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

Stoke City of Culture Bid and Innovation

Keele University and the University of Staffordshire are collaborating on the City of Culture bid for Stoke-on-Trent in 2021. I was invited to attend a workshop last week to discuss how we can support the bid.

Colleagues were present from a diverse range of academic backgrounds: criminology, social care, history, human geography, business studies, and sociology. We had a lively discussion on how our varied backgrounds could work together. We agreed on the importance of including people from a wide range of backgrounds who live in Stoke to contribute ideas as to what we could research, to get involved as researchers, and to define what was important about the City of Culture bid to them.

As a business studies academic, I was particularly interested in what the potential impact would be on SMEs in Stoke-on-Trent. Stoke is the largest town in the Stoke and Staffordshire LEP region.  SMEs in this region urgently need support with innovation. Innovation is seen by policy-makers as being crucial, not only for the SME’s themselves, but also for creating high quality jobs and driving economic growth in their region (Department for Business Energy and Industrial Strategy, 2017).

However, the Stoke and Staffordshire region appears to be doing less well than others. The  2015 Community Innovation Survey found that across the government, higher education, and non-profit sectors, the Stoke and Staffordshire region has a particularly low expenditure on R&D.  R&D expenditure is a crucial precursor for innovation. Business enterprise expenditures on R&D is particularly low in the region: Stoke and Staffordshire’s businesses spent only £155 million on R&D compared to neighbouring Cheshire and Warrington’s £1,035 million. The same report finds that Stoke and Staffordshire also has the 4th lowest percentage of businesses engaged in product or process innovation: only 18% as compared to South-East Midlands (the highest) at 34%.

There is clearly a need for Stoke and Staffordshire to improve the innovation activities of SMEs in the region. The MCIL Project (of which this blog forms a part) is a leadership development programme designed to improve the innovation activities of Stoke and Staffordshire’s SMEs.

While Stoke bid is clear that quality jobs and economic growth are reasonable expectations, to what extent can a City of Culture bid encourage innovation?

In the evaluation of the European City of Culture in Liverpool, which ran from 2005 to 2008, the report authors concluded that:

  1. SME businesses in Liverpool and the sub-region were positive about both the change in the perceptions of Liverpool but also about a positive impact on their turnover.
  2. Employment in the creative industries showed a major increase, mostly in contractual, rather than permanent positions.
  3. Retail tourism employment in Liverpool showed above average rises during 2008, but could have been due to other factors, such as a major new retail shopping development.and improved infrastructure.

While increased innovation funding for SMEs may not be an outcome of the City of Culture, there is some evidence that shows that improved “quality of place” has a positive impact on innovation activities. Increased pride in the city, as well as improved cultural facilities and infrastructure, was an outcome of the City of Culture activities in Liverpool. There is some hope therefore that the City of Culture bid in Stoke could indirectly increase innovation activity in Stoke’s SMEs.

References

Department for Business Energy and Industrial Strategy. (2017). Building Our Industrial Strategy. London: Department for Business, Energy and Industrial Strategy.

Garcia, B., Melville, R., Cox, T. (2010), Creating an Impact: Liverpool’s Experience as European Capital of Culture  University of Liverpool