The City as Innovation Machine

This study asks whether municipal leaders consider quality of life amenities as potential contributors to a local economy.
April 12, 2017

The City as Innovation Machine

Richard Florida, Patrick Adler and Charlotta Mellander

Regional Studies

Volume 51, Issue 1, January 2017

Description:

This paper argues that innovation and entrepreneurship are not just products of cities and greater metropolitan areas but that innovation and entrepreneurship require cities to thrive. Indeed, the authors contend that urban areas are the key social and economic organizing units for the processes that lie at the heart of innovation and entrepreneurship. Cities are uniquely positioned to coalesce the critical ingredients to driving innovation -- those of business firms, talent, regional knowledge institutions and infrastructure.

To support this theory, the authors measure innovation by analyzing the trails it leaves behind, which include knowledge (such as patents and copyrights), product improvements and venture capital. Each of these elements was found to be highly concentrated across and within cities and metro areas.

Findings:

The paper concludes that, at their core, innovation and entrepreneurship are spatial processes rather than company- or individual-level ones in that urban areas are uniquely positioned to collect the skills, firms and physical capital that these processes require. The authors emphasize that while cities have always driven economic growth, they are now even more critical when one considers that the modern knowledge-driven innovation economy is reliant upon place-based ecosystems.

Finally, the authors suggest that an improved model of urban innovation and entrepreneurship with place at its core would at least partially explain the tendency of innovators to throng together as well as the broader rise and decline of specific places as centers for innovation, entrepreneurship and economic growth.

Why this matters for practitioners:

This theory is important for public servants concerned with driving economic growth in their municipalities. Public leaders of urban areas may want to consider the key ingredients to fostering innovation and entrepreneurship that are central to such growth. By developing policies and infrastructure to support business, human capital, universities and their interactions, cities can expect to benefit from these alignments. This stands in stark contrast to the widely held belief that innovation comes from individuals toiling in their garages to create the next big thing. Indeed, cities and metro areas have more power to nurture innovation than may be realized.

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