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

5. Strong local social networks. By this
we mean the relative strength of local
social history and networks that form an
important part of the norms and values
within which local economic activities are
conducted. These can be either a good or
bad thing. Strong local social networks can
encourage conformity and consequent path
dependence. Successful innovative British*
cities like Cambridge, Oxford, Warrington
and Reading tend to have high levels of outof-region
and international social networks
and are not limited to their regional
networks.
Knowledge assets drive the ability to
develop new industrial pathways
The main differences between leading
and lagging cities in our sample were their
historically developed knowledge assets – such
as universities and R&D infrastructure and the
dynamism of their local innovation systems.
Among the lagging cities in our sample:
• The development of knowledge-intensive
sectors has been slower than elsewhere.
• This has had a knock-on effect on the quality
of human capital with lower proportions
of both knowledge-intensive occupations
and those specifically engaged in R&D or
university research.
• The combination of a few large private sector
employers with a large public sector has not
fostered a culture of enterprise.
• There exists a lack of local investment
and thin venture capital markets. The
commercialisation of new ideas also appears
limited by the low proportions of knowledgeintensive
business services in most of the
least innovative city economies.
Leading cities have generally benefited from
the cumulative development of their local
absorptive capacity and innovation systems:
• They tended to have more people working in
knowledge-intensive occupations (KIOs).
• They had more employment in R&D and
university research than other cities.
• This was then reflected in higher rates of the
generation of new knowledge in the form of
patent applications.
• They were better able to commercialise these
new ideas as a result of higher levels of
knowledge-intensive business services (KIBS)
in those cities.
Implications for policy
It is necessary to think large-scale and
long-term using an evolutionary economics
approach to understanding change and
innovation
This should be reflected in setting realistic
expectations, in policy analysis and in the
evaluation of specific initiatives.
In leading areas like Cambridge there was
widespread scepticism among the private
sector firms about the relevance or efficacy
of public policy on innovation
Few firms could name any policy that had made
a positive and measurable difference to their
innovation activities. Their development was
largely based on the identification of market
opportunities and organising to meet those
demands. They were more concerned however
with policies related to issues falling under
Local Authorities jurisdiction, such as planning.
While public policies targeted specifically at
local innovation had little apparent impact,
several firms noted significant effects
arising from the consequences of other
kinds of policy
We recorded some criticism of local land use
planning as being too slow, bureaucratic and
unimaginative in developing transport and
communications infrastructure. It was also held
to place too many restrictions on the physical
development of the new knowledge-based
economy.
On the other hand, the large-scale town
expansion schemes in both Northampton
and Warrington proved to be very successful
at generating innovation and creating new
industrial pathways. While the promotion
of innovation in itself was not one of their
original objectives, much of what they have
achieved has been based on the creation of
an innovative set of institutional and cultural
phenomena that positively encourage new
economic growth and innovation (even if by
accident).
* The data in this report refer mainly to Great Britain, but references to the United Kingdom are made where appropriate.
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