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Creative Clusters and Innovation Putting Creativity on the Map Research report: November 2010 Creative clusters and innovation Putting creativity on the map Caroline Chapain, Phil Cooke, Lisa De Propris, Stewart MacNeill and Juan Mateos-Garcia Disclaimer This work contains statistical data from ONS which is Crown copyright and reproduced with the permission of the controller of HMSO and Queen’s Printer for Scotland. The use of the ONS statistical data in this work does not imply the endorsement of the ONS in relation to the interpretation or analysis of the statistical data. This work uses research datasets which may not exactly reproduce National Statistics aggregates. Copyright of the statistical results may not be assigned, and publishers of these data must have or obtain a licence from HMSO. The ONS data in these results are covered by the terms of the standard HMSO ‘click-use’ licence. Creative clusters and innovation Putting creativity on the map Foreword No one doubts the economic importance of the creative industries to the UK. At 6.2 per cent of the economy, and growing at twice the rate of other sectors, they are proportionately the largest of any in the world. But there is some evidence that the UK’s creative industries support innovation and growth in other parts of the economy too. The significance of these spillovers has only recently begun to be examined rigorously. And we know next to nothing about their geographical dimensions. This gap in our understanding is what NESTA set out to address in Creative Clusters and Innovation, the outcome of a two-year collaboration with Birmingham and Cardiff Universities. The study adopts the concept of creative clusters as a starting point to examine the role that creative industries play in local and regional innovation systems. Its publication accompanies an online platform we have developed for users to examine creative industry concentrations at a fine level of detail in their localities. As ever, I look forward to hearing your views. Hasan Bakhshi Director, Creative Industries, NESTA November, 2010 NESTA is the UK’s foremost independent expert on how innovation can solve some of the country’s major economic and social challenges. Its work is enabled by an endowment, funded by the National Lottery, and it operates at no cost to the government or taxpayer. NESTA is a world leader in its field and carries out its work through a blend of experimental programmes, analytical research and investment in early- stage companies. www.nesta.org.uk 3 Executive summary It has long been recognised that industrial clustering benefits businesses by giving them access to skilled staff and shared services, and the opportunity to capture valuable knowledge spillovers. This is equally true of creative businesses, as exemplified by Hollywood, or closer to home by a host of thriving UK clusters, from post-production in Soho to video games in Dundee. This report is the most ambitious attempt yet to map the UK’s creative clusters, showing where they are, which sectors form them, and what their role is in the systems of innovation where they are embedded. It makes a case for a new approach to local economic policy as it relates to the creative industries: one that goes beyond ‘urban branding’ rationales, and acknowledges their great potential as active players in local innovation systems. The research has shown that London is the too’ approach to economic development that heart of the creative industries in Britain, compromises cities’ competitiveness. dominating in almost all creative sectors, and particularly in the most intrinsically creative The research also shows that the creative layers of the value chain for each sector. The industries are more innovative than many high level of geographical detail used in the other high-innovation sectors, for example mapping has allowed us to pin-point nine professional and business services. What other creative hotspots across Britain. They are is more, the creative industries provide a Bath, Brighton, Bristol, Cambridge, Guildford, disproportionate number of the innovative Edinburgh, Manchester, Oxford and Wycombe- businesses in most parts of the country. Slough. The research analyses co-location between NESTA is making this unique dataset available creative sectors and other innovative on an online platform that can be accessed industries such as High-Tech Manufacturing at http://www.nesta.org.uk/areas_of_work/ and Knowledge Intensive Business Services creative_industries/geography_of_innovation. (KIBS). It shows statistically robust patterns of This platform will enable its users to examine co-location in several cases. Advertising and creative industry concentrations at a high level Software firms are very often found near both of geographical resolution. It will be updated High-Tech Manufacturing businesses and KIBS. annually as a basis for policymaking at a Other creative sectors that provide content and national and local level. cultural experiences show weaker, although still significant, patterns of co-location with KIBS. The analysis also shows which creative industries tend to co-locate. Advertising and These findings suggest the existence of Software firms often cluster near each other; complementarities between some creative the same is true of Music, Film, Publishing and sectors and innovative businesses in other Radio and TV businesses. parts of the economy. These complementarities may be brought about by value chain linkages It also shows that different cities across Britain and shared infrastructures. They could also have different profiles of specialisation: cities be a consequence of knowledge spillovers across the South present more diversity in their that happen when creative businesses share creative specialisation, whereas Northern and new ideas with their commercial partners, or Midlands cities (Manchester excepted) have when creative professionals move into other similar creative profiles. This might reflect sectors, bringing useful ideas, technologies common structural challenges for cities in the and ways of working with them. In other cases, North, but it could also be indicative of a ‘me the presence of creative firms generates an 4 ‘urban buzz’ that attracts skilled workers and to avoid wasting money on poorly considered encourages collaboration. interventions. Armed with this knowledge, policymakers concerned with local economic The report examines some of these issues development should do the following: in further detail through four detailed case studies of creative clusters, produced using • Catalyse latent clusters rather than try to business surveys and interviews with local build new ones from scratch businesses and stakeholders. They are: Building clusters from scratch is notoriously difficult; far better to identify whether there • Software in Wycombe and Slough. are any latent clusters ‘hidden’ in their regions or localities that would benefit from • Film Production, Post-Production and Visual networking and awareness-raising. Increasing Effects in Soho, London. the visibility of such clusters can also help creative graduates find employment locally. • Media Production (including Radio and TV and Digital Media) in Cardiff. • Think about which sectors work well together • Advertising in Manchester. The co-location findings presented in this report suggest that there are important The case studies show how digitisation is synergies between some creative sectors, driving innovation in the creative industries, but not others. The same thing happens with most firms investing heavily in internal between creative sectors and Knowledge research and development (R&D), and devoting Intensive Business Services, and High-Tech large numbers of their staff to technology- Manufacturing. Local policymakers should intensive activities in order to benefit from this harness these complementarities, and digital revolution. avoid potentially wasteful ‘one-size-fits-all’ strategies for creative clusters that don’t pay The case studies also show that the mere sufficient attention to the distinctive needs existence of a creative agglomeration is of different sectors. not enough for the benefits from clustering to emerge. The other crucial ingredient is • Universities should do more to promote connectivity between firms within a cluster, innovation in increasingly tech-intensive with collaborators, business partners and creative industries sources of innovation elsewhere (both in the It is important to complement the somewhat UK and overseas), and finally, with firms in narrow view of universities as mostly other sectors that can act as clients, and as providers of creative talent with a stronger a source of new and unexpected ideas and emphasis on innovation. Technology- knowledge. These three layers of connectivity intensive creative industries, for example, are underpinned by a dense web of informal have something to gain from tapping interactions and networking. into the public research base in their local universities. Universities should also provide local knowledge hubs where creative firms can share information and build stronger Implications for policy networks. NESTA is publishing its detailed dataset • Help remove barriers to collaboration online, and will update it annually to provide Even if they are aware of each other, local a powerful resource for local areas seeking creative businesses may be keen to protect to understand and support their creative their valuable ideas or client portfolios industries. We are also publishing the survey and be wary of collaborating for fear
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