pri enterprising report · baxter led the united states (us) team and the other team members were...

04 ENTERPRISING PLACES SUSTAINING COMPETITIVE LOCATIONS FOR TECHNOLOGY-BASED ACTIVITY

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THE PROGRAMME ON REGIONAL INNOVATIONCMI’s Programme on Regional Innovation is addressing the issues facingregional economies in influencing and sustaining knowledge-basedgrowth.The Programme conducts its work through research, educationand outreach, and direct engagement with policy makers and stakeholdersto facilitate the development of strategy and solutions. Further detailsabout PRI can be found at www.regionalinnovation.org.uk

THE CAMBRIDGE-MIT INSTITUTE (CMI)The Cambridge-MIT Institute (CMI) is a strategic alliance between theUniversity of Cambridge and the Massachusetts Institute of Technology(MIT). CMI’s mission is to deliver education and research to enhance thecompetitiveness, productivity and entrepreneurship of the UK economy. Itfocuses on the interface between academia and industry, and isconcerned with improving the effectiveness of the knowledge exchangeprocess. Further details about CMI can be found at www.cambridge-mit.org

COMPETITIVENESS REPORTSThe Competitiveness Reports disseminate the latest research on howregions perform and provide evidence and data to inform the policymaking process.They are intended for both policy makers and researchersand they seek to inform and stimulate debate.They do not represent theviews of the Cambridge-MIT Institute.

COPYRIGHT COPYRIGHT RESIDES WITH THE CAMBRIDGE-MIT INSTITUTE AND THE AUTHORS.

03SUSTAINING COMPETITIVE LOCATIONS FOR TECHNOLOGY-BASED ACTIVITY ENTERPRISING PLACES

Table of contentsTeamLeaders 04Preface 05Executive summary 06

1. Introduction: themes and study areas 091.1 Overview 101.2 The study areas 111.3 Organisation of this report 12

2. Developing the conceptual framework 132.1. Introduction 132.2 The mapping exercise 132.3. Analytical framework 142.4 Evidence from the Literature 14

3. What technology-based companies need from place 233.1. Introduction 233.2. What influences company location? 243.3. On technology and innovation 273.4. On relationships with local research institutions 283.5. On networks 283.6. On collaborations 283.7. On finance 293.8. On type of employees 293.9. Constraints on recruitment 293.10. On infrastructure 303.11. Summary 30

4. Creating the innovation network 314.1 Introduction 314.2 Investment in research 324.3 Knowledge-based institutions and companies: it is about people 334.4 Technology, technology transfer, and intellectual property 354.5 Facilities and incubation 374.6 KBIs and place 384.7 Lessons 39

5. Financing the enterprise 405.1 Introduction 405.2 Summary of survey findings 425.3 Investing in institutions and infrastructure 425.4 Investing in ideas and technology 435.5 Investing in company development 465.6 Lessons: using finance to support place 49

6. Creating places 506.1 Introduction: issues and players 506.2 Physical place and infrastructure; making liveable places 516.3 Providing premises and more 526.4 Social and professional place 546.5 Fostering business and industry networks 576.6 Branding, marketing and promoting place 616.7 Incentives are still important in many areas 626.8 The role of research and critical review 636.9 Summary 63

7. Regional entrepreneurship, institutions and vision 647.1 Introduction 647.2 Civic enterprise: issues and players 657.3 Three generations of intermediaries 677.4 Regional collaboration and partnerships 717.5 Entrepreneurship and institutions 757.6 Conclusions 76

8. Main conclusions and implications for the United Kingdom 778.1 Key lessons: building the technology base 778.2 Key lessons: using finance to support place 788.3 Key lessons: maintaining the place 788.4 Key lessons: building organisations 78

A.1 1 Methodology 80A.2 Cluster mapping and study areas 82A.3 Organisations and people contacted during the research 85A.4 Bibliography 88


Team LeadersChristie Baxter(Project Leader, USA DUSP-MIT)Christie is a principal research scientist at MIT’sDepartment of Urban Studies and Planning. Herresearch and consultancies explore real estate andeconomic development initiatives by governmentsand nonprofit organisations. Her recent workfocuses on technology-led development. Previously,she was research director for a nationwide study ofhow local communities use former military bases toachieve economic development goals. From 1992 to1998 she directed the MIT Project on SocialInvesting, which sought to increase privateinvestment in beneficial capital and business projects.Other research has examined major infrastructureinitiatives, downtown redevelopment, and innovativecontracts for public building development. Sponsorsof her work have included the Cambridge-MITInstitute, the U.S. Economic DevelopmentAdministration, and the Ford, MacArthur and KelloggFoundations.

Peter Tyler(Project Leader UK, Land Economy-University of Cambridge)Peter is currently a Professor in the Department ofLand Economy at Cambridge University. He is afellow and Director of Studies of St Catharine’sCollege, Cambridge. A leading urban and regionaleconomist and a specialist in the evaluation of publicpolicy, he has an extensive track record in academicresearch and consulting for the private and publicsectors in the United Kingdom and in Europe. Hehas been a project director for over sixty majorgovernment research projects and which haveresulted in the publication of forty researchmonographs, twenty-three of which have been ofbook length. Besides his work in the United Kingdomfor HM Government, he has also undertakenresearch for the European Commission and theOrganization for Economic Co-operation andDevelopment on urban, regional and industrial policy.He has also worked extensively in the private sector.

Barry Moore (Land Economy-University of Cambridge)Barry is a Reader and Assistant Director of Researchin the Department of Land Economy and a Fellow inEconomics at Downing College. His specialisms arethe evaluation of urban and regional policies, high-technology clusters and collective learning, locallabour market dynamics, regulation and the bankingand credit sector and the commercialisation of theuniversity science base. He has undertaken researchinto the economic development of theCambridgeshire economy, as well as directing a largenumber of major research projects for HMGovernment and an extensive range of other clients.

Nicky Morrison (Land Economy-University of Cambridge)Nicky is a lecturer in the Department of LandEconomy specialising in urban planning and housingpolicy. She has recently been one of the coordinatorsof a major research programme for the EuropeanCommission that has been evaluating theachievements of housing initiatives designed toimprove the quality of life in deprived urban areas.She works extensively with colleagues from theCambridge Centre of Housing and Planning on arange of housing projects including research intoaffordable housing for key workers in the Cambridgesub-region.

Robert McGaffin(Land Economy, University of Cambridge)Robert holds a Masters degree in Urban andRegional Planning from the University of Cape Townand an MPhil in Land Economics from the Universityof Cambridge. He worked in the CommercialProperty Finance Division of Cape of Good HopeBank in Johannesburg for two years and has lecturedin the Department of Construction Economics andManagement at the University of Cape Townlecturing on property valuation and development.

Monica Otero Garcia(Land Economy, University of Cambridge)Monica has an MPhil from the University ofCambridge and worked for three years at theDepartment of Land Economy, University ofCambridge as a researcher involved in several majorgovernment funded projects and overseeing theeditorial process for the Regional Studies. She iscurrently working for an international telecommunicationsconsultancy.


Powerful global currents are changing the economic and social systems in cities andregions around the world. In response, people in leadership positions are seekingstrategies they can use to make their places competitive and, especially, to attract andretain technology-based enterprise. These places start with an inherited pattern of landuse, a resource base, and a set of institutions tailored to another era. In many parts ofthe United Kingdom (UK), for example, this inheritance reflects an industrial base thathas now declined. The challenge is to re-orientate land, resources, and institutions toaccommodate the needs of the New Economy.

To meet these needs, a place has to evolve and change. This occurs through agents whomediate the decisions and responses of players from a wide variety of differentorganisations in the private, public, academic and independent sectors. For example,evidence that new high-tech companies emerge and grow around research centres anduniversities is expressed both in forms of new land use and institutional connectionsbetween these centres and companies.

Our project sought to understand how the key players, seeking to transform their placeto accommodate technology-based enterprise, achieved change, and what factorsinfluenced their relative success. The research project was undertaken as part of theCambridge-MIT Institute (CMI) by researchers based at the University of Cambridge,Department of Land Economy, and the MIT Department of Urban Studies and Planning.Professor Peter Tyler led the UK team and the other team members were Barry Moore,Nichola Morrison, Rob McGaffin, Mónica Otero-García and Margaret Potton. Dr ChristieBaxter led the United States (US) team and the other team members were BernieFreiden, William Porter, Jean Poteete, Myuong-Gu Kang and Michael Sable. The mainfocus in this work was on the implications of the research findings for the UK.

The team is grateful for the support of a very large number of people from companiesand organisations across the UK and the US. We would especially like to thank keypeople at CMI for their help and support, including Mark Giordono, James Keller,Michael Kitson, William Lucas, Scott Shurtleff and Michael Scott-Morton. We wouldalso like to thank Karen Polenske, for giving us the opportunity to develop our ideasat MIT’s 2001 SPURS Seminar. And special thanks goes to leaders of companies,universities, research centres, government and civic organisations in each of thehigh-tech centres we studied, who generously gave us their time and help. Annex 3 liststhem all.

The views contained in this document are those of the authors only.

Preface


Introduction

The transformation of the world economy and increasing globalcompetition presents significant challenges for countries like theUnited Kingdom that once had a large presence in traditionalmanufacturing sectors. The pace of change is rapid, and theUnited Kingdom's ability to compete in the New Economydepends crucially on how it develops and nurtures itstechnology-based enterprises.

The current global transformation is largely the result of arevolution in information and communication technology (ICT),which is driving corresponding revolutions in the organization ofcompanies: how they value space and time when they sortproduction functions, and where they decide to locateoperations. As high tech companies reposition themselvesglobally and regionally, regional leaders are re-evaluating howthey can support technology-based enterprise and make theirregions more competitive. Increased recognition of theimportance of regions has also led to a re-examination ofwhether traditional institutions and policy measures will lead tooptimal outcomes, as well as to the development of new policyframeworks. These new frameworks often incorporatecollaborations that cross business, academic, government, andcivil society sectors, and span traditional geographic units.

The research described in this report yields a series of lessonsabout ways to strengthen players in high tech centres from thedifferent systems of knowledge, finance, business and the builtenvironment and the connections among them. In short,successful enterprising places that foster the growth oftechnology based activity have four things: academic excellence,flexible local institutions, adjustable infrastructure and civicleadership.

The research involved teams from the University of Cambridgeand the Massachusetts Institute of Technology (MIT), funded bythe Cambridge-MIT Institute (CMI). We began our work inspring 2002.We explored how key players in centres in the USand the UK enhanced the development of their high techcentres over time. We explored in particular the collaborationthat occurred across different functional systems, the new classof civic leaders, the new vehicles of engagement they developed,and the new instruments of policy. We summarize the lessonsbelow.

In addition to an analysis of published studies related to thedevelopment of high tech centres, the team conducted in-depthinterviews with 250 high-level government, industry andacademic leaders in the US and the UK, and we surveyed senior

managers of technology-based companies located in thesecentres.The main focus in this work was on the implications ofthe research findings for the United Kingdom.

How can key players enable thedevelopment of enterprising places?

Global forces affect places differentially, and some centres arebetter positioned than others. However, this research found thatkey players could shape the attractiveness of their region totechnology-producing companies. They did so throughcollaborative activities across the realms of business, academia,government, civic society and across local political units. In eachof the successful places studied we found a group of playersinteracting to produce, disseminate, share and use leading-edgetechnology to create, sustain and grow the technology-basedcentre. Innovative behaviour was equally required to manage thenegative externalities that concentrations of technology-basedcompanies and workers inevitably created, and we foundentrepreneurial and innovative behaviour present in the policy,academic and finance realms as well as the business sector ofsuccessful centres.

Crucially, enterprising places were able to create institutionalvehicles that brought together the key players but whichrecognised the new geographies that the workings of thetechnology-based centres provoked and the implications for thefinancing and installation of new infrastructure. Broad regionalintermediary partnerships enabled geographic connections tobe made that were necessary to create a vision of the regionand its future. Intermediaries facilitated problem-solvingstrategies over time, providing mechanisms for the leaders inone sector to test and build trust relationships with their peersin other sectors and they were able to form partnerships thathad connection with, but separation from, government. In eachplace, political leadership and the political climate changedsignificantly over time. Some separation from governmentpermitted organisations to maintain their operations in thisclimate of change.

The intermediaries facilitated connections to multiple realms.This allowed the organisation to draw resources from differentsources as the capacity of these sources shifted. They alsoenabled entrepreneurship. That is, the organisation had bothaccess to resources and the ability to mobilise and deliver themautonomously. They had independent credibility and couldinfluence key decision-makers in the core sectors ofgovernment, industry, universities and in other civic enterprises.

Executive summary


By involving the leadership of these sectors, intermediaries wereable to secure members’ resources to solve key problems,operate independently, and sustain the organization over time.Their structures as cross-sector organizations allowed them tooccupy neutral territory.This enabled the participating membersto stand aside from some of the inevitable complexities ofinitiating certain actions within their own organisations and tocreate alliances with other key players, and draw on theirparticular expertise and competences, to produce the outcomesnecessary to maintain the success and momentum of the place.In these circumstances the private sector came together withthe public sector because both sets of experience were requiredto bring about the required change at the local and regionallevels.

The intermediaries were usually driven by representatives fromthe respective organisations that could authorise realcommitment (and thus usually people at the chief executivelevel). Members of the intermediaries tended not to be heavilypolitically motivated. The intermediaries so formed had clearobjectives that were deliverable and action-orientated, withactions being reviewed constantly.This heightened credibility andhelped to ensure the delivery of their policies to support thegrowth of the technology-based areas. History matters when itcomes to policy-initiated intermediaries. In the United States, theprivate corporation has long been a model for public action.Theresult is a civil institutional structure heavily weighted towardintermediaries that undertake activities in the public interest butthat remain at arms length from government. In contrast, in theUnited Kingdom, in the post-war period public bodies havetended to take the responsibility for local action that oftenfollowed defined programmes directly accountable to centralgovernment.

Within the system of intermediaries and regional partnershipswe found entrepreneurs – individual leaders thinking and acting“outside the box.” These entrepreneurs were active in eachrealm and their actions shaped the realms in a way to foster thegrowth and development of the enterprising place. Someemerged from traditional institutions, changing them from within.Others built new organizations. They were central to thedevelopment and function of the new institutions, and theinstitutions themselves facilitate the development of the kind ofcivic leadership on which successful knowledge-based centresdepend.We called these “regional entrepreneurs.”

Building the knowledge base

A central message stood-out and this was the importance ofinvesting in systemic academic excellence in the knowledgebased institutions that formed the heart of the enterprisingplace. High quality teaching and research enhances thereputation of a university and the centre. This draws the

brightest students, and many of these remain into the regionwhen they finish their studies.The flow of research funding to anarea is a key factor driving academic excellence, innovation, andnew enterprise development, and leaders in successful centresmade concerted efforts to increase such flows. Universities andresearch institutions are also integral elements of a region’s“brand,” and respondents cited the importance of academicexcellence and excellence in basic research to the quality ofgraduates and the value of the brand.

