History Matters: Path dependence and innovation in British city ...

average in all forms of innovation outcome
except ‘advance management techniques’,
whereas Swansea underperforms in all forms
of innovation outcomes, suggesting that
the cumulative characteristics of the local
innovation system contribute to the path
dependent nature of development. Once
a critical mass of innovation is reached it
appears to become self-reinforcing, as distinct
identifiable innovation and technological paths
emerge, as in Cambridge. Not only is there a
lack of critical mass in Swansea, which hinders
such a self-reinforcing process, the nature of
the existing innovation is also generally less
radical. Respondents confirm that there is
limited R&D within Swansea, which inhibits
knowledge creation and innovation outcomes.
One of the few Swansea companies cited
as successful in innovation is Corus, which
sponsors research in the University Engineering
School. But while others mention the potential
for innovation in the ICT sector in the city, the
feeling is that most innovation is not leading
edge:
“Whether you say it’s product innovation or
whether it’s just that they’re using software,
and developing web pages, and these
types of things...it’s mid-level innovation.”
[Interview SW003]
Another respondent from the Council
comments on the difficulty moving from the
ideas stage to patenting:
“With the patents idea, to make it
commercially viable, is a hell of a leap of
faith. In fact, we and the university have
discussed that on numerous occasions,
because we’ve done joint initiatives where
we’ve encouraged people to come forward
with their ideas, but where we always
failed, is getting that commercialisation of
those ideas. Making them venture capital
ready, and that’s the huge thing.” [Interview
SW005]
Having ready access to venture capital – and
being viewed as a highly innovative place by
venture capital organisations – has certainly
been a major factor behind Cambridge’s
success. As the Cambridge high-tech cluster
has developed, a local venture capital industry
has emerged to serve it – a form of coevolution
– with some significant players,
including Amadeus and Cambridge Gateway
Fund. According to Library House some
108 companies in the Cambridge cluster
are venture-backed, totalling £600m of
institutional capital, making it second only to
London, and fourth in Europe (Library House,
2007). Thirty-six per cent of venture-backed
cluster companies are in the ‘healthcare and life
sciences’ sector. There is also a thriving local
business angel community. The general view is
that access to venture capital is a strength of
the cluster:
“Not only is there now a healthy
locally-based VC market, Cambridge’s
position close to London means that VC
organisations there are within easy reach,
and view Cambridge favourably. I don’t
think venture capital is a problem, though
some argue that the British venture capital
industry could steer more money into
high-tech activity. The key issue is having
entrepreneurs who can convince investors,
to have ideas that can be brought to
market. Cambridge does well here, but can
do better.” [Interview CAMB004]
Knowledge acquisition and adoption
External knowledge networks are key to
external knowledge identification and
absorption. We have seen that an estimated
96.5 per cent of OECD new research knowledge
is created outside the UK (AIM, 2008). This
makes international knowledge networks
particularly significant in bringing in new ideas
and knowledge to particular localities.
CIS4 data show that Cambridge firms are
generally much more integrated into various
networks (government partners, universities,
consultants, customers and suppliers) than
Swansea firms (Figure 31). Particularly striking
is the extent to which Cambridge far outstrips
Swansea on almost every type of network,
indicating that its firms have much more
extensive and intensive relationships with other
firms and bodies – and potential access to
much richer sets of external knowledge.
“It may be that some Cambridge high-tech
firms have relationships with other local
firms, and might collaborate in some way
with them. But my impression is that for
most, like us, the customer base is national
and even more importantly international,
so links outside Cambridge are the key
ones. Our fastest growing market is the
Far East and China, so that is where we
look for relationships with customers and
manufacturers. Global relationships matter
much more than local ones. To survive
you have to think globally.” [Interview
CAMB002]
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