Cities Are Innovative Because They Contain More Ideas to Steal
by Eric Jaffe, JUN 12, 2013
We all know that cities are great engines of innovation. One reason that’s the case, as Emily Badger recently pointed out, is that cities grow “superlinearly”: interpersonal connections grow at an greater rate than sheer population, and with that super proximity comes a super exchange of ideas. The secrets of industry, as economist Alfred Marshall once wrote, are truly “in the air.”
But innovation is a blanket term that can encompass very different things. Scholars who study the subject typically limit it to the urban proliferation of patents. For sure, the creation of original concepts and products is a sign of innovation. At the same time, it could also reflect a new way of doing business — applied from some other sector, perhaps, or even adapted from a competitor for some other purpose.
So we know cities innovate, but we don’t necessarily know what that innovation means.
Well, we have a slightly better idea now thanks to the recent work of economists Neil Lee of Lancaster University Management School and Andres Rodriguez-Pose of the London School of Economics. Lee and Rodriguez-Pose used a sweeping 2010 business survey to study the innovation patterns of roughly 1,600 small and medium enterprises across the United Kingdom. The survey divided innovation into two types (products and processes) and two sources (entirely “original” ideas or merely those newly “learned” to the firm).
The main results of the survey fit well with what’s already known about urban innovation. U.K. firms located in the city were indeed more likely than those in rural areas to report both new products (52 to 46 percent, respectively) and new processes (43 to 34 percent). From there, Lee and Rodriguez-Pose dug deeper to try to understand how exactly this urban advantage emerged.