Knowledge-based institutions, including centres of corporateR&D, contributed to the dynamism of a centre by facilitating thestart-up of companies, undertaking entrepreneurship education,providing facilities for the incubation of companies, investing inprime real estate and by their leaders participating in regionalpartnerships and related organisations created to advance thedevelopment of the centre.

In some places, universities provided the kind of charismaticleadership others defined as critical to the development andsustenance of the place. This leadership appeared to be betterdeveloped in the USA than the UK, however, for a number ofreasons. One is that in US, public universities at the state levelhave a long tradition of academic-industry collaboration; in manycases this was part of their original missions as land-grantinstitutions. Another reason is that, in the hierarchy ofeducational institutions in the UK, top science and researchinstitutions are seen primarily as national assets, with too muchprestige for much regional or business engagement. Andalthough this now appeared to be changing, there remains in theUK less recognition by university leaders of the mutual benefitsto be derived from such engagement. US respondentsconnected their own actions as regional players to promotingoutcomes that included increasing the flow of research fundingfrom industry in the region and the encouragement ofinnovation in the region that exploited the knowledge beingdeveloped in the region’s universities.They also felt that they hada key role in increasing the presence of their own graduates inthe region and thus making an impact on the regional skill base.

Although our UK respondents clearly recognized some of thesebenefits,Uk university leaders often did not act as directly to linktheir interests with the fortunes of the regional economy as theirAmerican counterparts. Although they were key players in theirregions, if only because of their size, their status as majoremployers, and their long time horizon, few in UK universitieschose to engage in the kind of civic leadership commensurate totheir position. Infact, compared to the American counterparts,they had fewer incentives to encourage their commitment andinvolvement in their local economy, and they often had limitedknowledge about how to exploit local economic assets.University budgets in the UK are centrally rather than locallyor regionally decided, and this was a factor. Interestingly, manyUK academics made the point that their promotion and the


financial well-being of their institution depended on doing wellin the Research Assessment Exercise, with rewards researchpublished in academic journals over applied research endeavourstargeted to facilitate regional economic development.

Investing in Centres

Our exploration of the relationships among finance, the stagesof development of ideas and companies, and their connectionsto place, policy, and sources of knowledge suggests a number oflessons for sustaining enterprising places. Respondents in the UShighlighted the importance of the investing in institutional assetsas important investments in a centre. Respondents suggestedmaximizing community use of these assets. UK and US leaderswere developing innovative strategies to support thedevelopment of embryonic ideas within universities andresearch institutions. Here, respondents in both countriescautioned that investing occur in collaboration with business.Several existing financing vehicles received high praise fromcompanies and were heavily used, for example, technologygrants such as SBIRs in the US and the SMART and SPURawards in the UK. Respondents recommended that policymakers pay attention to this success. Leaders in most centresactively worked to maximize the use of currently availablefinancing programmes by making sure companies were aware ofand had access to them. Respondents across sectors noted theimportance of financing at key junctures of a company’sdevelopment. One such juncture was when a company beganpilot manufacturing, and respondents discussed the need forfinancing programmes appropriate to this stage.

The ability to finance new infrastructure and other publicinvestments at least partly from local resources was central tosuccess.There needed to be sufficient resource levers to bringabout the changes required. Reduced flexibility in this respectcharacterised the system in the UK compared with that of theUS. A lack of buoyancy in the local tax base and a heavyreliance on central government for the funding of keyinfrastructure had even led some areas in the UK to resistaccommodating the growth of technology based activity intheir area.

Finally, in all cases, regional transformation involved changes tothe built environment: re-ordering old development patterns,investment in infrastructure, reinvestment in town and citycentres, and the development of premises that met the needs ofemerging and growing technology-producing companies.

The spark: civic leadership

Civic leadership was crucial to success.The US has a number ofdevelopment professionals and civic leaders with multiplecompetencies and relevant management expertise, in additionto formal network-type organisations providing them with peer-to-peer support and education. The research demonstratesclearly that to sustain the development of enterprising places,it is then necessary to bring together expertise that spans thefields of civic leadership, entrepreneurship, land use planningand finance (including local government financing issues). In theUK, there is a shortage of individuals with the diverse skill baserequired, and we saw an urgent need to provide educationaland training support to enhance this important component ofhuman resource base. We found examples of good practice inboth the UK and the US, and we feel there is much to belearned by sharing this experience.


1.1 Overview

The transformation of the world economy and increasing globalcompetition present significant challenges for countries like theUK and the US that once had a large presence in traditionalmanufacturing sectors.The pace of change is rapid, and the UK’sability to compete in the New Economy depends crucially onhow it develops and nurtures its technology-based enterprises.

The current global transformation is the result largely of arevolution in information and communication technology (ICT),which is driving corresponding revolutions in the organisation ofenterprises; in how companies value space and time when theymake locating decisions; and how they sort production functions.Most companies no longer exhibit traditional and unitarycorporate structures with strong rigid organisational boundaries.Today’s enterprises are ‘networked’ with internal functions de-linked spatially, and involve external collaborations andpartnerships with other companies, depending on the stage ofthe business process, from research to production andmarketing.These networks are not simply company-to-company,but involve interactions between companies, universities and thefull range of public and private service providers across nations.Corresponding with this, traditional knowledge-basedinstitutions like universities, in both the UK and the US, aretransforming their own organisations to increase theirconnections to, and interactions with, private enterprise.

This process is associated with strong patterns of spatialoutcomes, especially for technology-based enterprise. Muchresearch in recent years has focused on how the locationdecision made by companies in the New Economy differs fromthat made by companies in the Old. There has been stronginterest in examining the role of labour, universities and researchcentres in the Knowledge Economy; the development of andgrowth of technology centres; the characteristics and patterns ofsuch agglomerations in a Global Economy, and the role ofinstitutions in enabling regional development and change. Thenew spatial needs on the part of business have led to afundamental re-evaluation of the role of regions in industrialeconomics and management science, and much academicresearch has focused on this process (See Chapter 2).

Regional positioning has emerged as a fundamental issue fortechnology-based companies in the pursuit of their objectives,and it has forced regional leaders to re-evaluate how they cansupport technology-based enterprise.The increased recognitionof the role of the region or place has also led to a re-examinationof whether traditional institutions/policy measures can be reliedupon to generate optimal outcomes, as well as the development

of new frameworks that can be used to understand and guidethe processes involved. These new frameworks oftenincorporate collaboration across the realms of business,academia, government and civil society.

In spring 2002 the Cambridge-MIT Institute (CMI) funded ateam of researchers from the University of Cambridge and theMassachusetts Institute of Technology (MIT) to explore how keyactors in high-tech centres sustained their development overtime, and how policy-makers, business leaders, leaders ofuniversities and research centres, and investors contributed tothis process.The main focus in this work was on the implicationsof the research findings for the UK. The team adopted thefollowing definitions: Technology-producing companies includescompanies in the following industry groups: computerelectronics, instruments, software, aerospace, optics,photo/cinematography, biotech, drugs, and R&D in sciences andengineering (See Annex 1, Table A.4). We used the termEnterprising Places (and sometimes the more colloquial ‘high-tech centres’) to mean centres of technology-producingcompanies, research universities and centres, and innovativeactivity. Technology-based enterprise is a general term we useto refer to the activity of an enterprising place, including theactivity of technology-producing companies and relatedorganisations.

The team conducted in-depth interviews with close to 250 high-level government, industry and academic leaders in the UK andthe US. We also surveyed senior managers of high-technologycompanies located in these centres.

This research has found that key players can shape theattractiveness of their region to technology-producingcompanies, and they do this through a series of collaborativeactivities across the realms of business, academia, government,civic society and across local political units. In each of thesuccessful centres we studied, we found a unique group ofplayers interacting to produce, disseminate, share and useleading-edge technology to create, sustain and grow technology-based industry. We found entrepreneurial and innovativebehaviour present in the policy, academic and finance realms, aswell as the business sector of successful centres. Finally, we foundwhat we termed ‘regional entrepreneurs’ helping to facilitatechange and ensure that their centres remained attractive,vibrant, and successful.

1. Introduction: themes and study areas


1.2 The study areas

Centres in the UK included• East of England: Cambridgeshire, Hertfordshire and

Bedfordshire, and• Scotland: the Central Belt and Dundee.

Centres in the US included • San Diego, California,• Research Triangle, North Carolina, and• Massachusetts: Cambridge/Boston and Worcester.

1.2.1 East of England

In the UK, we looked at the Eastern Region of England,particularly at three of the six counties extending north ofLondon, namely Hertfordshire, Bedfordshire and Cambridgeshire.These were predominantly rural before World War II. After thewar, new towns were built in each of the three counties and,today, Hertfordshire and Bedfordshire are the most urban of thethree, while Cambridgeshire remains relatively rural.

Hertfordshire, adjacent to London, developed as a post-warhigh-technology centre focused on defence, electronics,aerospace, pharmaceuticals and chemicals. Along with this camethe growth of large companies such as Rolls Royce, BritishAerospace, and Glaxo Smith Kline. Hertfordshire is also home tomany of the government’s research laboratories, whose impacton the development of the area as a high-tech centre has beendocumented by Hall et al (1987).

Bedfordshire, to its north, also developed as an automotive andaerospace centre.The University of Cranfield, which began its lifeas the College of Aeronautics in 1946, is at its core, and the areacurrently has R&D centres for Aston Martin, Ford and Nissan’sEuropean Centre. The end of the Cold War brought about asignificant shrinkage in the defence industry. High unemploymentin the area in the early 1990s, prompted new initiatives thatsought to encourage high-technology industries like Informationand Communications Technology (ICT), media and film, andmedical instruments. In the 1990s British Telecom and T-Mobilemoved into properties vacated by British Aerospace and RollsRoyce.

Cambridgeshire has strengths in biotechnology, informationtechnology, and nanotechnology. Segal Quince and Wicksteed(1985, 2001) and Keeble and Wilkinson (2000) have extensivelydocumented the cumulative growth and development of thehigh-technology cluster in the Cambridge sub-region, as well asthe important contribution of the University of Cambridge andother knowledge-based institutions. Technology-producingcompanies employed a workforce of close to 50 000 in 2001,compared with 20 000 three decades ago, mainly in small firms

in the health, life sciences, ICT, and related industries, many ofwhich are located in close proximity to the knowledge-basedinstitutions. Cambridge, hosting the 800 year old University ofCambridge, is a major centre for world-class research inbiosciences, currently the most dynamic of the local technology-producing sectors. It is underpinned by the Sanger Centre at theGenomics Campus and various departments in the University.TheHuman Genome Mapping Project Resource Centre providesaccess to leading edge tools for research in genomics and geneticsas well as biological and data services for the medical researchcommunity doing work in the post genome era.

The research base in the field of biosciences at Cambridge hasbeen greatly strengthened through international collaborativeinitiatives. For example, in 2002 the United States’ NationalInstitutes of Health announced a multi-million dollar project toestablish a unique data and technology base of protein molecules,combining resources from the Cambridge, Geneva, Heidelbergand Washington DC. Research institutes. This includes theLaboratory for Molecular Biology and facilities funded by GlaxoSmith Kline and the Hutchinson Whampoa Group that haveco-located on the Addenbrooke’s Hospital site.

In nanotechnology, Cambridge builds on strengths in photoniccrystals, opto-electronics, nanolithography and molecularnanotechnology.The Interdisciplinary Research Collaboration inNanotechnology has drawn together experts from theUniversity of Cambridge, University College London and theUniversity of Bristol to create a new centre located on the WestCambridge site. Important areas of research include thedevelopment of new materials to replace degenerating tissuesand a nanowire research programme developing metal lines ofnanometre dimensions for future integrated circuits.

Multi-national corporations have joined the research cluster inCambridge and established ‘embedded laboratories’ linkedclosely to university departments1. Companies include Microsoft,BP Amoco, Unilever,Toshiba, Hitachi, Glaxo Smith Kline and RollsRoyce.

1.2.2 Scotland: Central Belt and Dundee

Scotland was at the forefront of the industrial revolution withstrengths in the textile, shipbuilding and iron, coal and steelindustries. However, these industries and the state of theeconomy declined over the course of the 20th Century as aresult of changing tastes and technologies; the failure oftraditional industries to introduce new products and processes;the failure to attract ‘new’ consumer-based industries; the limitedsize of the local market; and the ‘pull’ of the Greater London sub-region (Hood et al, 2002). As a result, in the late 1950s thegovernment offered regional incentives to induce mobile‘sunrise’ industries to locate in assisted areas. This inward-1 Embedded labs are significant research facilities established by companies within the campus of a university orresearch institution.


investment strategy prompted a number of large high-technology companies to establish branch plants in Scotland.Although many of these companies subsequently moved someof their operations offshore, many have retained a research anddesign presence in Scotland. This, together with the increasingcommercialisation of the region’s technology base, has led to arestructuring of the economy based partially on indigenous,technology-based enterprises in biotechnology, ICT, opto-electronics and microelectronics. Other important sectors in theeconomy include food and drink, forest industries, creativeindustries, tourism, oil and gas, textiles and financial services.

Scotland today has thirteen universities plus a number of well-known research institutions.The major centre of high technology isthe Central Belt, anchored by the University of Edinburgh, theUniversity of Strathclyde, the University of Glasgow and HeriotWatt University. Major research institutions include Roslin andMoredun.The University of Dundee has established a world-classbioscience capability in the city of Dundee. It has successfullyattracted world eminent scientists in biosciences, and a number ofresearch laboratories including the Wellcome Trust have locatedthere.Three of the fifteen most eminent bio-scientists in the worldlive in Dundee. In addition, the University has a strong medicalfaculty that has made major breakthroughs in keyhole surgery.

1.2.3 San Diego California

San Diego has a rapidly growing and changing economy. Thefastest growing segments of the San Diego economy during the1990s were biotechnology and ICT.

The San Diego economy has long been associated with thedefence establishment.The area has always been home to majorNavy bases, and most of the region's large manufacturing firmshave been major defence contractors. The downsizing of thedefence budget in the 1990s, though it contributed to asubstantial economic slowdown, helped lead to substantialchanges in the region's economic base. Some of the defence-related technology-producing enterprises specialised in militarycommunications and avionics. Qualcomm, the leadingmanufacturer of wireless telecommunication technologies, wasestablished in 1978 in San Diego and grew from 400 employees toapproximately 10 000 before recent downsizing.

With more than 1,500 technology-producing companies, SanDiego has transformed itself within two decades into one of themost innovative regions in the US. It now hosts a major researchcluster including a wide variety of knowledge-based institutions,some of which were established in the 1960s and 1970s; othershave located in San Diego more recently. In aggregate, San Diegoreceives annual research funds of $2 billion and, as of 2002, wasranked second in California in terms of federal R&D funding.

