The Geography of Innovation: Staffordshire’s Challenges Ahead

In this post, I will look at how higher education, a skilled workforce, culture and networks affect whether a particular place becomes an innovation hotspot.

Starting with house prices, the chart below shows how a high-tech hub can have a long-term effect on house prices. The median price paid for a house in Staffordshire in 1995 was £49, 950 . In 2016, it was £165,000, an increase of 230%. However, in Cambridgeshire the median price rose from £60,000 to £257,500, an increase of 330%. What is responsible for Cambridge’s stratospheric price rise?

Median House Prices Staffordshire vs Cambridgeshire

Since the late 1990s, Cambridge has become a high tech hub, and house prices have correspondingly increased. Also known as “Silicon Fen”, Cambridge Science Park was set up in 1970 as part of a Trinity College project, and there are now estimated to be over 1000 high-tech companies in the CB postcode. Cambridge University is a source of science graduates who can easily move into a local workplace. Previous research has found proximity to STEM graduates to be a characteristic of highly innovative firms (Coad et al., 2014).

Staffordshire aims to reach these heights, and has founded the Cannock Chase Skills and Innovation Hub with an FE college, the Digital Innovation Partnership with Staffordshire University, and the Smart Innovation Hub with Keele University. Startups thrive on network effects, particularly those created by universities who actively encourage

commercial activity. Partnerships with educational establishments are important in creating innovation eco-systems, but what else is important?
Encouraging talent from around the world is important for start-ups. More than half of the top American tech companies were started by first- or second-generation immigrants. Despite lobbying from the business sector, Home Office immigration rules discourage most type of immigration, and graduating students, who are both more skilled and entrepreneurial than the general UK population, are discouraged from remaining in the UK. Staffordshire may lose out from technology unfriendly national policies.

Local politics and culture also play a part in how innovation ecosystems develop (Mack & Mayer, 2016). It will be necessary for Staffordshire’s agencies take into account the specific political and cultural context. Being a place where entrepreneurs and their skilled workforce want to live helps. Stoke-on-Trent’s City of Culture bid has encouraged the cultural venues, cafes and restaurants needed to draw people in. Grassroots development is encouraged, particularly in developing local networks of mentors and entrepreneurs (Baum, Calabrese, & Silverman, 2000). Projects such as the Mercia Centre for Innovation Leadership, and networking organisations such Staffordshire Chamber of Commerce will be important to share ideas, pilot new technologies and foster creativity.

Staffordshire has proximity to higher education institutions, proximity to both the M6 and M1, and ambitious local leaders who are keen on growth. Staffordshire also has cost-effective housing, while Silicon Valley and Silicon Fen have famously unaffordable house prices. A small-two bedroom house in Palo Alto recently sold for $2m. As Ajay Rothan of Mithril Capital, an investment fund, recently asked “How you supposed to have a start-up if the garage costs millions of dollars?”

Further Reading

Baum, J. A. C., Calabrese, T., & Silverman, B. S. (2000). Don’t go it alone: alliance network composition and startups’ performance in Canadian biotechnology. Strategic Management Journal, 21(3), 267–294. https://doi.org/10.1002/(SICI)1097-0266(200003)21:3<267::AID-SMJ89>3.0.CO;2-8

Coad, A., Cowling, M., Nightingale, P., Pellegrino, G., Savona, M., & Siepel, J. (2014). UK Innovation Survey: Highly innovative firms and growth. Retrieved from https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/289234/bis-14-643-uk-innovation-survey-highly-innovative-firms-and-growth.pdf

Mack, E., & Mayer, H. (2016). The evolutionary dynamics of entrepreneurial ecosystems. Urban Studies, 53(10), 2118–2133. https://doi.org/10.1177/0042098015586547

Author: ujsalmon

Academic researcher. Dog lover. All opinions expressed are my own.

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