ordinary regionsregions• In this context it is important to be In this context it is important to be

reminded of Porter’s view on the reminded of Porter’s view on the competitive advantage of firms and regions competitive advantage of firms and regions being based on the exploitation of unique being based on the exploitation of unique resources and competencies (which need resources and competencies (which need not be R&D based), which must be not be R&D based), which must be reproduced through continous innovation reproduced through continous innovation understood as interactive learning, in which understood as interactive learning, in which cooperation and social capital is of strategic cooperation and social capital is of strategic importance.importance.