The University of California at San Diego (UCSD), established in1960, has a developed research capacity. In 1995, the USNational Research Council ranked the quality of the school’sgraduate programmes, especially in engineering, tenth in thenation.The National Science Foundation funded the San DiegoSupercomputer Centre as a member of one of two nationalconsortia in 1996, and the Centre now operates as a UniversityDepartment. The Centre has the most powerful vector andparallel computers available in the US, and supports research inbiosciences, environmental sciences, high-speed networking andscientific visualisation. Through its Science and TechnologyOutreach Programme, the centre supports more than 50government and private sector organisations.

San Diego is also a major biotechnology centre. UCSD is animportant location for neuroscience in the US and a number ofcompanies such as MitoKor have been attracted to the localityas a result of research done at UCSD and the nearby Salk andScripps Research Institutes. San Diego State University (SDSU)2

is part of the California State University Programme forEducation and Research in Biotechnology, a multi-campusinterdisciplinary programme to promote research and educationto support the biotechnology industry in California.The Centrefor Bio/Pharmaceutical and Biodevice Development at SDSU isanother initiative concerned with the growing interdisciplinaryrequirements in research and its application. It focuses oneducating the workforce for maturing biotechnology companies.

1.2.4 Research Triangle North Carolina

North Carolina made an explicit decision over 40 years ago touse three universities: Duke University in Durham, University ofNorth Carolina at Chapel Hill, and North Carolina StateUniversity in Raleigh, to attract research companies, building a7,000 acre research park between the three and naming it‘Research Triangle’. Duke University, a private institution, has anational reputation, especially in medical research.The Universityof North Carolina at Chapel Hill is a premier public researchuniversity. North Carolina State University, originally a land grantinstitution focusing on agricultural technology, has developedsignificant expertise in engineering. Major investments in theUniversity system have taken place in recent times, with a widevariety of programmes customised to meet industry needs.Today, the Research Triangle Park is one of the most successfulof all science parks in the US.The triangle has been successful inattracting branch operations of major multi-nationals, including IBMand Sun Microsystems.

While the universities proved to be an important marketing tooland workforce generator, research spill-overs from theuniversities proved to be more difficult. To re-inforce appliedresearch activities, local leaders created the Triangle UniversitiesCentre for Advanced Studies to bring together faculties from the2 The largest in the California State University System.


three universities to work together and collaborate on specificresearch. These leaders also successfully recruited nationalresearch organisations: the Environmental Protection Agency, theNational Humanities Centre, and Sigma Xi – the NationalInstitute of Statistical Sciences. It also created the ResearchTriangle Institute, which has developed into an internationalcontract research organisation, MCNC (formerly theMicroelectronics Centre of NC), and the North CarolinaBiotechnology Centre. Private research organisations include theBurroughs Wellcome Fund.

Using its supercomputing capacity, MCNC created the NorthCarolina Bioinformatics Grid to provide computing, data storageand networking capabilities to support genomics-relatedresearch across the state. Over 70 organisations – universities,biomedical, biotechnology and IT companies, non-profitorganisations and foundations – have access to the Grid. It isaccumulating a vast library of genomics, proteomics and relateddata that is being created around the world, combining it withnon-proprietary data from consortium members and making itavailable to researchers throughout NC.The Grid is drawing onother similar projects in Europe and elsewhere.

1.2.5 Massachusetts: Cambridge/Boston andWorcester

The Boston Metropolitan Area, including Cambridge – the homeof MIT and Harvard – has one of the nation’s deepest and mostdiverse concentrations of highly ranked research universities,affiliated institutions and non-profit research institutions.Research spending by the eight universities in the regionamounted to $1.5 billion in fiscal year 2000, of which about fourfifths was funded by the Federal Government. A further $383million was spent on research by associated or affiliated researchinstitutions in the area; and medical research at hospitals andmedical schools amounted to $675 million. Together, theseinstitutions receive over $2.5 billion in annual research dollars.

Interdisciplinary collaboration is the hallmark of new andemerging areas of scientific research in Boston, such as genomics,proteomics, photonics and nanoscience. MIT alone has over 60formal interdisciplinary labs and centres, as well as a number ofproject-based interdisciplinary research groups. Some of thisresearch is highly decentralised. An example is nanotechnologyresearch, which is undertaken at the Space NanotechnologyLaboratory, the Nanomechanical Technology Laboratory, theInstitute for Soldier Nanotechnology, and the NanostructuresLaboratory, among other places at the Institute. Moreover, theconvergence of technologies, the associated need forinterdisciplinary research and the breadth of the science base inBoston places the region at the forefront of collaborativeresearch globally.The region also hosts many university-industrycollaborative partnerships with major companies such asEastman Kodak, Genzyme, Intel, Raytheon, Sun Microsystems andMerck.

Worcester, an hour’s drive from Boston, was the second largestcity in New England in 2000. From the industrial revolution toWorld War II, the city's growth was driven by a thrivingmetalworking and machine tool industry. By the late 1970s,however, local leaders, workers and their political representativeswere becoming increasingly concerned about the economicfuture of the city. The industrial sector was ‘mature’, oldmanufacturing plants were closing throughout the northeast, andthe new growth industry in Central Massachusetts – computermanufacturing companies – was bypassing the city. In the early1980s, the city’s civic leaders decided to create opportunities forthe development of biotechnology companies. Since that time,investment in biomedical infrastructure has included: thedevelopment of almost one million square feet of biotech spaceat the Massachusetts Biomedical Research Park; a new 300,000square foot research building for the University of MassachusettsMedical School; a biomedical science park adjacent to the TuftsUniversity School of Veterinary Medicine; the development of abiomedical engineering institute at the Worcester PolytechnicInstitute; the development of a mixed educational, research andcommercial development adjacent to WPI; and the creation ofMassachusetts Biomedical Initiatives, which both promotes andcreates awareness for the biomedical industry in the region andoperates state-of-the-art incubator facilities for star t-upcompanies.

1.3 Organisation of this report

This report is organised around five main areas of inquiry.Theseare:• What did previous research say about the location of

technology-based enterprise, the patterns of agglomeration,the characteristics of high-tech centres, and the role ofinstitutions in their development.This is the subject of Chapter2.

• What are the connections between technology-producingcompanies (predominantly small- and medium-sizedenterprises (SMEs) and their home regions, their suppliers andcustomers, companies, and people and institutions ingovernment, universities and research centres? In other words,what do technology-producing companies need from theirplace? This is the focus of Chapter 3.

• What kinds of interactions occur at the boundaries oftechnology, finance and place, and how do policy actions inthese realms meet the requirements of technology-basedcompanies? This is the focus of Chapters 4, 5 and 6respectively.

• How did regional entrepreneurs create vision, deliver neededresources, capture regional returns, and maintain momentumthrough new regional institutions? We address these issues inChapter 7.

• What are the implications for the UK? This is the focus ofChapter 8.

2.1 Introduction

The study required a robust conceptual framework and toestablish this we did a number of things. We mapped thegeographical location of technology-producing companies inboth the UK and the US.The next phase of the work involvedinterviews with key contacts in Cambridge UK and Cambridge,Massachusetts, to get an understanding of the development ofthese places over time. Following this, our interdisciplinaryresearch team brought together its expertise and experience toidentify the key research questions that should form the basis ofthe inquiry, and we created an analytical framework to guide theresearch (see Section 2.3). We examined the extensive andvoluminous literature on what was known about thecharacteristics of places where technology-based companieswere located. The research team then surveyed a number ofpeople who either ran technology-based companies or advisedand dealt with them. The final phase of the work involvedinterviews with leaders of knowledge-based institutions,government, and others responsible for the development ofenterprising places (detailed in Annex 3).

2.2 The mapping exercise

In order to identify enterprising places, we first developed acommon list of technology-producing industries for the twocountries.We identified industry centres using location quotientsfor technology-producing companies. We then identifiedinnovative activity using concentrations of patents issued (per100,000 population), and the public and private expenditurespent on research and development. We mapped these resultsby metropolitan area in the US and by district and unitaryauthority in the UK (See Maps in Annex 2). We checked ourresults against other studies of high-tech centres, to ensure thatwe had identified places commonly understood by otherresearchers to be high-tech centres. Within these regions, wethen selected smaller areas for study, choosing them torepresent enterprising places in various stages of development(e.g. embryonic centres, mature centres), and different economicand policy contexts.

Our purpose was to select study areas, not to undertakeresearch on national industry agglomerations. However, one ofour team members, Myounggu Kang, went on to do such ananalysis of enterprising places in the US as part of his doctoraldissertation at MIT.We note his findings in Section 2.4.


2. Developing the conceptual framework

Knowledge System

Built Environment

Finance System

Business System


2.3 Analytical framework

Our team sought to understand the relative competitive successof different places (which were explicitly seeking to transformthemselves to accommodate technology-producing companies),by focusing on how the key players in the place came togetherto effect the required change. As a framework for the analysis,we defined four broad systems in which change agents werebased:

• Knowledge System: institutions, networks, and agents throughwhich ideas (that can form the basis for new inventions andsustained development), develop and traverse, and throughwhich workers gain access to technological expertise.

• Finance System: institutions and agents that provide capital forinvestment in business operations, facilities, and communityinfrastructure.

• Built Environmental System: agents and organisations, whoproduce housing, infrastructure, schools, parks, commercialcentres and cultural facilities.

• Business System: agents, institutions, and formal and informalnetworks that facilitate the commercialisation of ideas and thedevelopment of globally competitive businesses, includingbusiness decision-makers, skilled labour, as well as accountantsand lawyers.

We looked for entrepreneurial activity within each of thesesystems, activity that attempted to shape that system to thepurposes of enterprise growth and development.We looked atthe ways players in these systems came together across systemsand worked in concert to create the most positive conditionsfor enterprise growth and development.We also tried to identifymulti-system networks or “webs” of institutions and peoplecommitted to a coordinated approach.We proposed that it wasat the intersection of these systems that the competitive placearose.

And the role of geography in all this? ‘Places’ exist in a physicalspace, the boundaries of which may reflect particular physicalattributes, economic areas, or political jurisdictions.We assumedthat these were the result of its historical legacy with respect toits traditional industries and the effect that these have had inshaping the nature of its labour force, the form of itsinfrastructure (most critically that relating to transport), and thepattern of its land use. The nature of the resulting settlementpattern and the access provided by the place’s infrastructuredetermine the connectivity of the place to other places and theease with which flows of goods/ services (trade) and people (asin commuting) may occur to enhance its economiccompetitiveness. A place’s resources - land, capital, and labour -govern its ability to meet the needs of both its population andthe business that resides within its boundaries.

The revolution in Information and Communication Technologyand the globalisation of national economies are generatingimportant changes in the spatial distribution of regional and localactivity. Thus the agents of change identified in the aboveframework face ongoing challenges to enable their place to becompetitive in meeting the needs of technology-basedenterprise. In so doing, they need to overcome the legacy of thepast: to transform transport systems, housing systems, publicrealms etc. that were adequate to meet the needs of 19th and20th Century manufacturing, but which may not support newtechnology-based activity. This legacy does not just reside inphysical space but also in the institutions, structures and forms ofworking and doing business that exist in the place.The challengefor agents of change is to transform these multiple systems fromthe old to the new.

To understand how key players in enterprising places did this, weexplored the ways agents of change in our study areas cametogether through innovative institutional formats and modes ofworking. We also identified the importance of intermediaries inthis process; the key policy instruments that assisted in bringingabout change; and the importance of specific individuals.

2.4 Evidence from the literature

We faced multiple challenges in our analysis of the literature. Inour analytical framework we defined four broad systems:knowledge, business, the built environment and finance. Ourintent was not to explore deeply into each of these (whichwould have been a very significant research endeavour beyondour resources), but rather to explore their intersections. Wefaced our own boundary problem: how to define the boundariesof different disciplines, and how to transverse them. Weespecially wanted to explore how these systems came togetherin a particular place. This necessitated a clear examination ofbusiness location theory both in its traditional dimensions, whichhave been well studied, and in new dimensions associated withrecent changes in ICT, globalisation, and other dynamics of theNew Economy, which are not nearly so well studied.

2.4.1 Global currents

Recent changes in technology, especially ICT, are producing arestructuring of global economic activity, dispersing someactivities and re-agglomerating others. An importantconsequence is that very high-speed communications enablesfirms to create functional units in different places and facilitatesthe outsourcing of manufacturing and back office operations,accelerating trends that began well before the era of theinternet. Firms today can send separate sub-units to the mostdesirable location globally and collaborate with other business

entities regardless of distance (Sommers and Carlson 2003).Company fragmentation is accompanied by the development ofnew kinds of intermediate organisations (Lamoreauz, Raff andTemin 2002).

In her introduction to Global Networks, Linked Cities, SaskiaSassen (2002) described the impacts these trends have createdfor global financial networks. These firms are more widelydispersed with functional units distributed to serve globalmarkets, increasingly concentrated in certain cities. At the sametime, Sassen found that the massive demand for centralmanagement and control functions (financial, legal, accounting,managerial, executive, planning), has given rise to newconcentrations of producer services in particular cities.

Sassen (2002) saw the current global landscape as a network ofplaces. Core (global) cities anchor multiple cross-borderfunctions in a network of places. Cities in the global networksreflect divisions of labour and do not compete directly. Thesenew functions are in contrast to the historic roles primary citiesused to play as national gateways. New trans-territorial centresare constituted via telematics and intense economictransactions, and consist of multiple and diversifying inter-citylinks. Regions, which used to be organised with hinterlandsaround a central city, are reconstituting themselves as grids ofnodes, a pattern that may underlie today’s interest, especially inthe UK, in regional city systems. On the other hand, cities thatare strategic sites in the global economy tend, in part, todisconnect from their region through disproportionateconcentration of strategic resources and activities.

2.4.2 Firm decisions:Traditional location theory and its limits

Early economists and geographers were very interested inunderstanding how firms and businesses decided where tolocate and the spatial patterns that resulted.Von Thunen (1826)created a model for agricultural location choice; Weber (1929)and Hoover (1948) developed models explaining manufacturingchoice; and Christaller's (1993) model explained the location ofservice firms.These models, coupled with Losch's (1944) generallocation theory explained why firms, under traditionalassumptions, located where they did.

These traditional location theorists assumed that an individualfirm's location strategy was determined by the location of itsinput and output markets in a region or country. The modelsassumed that a firm sought to find the lowest cost location andthe theories explained the comparative advantage of differentlocations based on whether areas were endowed with theclassical factors of production – raw materials, labour andmarkets, and given substantial transportation costs in movinginputs and products. Individual firms and the whole aggregation

of individual decisions that formed an industry were conceivedas making successive adjustments to find the lowest cost locationand minimise their transport costs. Ultimately, a spatialequilibrium was assumed. These models centred on a point oftime whereby location advantages and the efficiency basis ofcompetitive advantage among firms were assumed to be static.

The situation facing technology-producing companies today isquite different. Transportation costs have become relativelycheap (Glaeser and Kohlhase 2003) and have diminished inimportance to companies (Hall et al 1987, Polenske 2003).Changes in ICT have redefined the economic meaning ofdistance and proximity, with one result being that firms caneffectively locate different functions in different places, even indifferent organisations (Sassen 2002).The dis-aggregation of firmfunctions in the New Economy violates assumptions of decision-making by a unitary firm. For technology-producing companies,knowledge is embedded in their labour, thus companies needhigh-quality skilled labour and not cheap labour. Finally,technology is changing much more rapidly than it was whentraditional locational theorists were studying the behaviour ofcompanies. Decisions are made in a more dynamic framework,whereby firms are continually preserving and enhancing theirpositions in the face of competitive pressures (Massey 1999).

2.4.3 Markets in the New Economy

Traditional theory assumes that firms face one of a few marketsand non-trivial transportation costs in getting products tomarket. In the New Economy, markets are often organiseddifferently to when traditional economists were studying firms,further changing the location equation.As Baptista (1998) noted,changes in customer preferences usually evolve at national andeven international level (versus local and regional levels). At thesame time, firms are more likely to be serving global markets.Kang (2006) found that the spreading out of markets around theworld influenced highly market-oriented firms, such as high techservice firms, to disperse, and for production firms to dispersetheir market- related operations, including market-relatedresearch and development.

On the other hand, when the bulk of demand is located in oneplace, then a strong concentration of suppliers exists in thatlocation and the local market becomes a key influence on afirm's location decision (Kang 2006). Being close to one’s marketis crucial when there is a high variability in demand and rapidchanges in the characteristics of the products. Being located nearthe market enables an ease of gathering information fromcustomers and rivals (for example, in theprinting and fashionindustries). Companies choosing to disperse functions todifferent locations often locate market operations near customers.Kang (2006) found a similar phenomenon with respect tocertain R&D activities. Heexplored outsourcing of R&D



to South Korea by multi-national firms, and he found that whilemultinationals did pure or basic research in advanced countries,in Korea the purpose of R&D was to customize products andservices and support sales and services in the Korean market.

2.4.4 Labour in the New Economy

A number of studies have focused on how labour availabilityinfluences the location decisions of firms in the New Economy(Keeble and Wilkinson 1999; Castells and Hall 1994; Sternbergand Tamasy 1999; Hall et al 1987). These studies madedistinctions with respect to the types of labour required bycompanies: administrative staff and managers; professional andscientific staff; clerical staff; skilled and supervisory workers; andsemi- and unskilled workers.They also assessed the importanceof the cost of labour and whether it was easy to recruit andattract labour in each of these categories.

Technology-based companies tend to draw from segmentedlabour markets, but with characteristics that differed from thosedescribed by earlier labour economists. Hall et al (1987) found high tech industry to be split between the research and development and routine manufacturing processes, requiring asmall number of highly skilled professionals, who tended also tobe highly mobile, and low-paid mostly process assemblyworkers, who were primarily located in low wage, weaklyunionised rural locations. Levy and Murnane (2004) studiedeffect of ICT on the job market in the New Economy. Theyfound that computer use resulted in job bifurcation: computerssubstituted for mid-level administrative and clerical jobs, leavinga market of high-skill and low skill jobs with not much in themiddle.

The pool of professional and skilled labour is a major attractionfor firms dependent on such a workforce to locate in an area. Inturn, skilled employees are said to be attracted to an area bygood working and living conditions, good housing, environment,cultural and education facilities, night life, and diversity (Hall et al1987, Gareau 1991, Florida 2002). Recent researchers suggestthat firms follow these skilled workers. Keeble and Wilkinson(1999) study of Cambridge noted that the availability and qualityof the local research staff was a major reason for businesseslocating there. They also noted that an attractive local livingenvironment for staff and directors, as well as the credibility,reputation and prestige of the Cambridge address, were seen asspecific advantages of the region over others. Hall et al’s studynoted that labour shortages and problems in getting skilledproduction workers into an area was more of a hindrance onexpansion plans than the actual cost of the labour.

2.4.5 Agglomerations – Marshall’s Districts

Early urban theorists also studied how firms benefited fromclose proximity to one another (Marshall 1890,Weber 1929). InMarshall’s Principles of Economics, 8th ed. London: Macmillan(1890), we find the classic discussion of the concept of industrialdistricts.

"When an industry has chosen a locality for itself, it islikely to stay there long: so great are the advantageswhich people following the same skilled trade get fromnear neighbourhood to one another. The mysteries ofthe trade become no mysteries. Good work is rightlyappreciated; inventions and improvements in machinery,in processes and the general organisation of the businesshave their merits promptly discussed. If one man takes upa new idea, it is taken up by others and combined withsuggestions of their own; and thus becomes the sourceof further new ideas. And presently subsidiary tradesgrow up in the neighbourhood, supplying it withinstruments and materials, organising its traffic, and inmany ways conducing to the economy of its material.”(Marshall 1890:225)

According to Marshall, firms in an industrial district benefitedfrom three positive externalities. Localisation allowed firms toincrease subdivisions of functions, namely differentiation anddivision of labour so that companies could develop specialisedskills and technology. At the same time, this increasedspecialisation of skills could be diffused through a community tocreate an abundant supply of qualified labour, subsidiary tradesand specialised services that were beyond the scope of any onefirm to develop independently. In this environment, knowledgespill-overs and enhanced communication among workers andfirms accelerated the adoption of innovations.

The intricate network of informal contacts among local actorsand information flows constituted an industrial atmosphere, andonce in an area, skilled workers stayed because job prospectswere better and the complex growth and linkages betweenfirms provided subassemblies and specialised processes for otherfirms. Once the pool of skilled labour grew up, this added to theinertia of location.Also, once the process of industrial localisationwas underway, it was essentially cumulative and dependent uponextensive co-operation with competitors in technology creationand innovation.

2.4.6 Revisiting Marshall’s theory

Marshallian theory on the process of industrial localisation hasre-emerged as a theme among academics to explain thegeography of firm clusters today and the factors that contributeto their development (Baptista 1998, Keeble and Wilkinson1999). In Marshall's day, these agglomeration economies usuallyoperated near the city centre at the prime heart of the city (i.e.London and New York) (Hall et al 1987). Jacobs (1969)suggested that cities themselves provided an urbanisationexternality, that companies in one industry benefited from thediversity of multiple co-located industries. Yet today, thetechnology-based industry tends to prefer greenfield sitelocations that have not been previously industrialised. Massey(1984) notes that this may be because members of the crucialinnovative group, having acquired mobility through carownership, moved their homes out of the city and into highamenity housing. He argues that the prime differentiatorsbetween regions are no longer based on industrial structure, buton occupational structure, both within and between industries.Small companies that have growth potential and enterprise tendto be highly concentrated in one particular region due to thesector that they are concerned with, access to capital, skilledpopulation, education, R&D facilities, and access to the market.

Recent authors have provided examples of the ways in whichthis complex network of producers bound them together in aweb of relationships. Saxenian (1985) for example, demonstratesin the case of Silicon Valley how one firm – Fairchild – spawned50 companies, and how the majority of skilled workers,particularly the engineers, were recruited locally. She laterdescribed how the history of industrial relations and structureaffected the characteristics of the local networks in Silicon Valley,California and on Route 128 in Massachusetts (Saxenian 1994).Porter's study of industrial clusters, decades later (1990), addedconcrete detail about firm inter-relationships in over 100industry clusters in ten nations.

2.4.7 Porter’s Clusters

Possibly one of the most influential theories of the past decadehas been that of Michael Porter's ‘cluster theory', now beingused as a tool for promoting national, regional and localcompetitiveness, innovation and growth (Martin and Sunley2001). Baptista (1998) remarks that he is probably the firstmodern economist to regard geography as a central issue inanalysing markets and competition:

"In a global economy – which boasts rapid transportation,high speed communications and accessible markets –one would expect location to diminish in importance.But the opposite is true. The enduring competitive

advantages in a global economy are often heavilylocalised, arising from concentrations of highlyspecialised skills and technology, institutions, rivalry,related businesses and sophisticated customers." (Porter1990)

Porter goes on to describe the competitive importance of “clustersconsisting of industries related by links of various kinds” (p.131).Industries in clusters are linked both horizontally(complementary products and services, the use of similarspecialised inputs, technologies or institutions), and vertically(buying and selling chains), including input-output tradinglinkages. Interaction occurs between four sets of factors thatmake up a ‘competitive diamond.’ These drive clusterdevelopment and, the more developed and intense theinteraction, the greater the productivity of an area. The fourfactors are:

• firm strategy – structure and rivalry• factor input conditions• demand conditions• related and supported industries.

Domestic rivalry among the firms provides the necessaryincentive for investment, and the geographical industrialconcentration increases the intensity of these interactions.Together these produced a dynamic system.The co-location ofrelated firms encourages the formation of, and enhances thevalue-creating benefits arising from networks of interactionbetween firms. Firms are endowed with skilled human resources,market-specific technology and specialised infrastructure thatgive them a competitive advantage over other areas.The intenserivalry and geographical concentration of firms has a favourableeffect on the development of related and supported industries,such as specialised suppliers and users. As the cluster of firmsdraws on these common specialised inputs and infrastructure, thismeans that they are constantly upgraded and increased in supply.

Parallel to Porter’s work, which emerged from business strategy,economic geographers have undertaken research on the natureand form of local business concentrations. Geographersvariously term these concentrations: the ‘new industrial spaces’;‘territorial production complexes’; ‘regional innovation milieux’;‘network regions’; and ‘learning regions’ (Pinch and Henry 1999;Keeble and Wilkinson 2000;Amin and Thrift 1992).Yet, as Martinand Sunley (2001) have noticed, many of these geographershave adopted Porter’s cluster terminology in preference to theirown. Martin and Sunley (2001) point out that this wide usemakes the clusters ‘a chaotic concept’, conflating and equatingquite different types, processes and spatial scales of economiclocalisation under a single universalistic notion. Themultidimensionality and vague character of the cluster conceptposes problems of definition and of investigation. Porter madeno reference to a cluster’s .



economically specialised entities in the Marshallian sense. Nordoes he discuss at what spatial scale and over what geographicalrange clustering processes operate. He also admitted that clusterboundaries rarely conform to standard industrial classificationsystems. Instead, Porter argues that “drawing cluster boundariesis often a matter of degree, and involves a creative processinformed by understanding the most important linkages andcomplementarities across industries and institutions tocompetition” (Porter 1990, pg 202). Martin and Sunley (2001)raise their concerns over the fact that this vague interpretationcan create confusions:

“The obvious problem raised by these cluster definitionsis the lack of clear boundaries, both industrial andgeographical. At what level of industrial aggregationshould a cluster be defined, and what range of related orassociated industries and activities should be included?How strong do the linkages between have to be? Howeconomically specialised does a local concentration offirms have to be to constitute a cluster.” (Martin andSunley 2001:14)

Martin and Sunley (2001) also remarked that despite the vastand still expanding literature on clusters, there was little detailedwork based on in-depth comparative analyses of cluster profilesand processes. This classification, like the type carried out byMarkusen et al (1999) when creating a typology of industrialdistricts, was argued to be an important stage of theorising andanalysis.

2.4.8 Concentrations of high tech companies

In their studies of local industrial specialisation, spatial economicagglomerations and regional development, economicgeographers have explored the intricate capacity of differentregions in promoting and attracting industry, especially high-techindustries (Castells and Hall 1994, Hall and Markusen 1995; Hallet al 1987; Keeble and Wilkinson 2000). There is a generalagreement that globalisation has heightened the importance ofdifferences in the ability, endowments and milieux of differentlocations and hence it has created different competitiveadvantages among areas (Allen 1999; Massey, 1999). The workby Keeble and Wilkinson (2000) is a particularly useful collectionof papers based on original research into the recent evolutionand dynamic processes underpinning the growth of keyEuropean regional clusters of technology-based small andmedium-sized firms.

But how do industry concentrations arise? Marshall said littleabout how the process of industrial localisation started and whyit started in certain places and not others (Martin and Sunley2001). Hall and Breheny et al (1987) noted that hardly anyliterature focused on how enterprising places came into beingand what started them. Instead, like Marshall, they focused onhow success breeds success. Porter’s study suggested that

clusters arise serendipitously and then grow through a positivefeedback of interactions. Baptista (1998) questioned whetherthe initial historic events were indeed purely random, as well asif the factors influencing the initial reason and decision of the firstentrants and the order of firm entry were in fact merelyhistorical accidents.

Bresnahan, Gambardella, and Saxenian (2001), through researchat the Stanford Institute for Economic and Policy Research, havemade some progress in this area, through an empirical study offactors that gave rise to ICT clusters.They examined nascent ICTclusters in eight centres, two in the US (Silicon Valley, andNorthern Virgina), one in the UK (Cambridge), and five in othercountries (Ireland, Israel, Scandinavia, India, and Taiwan).

Bresnahan et al found that new firms took advantage of marketopportunities for new technologies that were complementaryto existing technologies and clusters (versus head to headcompetition on technology such as between Japan and the USin the 1980s). Development occurred in the context ofsignificant investment in firm-building, market building, and theeducation of a skilled labour force. A skilled labour force was apre-condition, although the source of skills varied: university/large firms/government-sponsored contracts. Early managementskills came from engineers and scientists who learned to becomemanagers, or expats that had developed management skillselsewhere. Firms grew past thresholds to become large firms,except in Cambridge. Products complemented existing marketdemand or filled market niches not already taken (e.g.wireless inEurope). Later clusters were linked to Silicon Valley firms incomplementary ways.

With respect to the progress of clusters, Kang (2006) separatelytracked jobs in what he termed “high knowledge-generatingindustries”, approximately the same ones we focused on in thisresearch. Kang found that firms engaged in production, forexample, producers of computer equipment, became furtherconcentrated during the 1990s than they had been at thebeginning of the decade.These increasing agglomerations did notconstitute concentrations of increasingly large firms; rather theywere increasing agglomerations of smaller firms. Over thedecade, the number of firms with more than 500 employeesdeclined, as did the average number of employees perestablishment. In some cases, the agglomeration took the formof “winner-take-all.” Kang attributed this pattern to theimportance of tacit knowledge in these industries, generated byinteractions among collaborating producers and thus their desirefor physical proximity.

During the same period, Kang found that service jobs in theseindustry groups in the US dispersed. He attributed this to theimportance of tacit knowledge and the mutual learninggenerated through interactions between firms and customers,and the desire for companies to be close to their markets

2.4.9 Industry concentrations and knowledge

Researchers going back to Marshall (1890) stressed theimportance of locally rooted labour – or local human capitalresources – in the collective learning process. Hall et al (1987)noted that local entrepreneurs were likely to start new firms intheir local areas, as they had access to capital, previousmanagement experience, education and were knowledgeableabout the local markets. Capello (1999) argued that a stablelocal labour market can create the industrial atmosphere thatMarshall discussed, as cumulative technology is embedded in thislocal labour force.This in turn can help reduce transaction costsfor companies. A concentration of a large number of firmsbelonging to one industry in the same place means that similarskills are pooled.This pooled market benefits both workers andfirms, enabling them to cope with uncertainty in relation tobusiness cycles. Mobility and flexibility is also necessary withinthe local labour market, as this allows for lower redundancycosts and easier adaptation to changes in products andprocesses.

Although local labour was important, other authors stressed thatmovement of skilled and professional labour into an area wasalso crucial. This immigrant workforce could bring ideas withthem into the area (Keeble and Wilkinson 2000). Hence, labourmarkets’ connections to wider national and global networkshelped to transfer know-how and learning from outside the localarea. It also helped to develop external linkages that are seen ascritical to firm growth (Bresnahan et al 2001).

Another strand of the literature on the significance of labour incompany decision-making, stressed the specific role of university-related labour.The presence of a local university’s research anddevelopment (R&D) operation was critical as it provided animportant source of new graduates who could establishinnovative firms; continue to draw on the stream of universityresearch; and provide a supply of new scientists andtechnologists.As Keeble and Wilkinson (1999) noted, this flow ofhighly skilled workers within this scientific research andprofessional labour market could create localised processes ofnew firm spin-offs. Their study of Cambridge focused inparticular on the way that firms interact and continue personalcontacts with the university, parent or incubating company.Thisinteraction could range from swapping ideas through to formalsub-contracting, share holding and joint venture arrangements.

Modern economic geographers who focus on the dynamicsof spatial production systems have developed the concept‘regional collective learning’ to explain how knowledge developsin these systems. Keeble and Wilkinson (2000) defined regionalcollective learning as: the creation and further development of abase of common or shared knowledge among individuals makingup a productive system which allows them to co-ordinate theiractions in the resolution of technological and organisationalproblems they confront. Collective learning is centred on threemechanisms:

• the degree of local movement and spin-off oftechnological/managerial expertise in the form ofentrepreneurs (with embodied expertise),

• the extent and frequency of inter-firm technical networkingand interaction,

• the importance of flows of key research and professional staffbetween local firms.

Within this broad concept, the literature particularly stressed theimportance of localised processes of knowledge creation – howfirms learned about new technology, trusted and sharedinformation. Formal and informal business networking amonglocal firms is a necessary ingredient in the process of innovation(Yeung 1994). Inter-firm relations allow effective transfer ofknowledge and other organisational capabilities. Close user-producer collaboration allows for greater production flexibilityand joint development. Hence, by risk sharing, it is argued thatuncertainty is reduced. Camagni (1991) stressed that a closepresence of other innovators sharing similar experiences, as wellas the presence of suppliers and end-users of products andprocesses, creates an important source of knowledge and ideas.Direct co-operation and exchange meant that suppliers couldgather feedback for further innovation and users simultaneouslycould learn about new products and processes. In effect, thisexchange was highly dependent on geographical proximity andenhanced the competitiveness of an area. This networking –sharing and collaboration of information flows – created thenecessary synergy that builds up the collective learning region. Inturn, it reduced uncertainty and created a common culturalbackground within which to operate.

Central to the question of how knowledge spreads withinindustry clusters are the concepts of tacit and codifiedknowledge. Polanyi (1962) described tacit knowledge as the kindof information that is carried by individuals, passed from masterto apprentice, diffused by people not by prescription. Marshall(1890) described the diffusion of knowledge within industrialdistricts as occurring in this way. Codified knowledge, on theother hand, can be written and thus diffused with ease, and inthe era of the internet, this diffusion can be almostinstantaneous.The transfer of tacit knowledge requires proximity.The diffusion of codified knowledge does not. Sassen (2002)identified a parallel phenomenon in her discussion of globalcities. She identified as “datum” bits of information that are easilytransmitted but that mean little on their own. Interpretation,evaluation, and judgment about data can produce higher orderinformation, which is useful to companies. This occurs throughthe “specialised social connectivity” to which global cities offeraccess. Clustering of companies is most important at early stagesof industrial life cycles when the exchange of tacit knowledge isvital, whereas less is known about the maturity stage of the cycle(Audretsch and Feldman 1996).



Other authors have questioned whether relative decline is aninherent systematic feature of cluster dynamics (Baptista 1998).Pouder and St John (1996) argued that agglomerationeconomies that initially draw firms together and act as a sourceof strength could eventually erode and become a source ofinertia and inflexibility. This could occur if learning occurs onlythrough internal networks within an area at the expense ofwider external networks. The concern is that a continuedaccumulation of knowledge can lock firms into an obsolete andincreasingly non-competitive technological trajectory thatcreates barriers to exit for insiders. Keeble and Wilkinson (2000)stressed that whilst internal networks are important, learningfrom knowledge externally is essential as markets are worldwideand firms need to develop external links. Porter (1990) stressedaccess to markets and firm rivalry as sources of externalinformation critical to competitiveness.

Martin and Sunley (2001), on the other hand, are skeptical aboutwhether the evidence confirms that firms in localisedconcentrations adopt new technologies more quickly than theirgeographically dispersed or isolated counterparts. They suggestthat the role of tacit knowledge is over-emphasized, that the ideais unsubstantiated, and that its role as a source of competitiveadvantage for particular areas is unclear.

“More detailed comparative research needs to becarried out to determine the precise extent to which,and the precise conditions under which, clustering doesraise firm performance and innovativeness.” (Martin andSunley 2001:36).

Other authors have suggested that much of the evidence tosupport claims about the importance of industry concentrations tofirm growth and innovation is anecdotal and based on successstories about particular locations (Swann et al 2000; Harrisonand Malmberg 1996). What is clear from these observations isthat focusing on a successful economic region should not be inisolation from wider inter-regional systems. Wider inter-firmnetworks, access to information, changing global technologies,and market opportunities are all essential for long-term regionalgrowth.

2.4.10 The role of institutions

Perhaps one of the most significant developments in research inrecent years has been to recognise the role and importance ofother economic agents and institutions besides the companiesthemselves in enhancing the competitive advantage of locations.Unlike Marshall (1890) who did not acknowledge the role ofinstitutions and public intervention in agglomeration economies,modern authors now place greater emphasis on this aspect(Amin & Thrift 1992, Keeble and Wilkinson 1999, Cooke andMorgan 1998). For example, Porter, writing in 1998, expanded

his definition of clusters to include “associated institutions (forexample, universities, standards agencies, and trade associations)(Porter 1998:117).

Such writers suggested that collectivist and institutionalinvolvement is the basis for successful co-ordination oforganisations within an area. Social relations and rules ofbehaviour are embedded in formal institutional relationships, andthese engender trust and co-operation that strengthen inter-firmnetworks. In effect, institutions establish a framework ofstandards that underpin co-operation. Amin and Thrift (1992)termed this collaboration as ‘institutional thickness’ or capacity,and cite four factors relating to ‘institutional thickness:’

• a strong institutional presence• high levels of interaction between networks• defined structures of domination and/or patterns of coalition

resulting from both the collective representation of sectionaland individual interests

• the development among participants of a mutual awarenessthat they are involved in a common enterprise.

Keeble and Wilkinson (1999), Cooke and Morgan (1998) andSimmie (1997) as well as others equally place considerableemphasis in their work on the role of institutions in shapingregional innovative capacity, which, they contend, may be moreimportant than the networking and intensity of interactionbetween individual firms. These institutions in the UK includenon-firm institutions such as central and local government,Regional Development Agencies (RDAs), trade associations,universities, and business support agencies as well as venturecapital funds. As Lorenz pointed out, each of these institutions,or as he termed them, ‘local collective agents’, enhanced thecollective learning processes. Knowledge was transmittedthrough these organisations and networks. At the same time,dependencies were created that were fostered by the cultural,institutional and geographical proximity. Boschma (2005) inparticular looked at the role of institutional proximity. Thisknowledge is not traded or even tradable, but it significantlyaffected the competitive performance of an area. Storper (1995)called this process ‘untraded interdependencies’, which extendbeyond traditional customer-supplier and servicing relationshipsto embrace formal and informal collaboration and informationnetworks.This interaction entailed non-firm institutions as well asfirms that share conventions and rules for the development ofcommunication and interpreting technology.

Other authors have labelled this collective process an ‘innovativemilieux,’ a term adopted by Aydalot (1986) and Camagni (1991)in their research at the European School of Regional Economicresearch (GREMI). This too focused on the interrelationshipbetween the suppliers and customers, (i.e. the makers and usersof products and processes). Their work focused on the formaland informal collaboration of companies and the inter-firm

mobility of workers in localised markets that create spin-offs ofnew firms from existing private sector companies, as well asinstitutions such as universities and public sector researchlaboratories. These spin-offs transferred knowledge across thedifferent actors and kept the links between the public andprivate sectors on-going. Capello (1999) particularlydocumented a schema of the emergence of innovative milieuxand the preconditions for the various stages of development.One of the necessary ingredients is the social interaction andsupportive institutional framework that generates trust andencourages informal and tacit knowledge transfers.These lead toexternal economies and savings in transaction costs as noted bytheorists such as Marshall and Porter. However, the differencewith this perspective is the importance given to non-businessinstitutions in not only supporting but also enhancing theseagglomeration tendencies.

Different public institutions have particular roles in this collectivelearning process or innovative milieux. Specialised businessservices, for example, are part of the knowledge infrastructureand form a crucial role acting as a source of expertise ongovernment regulations, standards, product testing, marketresearch and financial services.Training agencies similarly provideadvice to local knowledge-based firms, particularly new start-upcompanies, and provide necessary skills training courses. Beingable to share a knowledge base with respect to technical,marketing and managerial skills is all seen as part of the collectivelearning process. Hence, a highly developed and effectivesupportive infrastructure made up of these services is a criticallayer in this process. The Keeble and Wilkinson (1999) studynoted that overcoming constraints and exchanging tacitknowledge was particularly critical for specialised small andmedium-sized enterprises (SMEs) in growing clusters.They oftenexhibited high levels of inter-firm networking and use of localbusiness support and institutional resources.

Universities as key local collective agents and their role inenhancing the collective learning process or innovative milieuxhave, in turn, been the focus of attention for a number ofacademics both in US and across Europe. Academia plays acentral role in regional knowledge-based developmentstrategies. The literature suggests that the location of nationalresearch centres has been a major factor driving activity incertain high tech places (Hall et al 1987; Glasmeier 1991).

The Keeble and Wilkinson (1999) study of Cambridgedemonstrated the way that the University of Cambridgeadopted a liberal positive academic attitude to researchcollaboration with firms. This attitude was also fundamental infostering the growth of university spin-off companies. Thisculture of collaboration was seen as crucial to the successfulgrowth of SME companies and in enhancing and shaping theoverall collective learning capacity of the area. As Hall et al(1987) noted in their work on the growth of high technology

companies, these institutional advantages obtained fromuniversities and government research establishments producedinstant agglomeration benefits for an area.

The dissemination of R&D through institutions, such asuniversities and government research establishments, plays aparticularly important role in the collective learning process andcreation of enterprising places. The nature of the innovationprocess means that it is very much spatially concentrated andlocalised. This is attributed to the geographical rigidity of R&Dactivities that are relatively immobile and place-specific, relatedto University and research institutions within an area. Newresearch units locate close to existing ones due to the high costof moving and the need to maintain good researchcommunication flows and retain research staff that might joinanother company if the research operation moved elsewhere(Oakley,1995).

Hall et al’s (1987) study of high-tech companies found littleevidence of fragmentation of R&D activities, finding instead thatfirms tended to keep the production of technology for globalmarkets close to their original home base. Hall et al (1987)concluded that university and government R&D was one of themost critical factors in the development of technology-basedindustries within the UK. Similar studies in the US noted thistendency towards regional concentration of R&D labs andequally argued that this had implications for the generation ofknowledge, innovation and growth in certain locations (seeHowells 1984; Hall and Markusen 1985). An exception is theestablishment of R&D operations near key markets, aphenomenon studied by Kang (2006) and referred to earlier.

Studies in Europe have found that supportive local businessservices and non-business institutions have played a critical rolein fostering economic growth. Cooke and Morgan’s study of theFrench Dirigiste approach to growth poles in Sophia-Antipolis, aswell as De Bernardy’s (1999) study of the Grenoble regionacknowledge the role of municipal organisations in reinforcingcommunal solidarity and encouraging the exchange ofinformation among companies. Brusco’s (1982) work in Emila-Romagna and Tuscany, as well as Lindholm’s (1999) work onGoteborg equally supported these findings. However, as notedearlier, all of these studies argued that whilst these local supportnetworks are critical to an area, wider national as well asinternational relationships are becoming more important.Porter’s more recent work (2001) considered ‘institutions ofcollaboration” as key parts of industry clusters. Benner (2003),studied what he called ‘labour market intermediaries’ in SiliconValley. He found that these intermediaries facilitated labourmarket adjustments by playing three fundamental roles:

• Reducing transaction costs• Building networks• Managing risk.



2.4.1 Opportunities and constraints on change

The previous discussion suggests that we are witnessing a seachange in the organisation of economic activity around theworld. Companies are moving themselves and their functionalunits to different areas in order to maximise their competitiveness.At the same time, civic leaders are competing to position theirplaces as competitive choices. Therefore is a particularlyimportant time to understand the role of change agents.

With respect to public sector organisations, Porter (1990),Bresnahan et al (2001) and others suggest that governmentneed to stay out of the way, acting at most as an enabler.Meanwhile, people like Kathryn Foster (2001) and Henton,Douglas, Melville, and Walesh (Henton et al 2002) in their work‘Collaboration and innovation: the state of American regions’argue for an activist role by civic leaders, including those ingovernment.

There is certainly a need for greater understanding as to themechanisms by which all of the relevant agents of change in aparticular place, including public institutions, can work togetherto maintain the success of the place as a thriving location fortechnology producing industry. This would not seem to be atrivial issue. Many commentators recognised that the benefits ofgeographical clustering to technology producing companies insome locations might be eroded by physical constraints, risinghousing/property costs, congestion effects and the like, in thearea concerned. What, if any, are the critical masses involved inthe settlement scale? Such discussions fit into the literature oncity regions and “citistates”, coined by Pierce and Johnson (1993)to describe economic regions that compete in the globaleconomy, and research that has examined the opportunities forregions to specialise functionally (Sommers and Carlson 2003).

Of related interest is whether regions may lack the appropriateinstitutions to solve problems such as the congestion and risingcosts of living that retard business success.Thus, Downs (2004)explored potential regional institutional forms in the context ofthe need to solve regional traffic problems. The author arguedthat the predominant governance system in US regions –consisting of many small, highly fragmented local governments –is not capable of dealing effectively with a variety of problems,including rising infrastructure costs and traffic congestion. Someauthors have emphasised that the ability of a particular place toadjust to the requirements of the New Economy is very much afunction of its history. Maskell and Malmberg (1999) argued that“firms locate and build their competitiveness in interaction withlocalised capabilities, which are primarily based on the region’sinfrastructure and built environment, the natural resourcesaccessible in the region, the region’s specific institutionalendowments, and the knowledge and skills in the region.”Theseauthors, and others, lend support to the view that enterprisingplaces should be seen as systems of core competencies tied

together in relationships that influence the underlyingcompetitiveness of the place concerned.

This raises a corresponding problem: inertia within systems is akey barrier to change.The places we studied faced considerablechallenges in overcoming ‘lock-in’ associated with their pastdevelopment patterns (Grabher, 1993, Boschma 2005, Hassink,2005). (For a recent excellent set of readings see Gerhard Fuchsand Philip Shapira, 2005). The lock-in was not limited to land,infrastructure and labour but included institutions that hadevolved over time. Some have also suggested that institutionalrigidities associated with the legacy of the past may contributeto a sort of ‘institutional lock-in.’ (For a summary of the literaturesee Martin and Sunley, 2006.)

Finally, change often occurs through the efforts of individuals, andin our research we sought to develop a greater understandingof this aspect of change.We looked at how those responsible fordelivering change particularly when it involved bringing the stateand the market together, acted to enable a dynamicenvironment.


3.1 Introduction

Drawing on an extensive survey of the CEOs in technology-based companies in our case-study areas, this section begins byexamining the place-related attributes that technology-basedcompanies identified as important in both their choice of aspecific location and their decision to remain there.The surveyresults were examined according to the geography, stage ofdevelopment and broad sectoral characteristics of thecompanies responding. In presenting the results the focus is onthe responses of all companies, whether in the US or the UK,and by stage of development.

We then examined in more depth the attributes associated withthe chosen location in terms of innovation, technology, networks,collaboration, finance, labour force, infrastructure and premises.We assessed the relative merits of a range of quite disparatefactors that have been identified as being important in locationdecisions by technology-based companies. The focus here wason the all company results and by whether the companies wereyoung and thus newly established or more medium sized andthus fairly well established.

Companies included:• start-up-companies, at invention and proof of concept stage or

developing a prototype product or service • young companies, producing and selling their first products and

services• medium-sized companies, with established manufacturing and

sales of products and/ or services • mature companies with numerous products and/or locations

and/or subsidiaries

Company managers cited a number of factors related to thecost and location of inputs. However, traditional policy levers -tax policy, financial incentives, and regulatory policy – turned outto be fairly unimportant. Quality-based factors were much moreimportant to the location of technology producing companies.These factors included the suitability of space: the quality andavailability of the local workforce; the quality of theinfrastructure; and the quality of the residential environment andits social and cultural amenities. These were the focus of policyinterventions in the places we studied, and we discuss these laterin the paper.

3. What technology-basedcompanies need from place

Knowledge System

Built Environment

Finance System

Business System


3.2 What influences company location?

3.2.1 Why do they come?

We first asked senior managers of companies in the study areaswhat factors had influenced them to locate where they did.Theresults appear in Table 3.1. Workforce and space-related factorswere the most important, led by the location of the founder’shome.There was little difference between companies in the USand the UK.

What most distinguished responses from one another was thestage of development of the company. When our samplecompanies first decided on their current location, almost half were start-ups, another 30 percent were young companies;

14 percent were medium-sized companies; and only 1 percentidentified themselves as mature3. Except for affordable space, thefactors valued by start-ups related to the characteristics of thelocal community and its residents. These included where thefounders/directors lived; where existing employees lived; thequality and availability of the local workforce; the presence oflocal contacts and networks; and the quality of the residentialenvironment. Young companies placed more importance onspace and infrastructure as well as on proximity to their markets.Medium-sized companies were more loosely tied to theirfounders but placed more value on their own workforce and thequality of the workforce in the community. Factors related totheir own premises (affordability but also suitability andavailability of parking), were also more important for them thanfor younger companies.

Source: Enterprising Places Company Survey Rank for all companies Country Initial stage of company development

Criteria (Note: Relative rankings: 1 is most important, 29 is least important. UK US Start-ups Young Medium-sized

Location of the founders’/directors’ home 1 1 1 1 1 3

Convenience to your existing employees 2 3 2 2 3 1

Availability of affordable/low cost space 3 2 3 3 2 2

Availability of suitable facilities 4 4 4 8 5 4

Good transportation links (e.g. roads, rail and airports) 5 5 6 9 4 7

Quality and availability of the local workforce 6 8 5 4 12 6

Quality of the residential environment, social and cultural amenities 7 7 7 6 10 9

Availability of parking for employees, customers and suppliers 8 6 8 12 7 5

Good communication infrastructure 9 10 10 11 8 8

Presence of local contacts and networks 10 11 9 5 9 11

Proximity to customers and clients for your products/services 11 9 11 7 6 12

Proximity to colleagues working in the area 12 12 12 10 11 14

Image/"right address" 13 13 13 14 13 15

Availability of facilities for manufacturing 14 14 14 20 19 10

Proximity to key suppliers and sub-contractors 15 15 15 13 17 18

Availability of specialised business support services 16 16 17 17 15 13

Proximity to research institutions to recruit quality workforce 17 17 16 15 14 17

Presence of similar companies for collaborations & tech spill-overs 18 20 18 16 18 24

Capacity of utilities: power, water, sewerage, waste disposal 19 18 19 26 24 20

Proximity to research institutions to use facilities 20 21 20 18 21 25

Availability of area targeted government assistance 21 19 21 22 23 21

Supportive national regulatory framework (e.g. standards & laws) 22 23 22 25 25 19

Availability of specialised finance (e.g. angel and venture capital) 23 25 24 19 20 29

Favourable local taxation/Policies 24 22 23 24 28 16

Proximity to research institutions to obtain intellectual property 25 24 25 21 16 28

Proximity to research institutions to train existing employees 26 26 26 23 22 27

Supportive land-use planning policies and procedures 27 27 27 28 26 22

Support of local political leadership 28 29 28 27 29 23

Outcome of a merger or acquisition involving another company 29 28 29 29 27 26

Table 3.1. Criteria influencing technology producing companies’ initial decision to locate in a place

3 At the time of the initial decision and at the time of the survey, a small number of companies identifiedthemselves as “other”.


3.2.2 Why do they stay?

In the traditional location equation, the prices companies payover time for factors of land and labour reflect both the originalbenefits associated with a particular location, as well as thoseassociated with geographical concentration4. Moreover,increasing levels of activity in a particular place increasepressures on the resources available in the place to meet theincreased demands. Combined, these result in higher costs andlower quality services. Companies would then seek to move tolower cost areas. Markusen, Lee, and DiGiovanna (1999) offeredan alternative scenario.They explained the “stickiness” as well asthe success of new smaller “second tier” cities, which are notnecessarily the lowest cost option for companies, as a functionof the place’s industrial organisation and the role of “activeagents – firm managers, state sector decision-makers, localeconomic development boosters, and worker and communitygroups.” (p.335)

To see what kept high tech companies in their current location,we asked company managers to identify the three factors most

important to their decision to remain where they were.Table 3.2summarises the results. As the table shows, once firms madetheir location choice, including the choice of premises, theystayed for other reasons. Proximity to customers and clients wasthe most important such reason. Other factors that kept firmswhere they were (rather than attracting them there in the firstplace), were connections to research institutions (to use facilities,obtain IP, and recruit workers), as well as, to a lesser degree,targeted government assistance.

US and UK companies reported some interesting differences.For US companies, the quality and availability of the localworkforce; the presence of local contacts and networks; thequality of the residential environment; proximity to researchinstitutions to use facilities; and the availability of manufacturingfacilities, were more important in keeping them in place thanthey were to UK companies. For UK companies, the availabilityof suitable (and affordable) space, good transportation links,communication, the availability of parking, and the availability oftargeted government assistance, were more important to thanthey were to US companies.

Source: Enterprising Places Company Survey Rank for all companies Country Current stage of company development

Criteria (Note: 1 is most important; 26 is least important; na indicates that no company identified this as an important factor.) UK US Young Medium sized Mature

Location of the founders’/directors’ home 1 1 1 1 2 3

Convenience to your existing employees 2 2 2 3 1 1

Proximity to customers and clients for your products/services 3 4 3 4 6 2

Availability of affordable/low cost space 4 3 5 2 4 5

Quality and availability of the local workforce 5 7 4 7 3 6

Good transportation links (e.g. roads, rail and airports) 6 5 15 6 7 10

Good communication infrastructure 7 7 10 5 8 13

Availability of suitable facilities (e.g. built to suit your company 8 6 19 11 5 4

Presence of local contacts and networks 9 9 6 7 9 10

Quality of the residential environment, social and cultural amenities 9 9 6 7 9 8

Proximity to research institutions to use facilities 11 11 6 10 22 13

Image/"right address" 12 13 11 13 13 8

Availability of parking for employees, customers and suppliers 13 11 na 20 9 6

Proximity to colleagues working in the area 14 15 9 11 14 na

Proximity to key suppliers and sub-contractors 15 15 12 16 12 na

Availability of area targeted government assistance 16 13 na 13 15 na

Availability of specialised finance (e.g. angel and venture capital) 17 18 12 16 15 12

Proximity to research institutions to obtain intellectual property 18 15 15 15 15 na

Proximity to research institutions to recruit quality workforce 19 19 15 16 na na

Availability of facilities for manufacturing 19 22 12 22 15 na

Capacity of utilities: power, water, sewerage, waste disposal 21 20 na 16 na na

Presence of similar companies for collaborations and tech spill-overs 22 26 15 20 15 na

Favourable local taxation policies 23 21 na 22 na na

Availability of specialised business support services 23 24 20 22 na na

Proximity to research institutions to train existing employees 25 22 na na 15 na

Outcome of a merger or acquisition involving another company 26 24 21 na 15 na

Support of local political leadership na Na na na na na

Supportive land-use planning policies and procedures na Na na na na na

Supportive national regulatory framework na Na na na na na

Table 3.2: Criteria influencing technology-producing companies’ decision to remain in a place

4 unless the effect are so dynamic and significant that they continue to ‘surprise’ the forces of marketinternalisation.


3.2.3 Deciding to stay in a centre and a company’sstage of development

In order to understand how a company’s decision to remain inan area might change as it matured, we analysed the responsesbased on the companies’ stages of development for allcompanies in the sample. At the time of the survey, only 5percent remained start-ups; over 40 percent were youngcompanies; the number of medium sized companies hadreached 35 percent; and 10 percent were mature. Table 3.3shows the results for young companies, Table 3.4 for medium-sized companies, and Table 3.5 for mature companies. In eachcase we present the six factors that companies in the relevantgroup said were most important in their decision to remain inits current location. Each table also shows the priority thatcompanies in the other stages of development gave that factor.We also considered whether or not the factor was “policy”related. Factors involving a company’s current employees,customers, clients, and suppliers were not considered to bepolicy-related. Space; the general quality of the local workforce;transportation and communication links; the quality of theresidential environment; the availability of incentives; favourabletax policy; local planning policies, and political leadership wereconsidered policy-related.

Table 3.3: Factors influencing a young company toremain in place

Current stage of development

Criteria Young Medium Maturesize

Location of the founders’/directors home 1 2 3

Availability of affordable/low cost space 2 4 5

Convenience to your existing employees 3 1 1

Proximity to customers & clients for 4 6 2products/ services

Good communication infrastructure 5 8 13

Good transportation links (e.g. roads, rail, 6 7 10and airports)

For young companies, company-related factors were thelocation of the founders’/director’s home (although see thediscussion of quality of life factors); the convenience of existingemployees: and proximity to customers and clients for thecompany’s products and services. Policy-related factors includedthe availability of affordable/low cost space, communicationsinfrastructure, and transportation links. (Note: Although notshown, the quality of the existing workforce and local contactsand networks both ranked seventh.)

Table 3.4: Factors influencing a medium-sizedcompany to remain in place


Criteria Medium Young Maturesize

Convenience to your existing employees 1 3 1

Location of the founders’/directors home 2 1 3

Quality and availability of the local workforce 3 7 6


Availability of suitable facilities (e.g. built to suit) 5 11 4

Proximity to customers & clients for products 6 4 2/ services

For medium-sized companies, workforce factors tied thecompany to the place.The convenience of existing workers wasthe most important factor holding the company in place,followed by the location of the founder’s home, followed by thequality of the local workforce in general. Premises-related factorswere the next most important, including both affordable andsuitable space. Proximity to customers was the sixth majorfactor.

Table 3.5. Factors influencing a mature company toremain in place


Criteria Mature Young Mediumsized

Convenience to existing employees 1 3 1

Proximity to customers & clients for 2 4 6products/services

Location of the founders’/ directors’ home 3 2 1

Availability of suitable facilities (e.g. built to suit) 4 5 11


Quality and availability of the local workforce 6 7 3

Availability of parking for customers and suppliers 6 9 20

Like medium-sized companies, mature companies placed thegreatest value on the convenience of their existing employeesand were more loosely tied to founders. Premises-relatedfactors (suitability and affordability of space, parking), were moreimportant than they were to young companies.


3.3 On technology and innovation

Overall, taking all companies together, the most importantsources of technology were feedback from customers, researchwithin the company, the Internet, competitors, literature andnew employees. This was much the same across the differentstages of development (Table 3.6). Universities were notperceived as being particularly important sources of technologyper se.

Table 3.6: Sources of technology

Rank for ALL companiesUK and US

Feedback from customers 1

Research in the company 2

Internet 3

Competitors 4

Literature 5

New employees 6

Feedback from suppliers 7

Previous work colleagues 8

Professional conferences 9

Research within the company group 10

Specialised business support services 11

Investors in the company 12

Previous and current university colleagues 13

Formal networking organisations 14

Trade association 15

Contract research from a consultancy 16

Patent disclosures 17

PhD undertaken by employees 18

Contract research from a research institute 19

Purchase of IP from another company 20

Acquisition from another company 21

Chambers of Commerce 22

Assigned or licensed IP from a research institute 23

All companies taken together identified the top five factorsassisting them to innovate as being: key local marketopportunities; sophisticated customer base; strong networkswith research institutions; the new technologies they introduced;and the diversity of local technology companies (Table 3.7).Thus,companies ranked market-related factors both as the mostimportant sources of technology to them and the factors thatinfluenced their ability to innovate (the demand part of thePorter diamond).

Table 3.7: Factors assisting companies to innovate


Key local market opportunities 1

Sophisticated customer base 2

Strong networks with research institutions 3

New technologies introduced by other local companies 4& research institutions

Diversity of local technology companies 5

Local financing favouring specific locations 6

Collaboration opportunities with corporations 7

Supportive regulations, standards & laws. 8

Innovative activity of local competitors 9

However, universities and research centres did play a role inhelping companies to innovate and translate technology intonew technologies. Whilst market factors (market opportunitiesand the sophistication of a company’s customers), wereidentified as the most important influences on innovation, thenext most important factors were university related: networkswith research institutions and technology developed by othercompanies and by research institutions.


3.4 On relationships with local researchinstitutions

Table 3.8 below indicates the nature of the relationships that thetechnology-based companies had with their local researchinstitutions. For all companies, the most common factors werethat their employees maintained informal relationships with thefaculty and that the company hired the institute’s graduates.However, other more indirect relational pathways werehighlighted, including that the company benefited from theintellectual dynamism of the institute’s presence. Companyemployees attending courses, academics acting as consultantsand collaborative endeavour occupied the middle ground interms of ranking ahead of direct use of the institute’s facilities. Itwas of interest that this position was much the same in the UKas the US (not shown in table).

Table 3.8: Relationships with local researchinstitutions


Company employees maintain informal relationships 1with the faculty

Company hires institute's students and graduates 2

Benefits from the intellectual dynamism resulting 3from the institute's presence

Company employees attend courses 4

Academic acts as a consultant 5

Company undertakes collaborative research with the institute 6

Company uses the institute’s facilities 7

Company is a spin-out 8

Company contracts Institute to do research 9

Institute licenses IP to the company 10

Company's employees are adjunct professors 11

Academic serves as board member 12

Company uses institute's incubator 13

3.5 On networks

Companies were also asked about their networks. The resultsare summarised in Table 3.9 below. Overall, all technology-basedcompanies in the UK and the US emphasised contacts withcustomers; contacts with suppliers and sub-contractors; contactswith previous employees/ers; joint projects with othercompanies; contacts with research institutions; and informalcontacts with similar companies.

Table 3.9: Important networks


Contacts with customers 1

Contacts with suppliers and sub-contractors 2

Contacts with previous employees/ers 3

Joint projects with other companies 4

Contacts with research institutions 5

Informal contacts with similar companies 6

Membership of a trade association 7

Use of common specialised business support 8

Sharing equipment with other companies 9

Membership of a networking organisation 10

Contacts through financial community 11

Contacts with business advice centre 12

Participation of the board of directors of other companies 13

Contacts through business mentors 14

Membership of the chamber of commerce 15

3.6 On collaborations

The collaborations that companies undertook are summarisedin order of importance in Table 3.10 below. For all companiestaken together in the US and the UK, collaborations withcustomers and suppliers were the most important. This wasfollowed by product collaborations with other companies;market and distribution collaborations with other companies;R&D collaborations with other companies; collaborations withspecialised business support; informal collaborations withcolleagues at research institutions; and formal collaborations withresearch institutions.

Table 3.10:Types of collaboration


Collaborations with customers 1

Collaborations with suppliers 2

Product collaborations with other companies 3

Market & distribution collaborations with other companies 4

R&D collaborations with other companies 5

Collaborations with specialised business support 6

Informal collaborations with colleagues at research institutions 7

Formal collaborations with research institutions 8


3.7 On finance

Table 3.11 below summarises the views of companies in relationto sources of finance. Overall, the most important sources offinance were identified to be (in order of importance): companyearnings; owner equity; family and friends; debt finance; smallbusiness loan guarantees; development of specific technologyand grants; venture capital; area-targeted grants; early stagegrants; angel finance; and the stock market

Table 3.11: Sources of finance


Company earnings 1

Owner equity 2

Family & friends 3

Debt finance 4

Small business loan guarantees 5

Development of specific technologies' grants 6

Venture capital 7

Area targeted grants 8

Early stage grants 9

Angel finance 10

Stock market 11

3.8 On type of employees

Companies were asked about the relative importance of certaintypes of employees to them in their present location.Table 3.12below ranks them in order of perceived importance. Allcompanies taken together identified information technologyspecialists, marketing and sales personnel and business managersas the top three.

Table 3.12: Employee types


Information technology specialists 1

Marketing and sales personnel 2

Business managers 3

Clerical and administrative 4

Technicians 5

Strategic board members 6

Newly graduated engineers and scientists 7

World class experienced scientists 8

The survey respondents ranked the location of thefounders’/directors’ home and convenience to existingemployees as the first and second most important factorsrespectively in influencing a company’s decision to initially locate,as well as remain in a particular place.This finding was consistentwith the information gained from the in-depth interviews, whichsimilarly identified this trend towards companies being

established where the founder was living at the time. It isapparent that people became socially and financially entrenchedin an area, further reinforcing the concentration of people andcompanies in that particular area. Furthermore, manyrespondents acknowledged the extent to which cumulativeinertia set in, resulting in it becoming too expensive to relocatethe company, primarily because they would lose a significantpercentage of the staff if they did so. As the survey confirmed,convenience and loyalty to existing staff was seen to be of criticalimportance to companies.

3.9 Constraints on recruitment

The most significant constraint on recruitment was identified tobe the cost of housing, followed by competition from similarcompanies and a lack of specialist technical scientific skills (Table3.13). This position varied somewhat between the UK and theUS (not shown in table). In the US, the second most significantfactor identified was high local wages.

Table 3.13: Constraints to recruiting employees


Cost of housing 1

Competition from other similar companies 2

Lack of specialised technical/scientific skills 3

Labour shortages 4

High local wages 5

Commuting problems 6

Lack of managerial and marketing skills 7

Lack of a range of housing types 8

Limited family support facilities – schools 9

Limited technical and business training facilities 10

Lack of similar job opportunities 11

Parking problems 12

Limited leisure facilities 13

Poor quality of the physical environment 14

High turn-over of staff 15


3.10 On infrastructure

All companies highlighted the importance of broadband access,good transport links, affordable/low-cost space and good mobiletelecom reception. Flexible leasehold conditions and parkingfacilities came next in the ordering (Table 3.14). There wasconsiderable variation between areas and, to some degree, stageof development. In the UK, good transport links rated first,whereas in the US, the first position was given to affordable, low-cost space (not shown in table). Both placed broadband accesssecond and good mobile telecommunication reception fourth.

Table 3.14: Infrastructure and premises requirements


Broadband access 1

Good transport links 2

Affordable/low cost space 3

Good mobile telecommunication reception 4

Flexible leasehold conditions 5

Parking facilities 6

On-site expansion 7

Utilities capacities 8

Range and type of premises 9

Supportive planning policies 10

Space for manufacturing 11

Laboratory space 12

Premises in high-tech science parks 13

Adjacent developable land 14

Incubator space 15

3.11 Summary

The evidence from the survey of technology producingcompanies and other respondents pointed to a number offactors that were important requirements in maintaining thecompetitive advantage of a location.The quality of the residentialenvironment, a range of workforce related issues and theimportance of communication/transportation and premiseswere highlighted. If places were to remain competitive locationsfor high technology, the regional leadership often had to findways of meeting and financing substantial changes to thetraditional patterns of infrastructure and settlement.

Companies often started up in one of the study areas becausethat is where the founder lived.They stayed and grew becauseof the connections they had with customers and because of agood workforce. However, young and medium-sized companiesfaced workforce-related issues. They were in competition withsimilar companies, especially for IT, marketing and salespersonnel, who were perceived to be in short supply. Bringingworkers to areas like the Eastern Region in Cambridgeshire(UK), Eastern Massachusetts or San Diego (US) was problematic

because of the high cost of housing. The availability of goodquality premises and sites became more important ascompanies began to grow and develop.

Universities and research institutions played an important role inthe development of the companies, mostly through the peoplethey provided. These institutions facilitated start-ups, providingworld-class scientists and strategic board members. Companiesrealised that networks with universities and research institutionsfacilitated innovation (although they were not an importantdirect source of technology). These companies went on toidentify the most important relationships as those that werepersonal, connections to faculty, and the pool of students thatconstituted potential employees. Their presence also helped tocreate a general intellectual dynamism that companies valued.New companies also identified government programmes, suchas grants and loan guarantees, as being important sources offinance. They depended on government provision of criticalinfrastructure (especially transport and key services), and otherfactors that government had the ability to influence, such as thequality of the residential environment and the availability of land.These actions were considered to be important in influencing acompany’s decisions to locate and grow in an area.

Competitive and attractive locations were those that were ableto flex their resource bases to accommodate the needs oftechnology-based industries. Their ability to do this was clearlyinfluenced by where they started from, their industrial legacy andtheir ability to bring together the key players who could initiatechange.


4.1 Introduction

Academic researchers and the people we interviewed for thisproject agreed that universities and research institutions, whatwe call ‘knowledge-based institutions’ (KBIs), were importantregional assets and potentially central elements in the portfolioof assets that contributed to a region’s competitive advantage and enterprising capability.

As technology has become increasingly important to a firm’scompetitiveness, so have KBIs as central institutions inenterprising places. They raised local capabilities andcompetences in many ways. They produced a steady output ofqualified and skilled labour; they increased the stock of ‘codified’useful technology; and they played a role in the process ofinnovation by interacting with the business community throughformal and informal channels. KBIs with large and diversifiedresearch bases supported by substantial public and privatesector funding attracted high-quality scientists, talentedgraduates, and post-docs to the local area.They, in turn, startednew technology-based companies, joined existing companiesand became the conduits for technology transfer from the KBIsto the business community. Large-scale high-quality research inKBIs and a pool of labour with advanced technical and scientifictraining also attracted research functions of multinationalcompanies and collaborative research activity with KBIs, which

further enhanced the technology and innovative capacity of theregion.

In our research, we explored the various roles played by KBIs inour study areas by looking at the connections between high-technology companies and KBIs and their relationships to policyand place.

In our survey, we asked companies several questions about theirconnection to knowledge-based institutions. We asked themabout the factors that caused them to innovate, their sources oftechnology, and their most important relationships with localresearch institutions. Young and medium-sized companiesreported that their markets and customers were their mostimportant sources of innovation. Networks with researchinstitutions were the next most important for young companies,but medium-sized companies reported these networks to beless important than opportunities to collaborate with othercompanies. Companies at all stages of development reportedthat assigned or licensed IP was almost the least important of allsources of technology to the company.

When asked about the nature of their relationships with localresearch institutions, start-ups valued their relationships with faculty;they used the institutes’ facilities, and they employed academicsand consultants in their companies. Young and medium-sized

4. Creating the innovation network

Knowledge System

Built Environment

Finance System

Business System


companies reported that the three most importantrelationships were: hiring of the institutes’ students andgraduates; informal relationships with faculty; and the intellectualdynamism in the place resulting from the institution’s presence.

We asked similar questions of the leaders of companies andKBIs, policy makers, and civic leaders in our place-basedinterviews. They confirmed the survey findings and provided agreat deal of explanatory detail. In brief, our intervieweesreported the following:

• The most important contributions that KBIs made to high-technology companies and enterprising places were people: astream of educated graduates who might start or becomeemployees at technology-based companies or who providekey civic leaders to enterprising places. Academic excellenceand excellence in basic research were the drivers for this flow.

• The real output of company sponsored or collaborativeresearch was not necessarily technology; it was companyaccess to a cadre of bright students trained in appropriateresearch methods.

• Most early stage companies were based on intellectualproperty owned by the founder or the company.

• Start-up companies often cited university ownership of IP asinhibiting the development of their businesses. As companiesgrew, those that began based on specific university-owned IPoften abandoned it as the company developed and diversifiedits product line; and companies that used university-owned IPdid so without regard to the location of the university.

Each of our case-study areas included world-class centres ofscientific excellence in their universities and research institutions.The areas also contained a variety of technical, community, andteaching colleges and universities. Together, these KBIs werewidely perceived as critically important in their contribution toeconomic development. Not only were they consideredimportant as national economic assets, but also as local assetsplaying a significant role in supporting the growth of the localhigh-technology sector and contributing more widely to theinnovative capability and competitiveness of the local businesscommunity. As Mary Walshok observed in describing the SanDiego experience of becoming a leading high-technologylocation: “You need a critical mass of intellectual capital”, and KBIswere a critical source (Walshok 2004).

People we interviewed who were associated with KBIs engagedin a variety of activities, beyond what might be considered theirtraditional functions of education and research. Such activitiesbrought them in direct contact with high-technology companies.These could be grouped as follows:

• facilitating interactions of various kinds between the KBI,companies, investors, and others in the high-tech centre

• investing in real estate and related services

• holding intellectual property, funding its development, andmaking it available for commercial exploitation

• investing in companies• providing specific continuing education for company

employees• participating in civic partnerships and providing civic

leadership.

4.2 Investment in research

Increasingly, many of the new technology platforms of potentialsignificance for company innovation were based on multi- andinter-disciplinary research, and the capacity to undertake suchresearch was an increasingly important feature of the researchcapability of a high-technology region. Such research oftenrequired depth in multiple areas of specialisation, thus thegreater the scale and diversity of a region’s science and researchbase, the greater its potential as an enterprising place. Althougheach of the case-study areas hosted world-class researchcapabilities, the scale and depth of this capability differed acrossthe case-study locations: from the relatively specialised strengthsof the Scottish science base, to the more diverse and wideranging research capability identified in the Boston area,Cambridge UK, and San Diego.

One of the key issues facing KBIs in both countries was how toattain a critical mass sufficient to support the scientific andtechnological specialisation required for inter-disciplinaryexploration given that, increasingly, much cutting-edge researchwas occurring ‘at the fringes’ or ‘on the margins’ between thevarious disciplines, especially in areas related to nano- andbiotechnology. One mechanism was interdisciplinary researchwithin the university. Another mechanism for promoting suchinterdisciplinary research, used more in the UK, has been theestablishment of collaborative centres of excellence basedaround a specific technology. These centres usually involved anumber of research institutes, government agencies and industry,and focused on applied research and technology. Such centreswere intended to attract and lever various sources of privateand public funds and pool them to achieve a critical mass in aparticular discipline. They could encourage and facilitate themovement of ideas and people across their respectiveorganisations. Their separation from the university assisted inreducing the conflict between basic and applied research.Similarly, because their purpose was often to undertake appliedresearch and to commercialise intellectual property, thecommercialisation process would be smoother and less fraughtwith problems than those experienced in university-relatedcommercialisation processes. Furthermore, while these centresmay have had public university participants, as independentinstitutions they could pay market-related salaries to attract andretain high-quality scientists and managers. Lastly, especially in the

UK, these centres could provide the opportunity for students tointerface with industry and to work on commercial applicationswhile completing their studies5.

In some cases, such centres essentially commissioned researchthat was undertaken by the various institutional participants.TheNorth Carolina Biotechnology Centre and the ScottishIntermediary Technology Institutes were examples, although thiswas only one aspect of their operations. The new ScottishIntermediary Technology Institutes (ITI ) will funnel resources tosupport industry-related research in three sectors: energy, lifesciences and communications/digital media markets, whereScotland has acknowledged strengths. Run in collaboration withindustry and academic institutions, the institutes will act as thehubs for commissioning and supporting pre-competitiveresearch in anticipation of future market opportunities6. Othercentres undertake research directly; examples included MCNCin North Carolina, and the Institute for System Level Integration inScotland (ISLI), located on the Alba Campus).The latter focusedon education for the electronics design community andsupported related research.

Government R&D funding was typically attracted by institutionswith a well- developed and proven capacity and capability tohost the research (including, where appropriate, facilities andinstitutional arrangements for interdisciplinary research). Thepresence of established research institutions not only played animportant role in attracting government R&D expenditure intothose specific areas of research in which a region excels, but alsoassisted greatly in attracting national research institutes andcompanies with strong R&D functions into an area.The increasingconcentration of diverse well-funded KBIs attracted high-qualityscientific and engineering talent, faculty and students that furtherstrengthened the capacity of KBIs in the region to attract publicand private sector R&D funding. In some cases, new high-technology firms spun off from research done at KBIs. In othercases, it was the graduates who went on to start companies inthe area. Corporate spin-offs often followed. Access to localhigh-quality manpower, a network of specialist business servicesuppliers to the high-technology sector, combined withopportunities for collaboration with KBIs and other high-technology companies facilitated company growth andinnovation. Innovation not only gave rise to new companiesproviding new products and services, but also had the potentialto transform traditional industries in the region.

KBIs also contributed to the development of tacit codes ofconduct as well as formal protocols that facilitate KBI-businesscollaboration. For example, a xenotransplantation companyapproached Tufts University School of Veterinary Medicine withan idea for a protocol for clinical trials. Tufts implemented theprotocol, training its own staff, but also trained the company’sstaff in tissue harvesting and animal husbandry.

4.3 Knowledge-based institutions andcompanies: it is about people

What emerged from our interviews on KBIs and companies? Thefirst important finding was the importance attached by thebusiness community to the role of local KBIs as a source of highlyqualified scientists, engineers and technicians.

Founders and managers of companies at all stages ofdevelopment pointed to the universities as essential sources ofpeople.The founders of new companies in our study most oftencame from the local universities, many as students. Maturecompanies relied even more on the universities for theirworkforce. For example, in North Carolina, both IBM and GSKhired extensively from the North Carolina State University(NCSU), a public institution, and the presence of high levelresearch facilities and high quality graduate labour was animportant factor in their decision to locate there. In fact, IBMnationwide hired more employees from NC State than anyother school in the US.At the same time, the NC State has beenan important customer for high-technology companies such asIBM.

4.3.1 Continuing education

KBIs not only turned out undergraduates, post graduates, andthose who have received post-doctoral training in researchinstitutes. They provided continuing education programmes forthe local workforce as well as entrepreneurship traininginitiatives. One of the striking findings from the UCSD case study,for example, was the numbers of the workforce participating inExtension/Continuing Education Training Programmes coveringsubjects ranging from computer programming to regulatorypractices and professional business development for high-technology company executives. Courses provided by theuniversity are typically largely self-supporting. Their importancederives from the role they play in qualifying generally educatedstudents with industry specific skills and competencies andbecause they reflect industry’s needs for competencies (Lee andWalshok 2002).

San Diego City College had a Centre for Applied CompetitiveTechnology (CACT), one of twelve applied technology centresin California which helped small firms upgrade their productiontechniques and workers skills, particularly technicians formaintaining and servicing equipment in high-technology firms.CACT was also building its training capability in the biosciencesarea and had established a ‘biolab’ to provide training anddemonstration on advanced equipment.


5 Note differences between the US and the UK. In the US, opportunities to work on industry sponsored research aspart of the academic programme is commonly available within universities such as MIT. In the UK, it is much moreuncommon for students to structure these within such projects within the university.6 The Intermediary Technology Institutes are in the process of being rolled out and therefore it is too early tocomment on their effectiveness.


4.3.2 New companies in enterprising places

Technology start-ups were an important way in which theuniversities and research institutions contributed to the local andregional economy. Most of the founders of new companies inour study came from the local university, many as students.Theychose to start their businesses locally, in part because they livedthere and were socially entrenched in the area. Many also reliedon contacts at the institution. Some used their formersupervisors or professors as technical advisors. Others used thefacilities available at the university, at least at first.These start-upcompanies directly and indirectly contributed to the growth anddevelopment of high-technology industry in each of the studyareas.Their direct impact resulted from the jobs and local valueadded that the companies generated and the technology andknowledge that they carried from the science base.Their indirectimpact occurred through their role in spawning subsequentcorporate spin-offs and through the collective learning role thatthey played in diffusing new technologies and innovationsthroughout different parts of the local economy. They alsoattracted growing and mature companies seeking new ideas andtechnologies, that usually end up acquiring them.

University-related technology start-ups were important inalmost all our study areas. Segal Quince and Wicksteed (1985,2001) estimated that one quarter of new technology start-upsin Cambridge UK had a founder either from the University or aresearch establishment, and Keeble and Wilkinson (2000)estimated that between 15 and 20 percent of Cambridgehigh-technology small and medium sized enterprises originatedin Cambridge University. UCSD’s first biotechnology firm,Hybritech Inc., created by two UCSD researchers in the late1970s, has spawned many offspring and has been credited withthe birth of the biosciences industry in the San Diego region7.San Diego’s renowned Scripps Research Institute and the SalkInstitute for Biological Studies have also provided a rich sourceof spin-offs. According to CONNECT, at least 41 San Diego-based communication and telecommunication companies wereeither founded by students or faculty, or spun off from firms withties to UCSD, (Innovation Associates 2000). Dundee leadersclaimed that their local bioscience industry owed its origins tothe efforts of a small number of individuals from the Universityof Dundee who started new companies.

In Cambridge Massachusetts, MIT was renowned for itsinstitutional culture that encouraged entrepreneurship and it hasbeen estimated that as of 1997 there were 1,065 MIT-related firmsemploying 125, 000 people in the state. MIT-related firmscomprised one third of manufacturing firms and sixty percent ofelectronics and instrumentation firms in the Boston area.Almosthalf of the MIT-related firms in the state maintained contact withthe institute, mostly by retaining consultants from MIT and usingthe institute for professional education and to recruitemployees8.

4.3.3 KBIs: making the connection to enterprise

Recognising the powerful connection between KBIs andenterprise, leaders in our study areas worked to buildentrepreneurship. They also sought to exploit the relationshipsbetween KBIs and companies by connecting people toopportunities. San Diego provided some good examples ofefforts to facilitate connections between KBIs and enterprise.

In 1985 UCSD star ted the now famous CONNECTprogramme to foster University-Industry cooperation and topromote the growth of high-technology entrepreneurship. Itnow operates independently of the University and receives itsincome from membership fees, events income and grants. It seesitself as an ‘incubator without walls’ providing training for high-technology CEOs and entrepreneurs. It provides newsletters,operates a TV show and organises a number of activitiesdesigned to support entrepreneurship (e.g. Meet theResearchers,Technology Financial Forum, Corporate PartnershipForum and Most Innovative Products Award).

UCSD’s Corporate Affiliates Programme (CAPS) is anotherexample of an innovative initiative designed to forgepartnerships with industry and fuel the region’s economy. Theprogramme involves a very active role for affiliates includingannual research reviews of their current work, poster sessions bygraduate students, and displays by CAP member companies.Thisfrequently results in some form of collaborative research projectand CAP members contribute to the future research strategyand educational directions of the University.

7 See Porter’s family tree.8 BankBoston (1997) study.

4.4 Technology, technology transfer, andintellectual property

Considerable attention has been paid to the issue of IPdeveloped by KBIs and its commercialisation. Technology-basedcompanies were seen as crucial elements in the technologytransfer process in that they could embrace new technologiesthat had the potential to render existing technologies inestablished firms obsolete. Moreover, because of their propensityto locate near to the parent institution from which thetechnology originates, spin-outs played an important role insupporting local innovation, particularly in industries well placedto exploit new technology platforms emerging from the localscience base.Yet how this should happen, and the role of KBIs intechnology ownership, is an area of some debate.

4.4.1 Different approaches to IP

Different rules and practices govern ownership of intellectualproperty in the US and the UK. In the US, federal policies on IPare drivers, through rules governing federally funded research.Throughout the 1970s, the Federal government retained rightsto IP for all the research it funded, although it seldom enforcedthose rights.The concern that publicly-funded research was notbeing commercialised led to the passage in 1984 of the Bayh-Dole amendment, which transferred the IP rights of the Federalgovernment to the universities in which the research wasundertaken. The consequence is that, today, in most USuniversities, the university has rights to IP developed using itsfacilities9.

In the UK there has been no national legislation comparable toBayh-Dole, and historical practices prevail with respect to IP.These vary across the different universities and researchinstitutes. For example, at the University of Cambridge, IPgenerated by externally funded research, (Research Councilsand Charities, except where the University has agreedotherwise) is owned by the University; however, this is not thecase for IP generated by Higher Education Funding Council forEngland (HEFCE) funds or income from other sources such asCambridge’s endowment fund. All IP created by employees inthe normal course of their employment, including that coveredby the 1977 and 1988 Patents Act, is not therefore covered.

By way of contrast, the University of Cranfield in the UKdifferentiated IP ownership on another basis. If the universitycontracted with a life-science company to do research anddevelopment work on its behalf, the university owned theresulting IP. However, if the university contracted with anengineering firm with which the university had a long-standingrelationship, the firm kept ownership of the resulting IP.

4.4.2 Licences versus spinouts

Similarly, the assignment of IP to a company took different formsin the two countries. In the US, commercialisation efforts focuson licensing, an activity that gained momentum after the passageof Bayh-Dole.

MIT’s policy governing the distribution of licensing income andits licensing office, the Technology Licensing Office (TLO), wereoften cited as US models10. MIT retained outside patentattorneys to manage the patenting process. The TLO licensedthe patents on MIT-owned inventions to businesses that woulddevelop the technology commercially. The TLO was staffed bypeople with substantial private sector backgrounds. Afterrecovering costs associated with obtaining a patent, the TLOretained 15 percent of the royalties paid by the licensee. Theremaining income was split one third to the inventor, one thirdto the academic department and one third to MIT’s generalfund.The role of MIT licensing staff was not limited to the initialprocess of negotiating the licence, but also to ensuring that themilestones for bringing the product to market were met by thelicensee. If a licensee was not successful, MIT could recover therights and the licence.

The TLO’s licensing process effectively separated academicresearch and the development of new technologies from theircommercialisation by industry. Scientists shared royalties fromtheir MIT patents, but independent companies, by and large,licensed and developed the technology. The scientist mightparticipate on the company’s scientific advisory board, but theassumption was that the scientist stayed with the University andcontinued with academic research. University personnel policiessupported this separation: MIT prohibited direct companymanagement by its faculty, discouraging participation incompanies other than as a consultant or member of a scientificadvisory board. The personification of this approach, suggestedby several interviewees, was Professor Robert Langer,responsible for over 400 MIT patents. Despite his connections tomany companies, the centre of his work remained his lab andstudents at MIT.

As a policy, the TLO did not make investments in companies thatuse MIT technology. However, the MIT treasurer’s office, whichmanaged the university’s endowment, did have a venture capitalfund that it invested in business start-ups. It made these decisionson a market basis without consideration as to whether thetechnology came from MIT.

In the UK, the scientist, his or her inventions, and the developingcompany were often considered as a bundle. In a parallel way,universities and research centres have focused more on spin-outcompanies, that is, companies started by a university’s academicstaff, using university-owned IP, and in which the universityretained an equity interest. When the company “spun out,” itoften took the academic with it.


9 Because of the mingling of federal and other funds at research institutions, virtually all research is covered byBayh-Dole.10 MIT in turn based its practices on those of Stanford University. MIT reorganized the TLO in the 1980s, inresponse to the Bayh Dole amendment, and MIT hired Stanford’s Technology Licensing person to manage thereorganisation.


Greater commercialisation has been associated with more spinout companies, and policies to encourage this often focused onteaching academics to become entrepreneurs. People weinterviewed at several university commercialisation offices noteda dilemma – when a company spun out, the university could losevaluable people. Some commercialisation offices discouragedspinouts involving faculty for this reason. Where universities didreceive income from licensing of IP, the rules varied widely evenwithin institutions. Academics at the University of Cambridgecould expect to receive between 15 percent and 70 percentdepending on the level of net income received by the university;different classes of employees had different rights in their IP andIP from different income streams was treated differently.

4.4.3 Companies, technology transfer and IP

Company founders and managers that we interviewed in bothcountries raised several kinds of problems related to thecommercialisation process. One involved the ownership of theintellectual property by universities; another concerned theactual procedures and processes involved in a company’ssecuring rights to the IP; a third issue was the price.

Start-up companies in both countries reported that ownershipof the IP by a research institution was problematic. Companyinvestors were reluctant to finance ventures where the companydid not have secure IP control.A second problem related to thebureaucratic and time-consuming negotiations between thecompany founders, investors and technology-transfer offices.Again, this was seen as problematic in both countries.Companies noted that technology transfer offices with whichthey dealt, and MIT was cited as an exception, were staffed withpeople that lacked business experience, and our intervieweesfelt that university-owned IP was under-developed and over-valued.An analogy was often made with the IP being a seed thatwas not worth anything until it had been nurtured anddeveloped into a commercial, income-generating product.

As a consequence, company managers interviewed reportedefforts to avoid university-owned IP at the start. As companiesgrew, those that began based on specific university-owned IPoften abandoned it as the company diversified its product line.And companies that used university-owned IP as part of theirbusiness strategies did so without regard to the location of theuniversity.

In practice, university-owned IP represented a small proportionof local patents, and spinout companies were a small proportion ofthe university-related technology companies. For example, MITwas generally acknowledged to be the biggest technology enginearound, and its impacts were well documented in the 1997 Bankof Boston study.Yet most patents in Massachusetts are issued toindividuals and companies, not to KBIs. In 1999, the patent office

issued about 3,600 patents in the state, of which 16 percentwent to all of its universities. Another 5 percent went tohospitals. In San Diego,Walshok at UCSD pointed out that verylittle of the research done at UCSD resulted in specifictechnology out of the university. Rather, the professor’s role isone of an intellectual hub. The university creates a platformwhere interactions can take place. In the UK, Hughes (2003)concluded that “spinouts were an important but small and variablepart of the overall range of ways in which the industrialisation ofscientific advances can occur.”

4.4.4 Connecting IP to place

Yet (perhaps) because of the success of institutions such as MITin generating and licensing university technology, universities andregional leaders remained interested in this process as animportant policy lever. KBIs have some control over intellectualproperty arrangements, and if they manage the process well,they can generate revenues for the institution.

MIT made no effort to affect the locational decisions of itslicensees, but analysis demonstrated that many licensees end upat least within reach of MIT. According to the TLO, about onethird of the companies licensing its technology were locatedwithin Massachusetts, most in the eastern part of the state.About one third of the licenses went to start-ups, one third tocompanies with less than 500 employees, and one third to largecompanies. According to one MIT professor active in thedevelopment of biotech IP, there were three types of companiesaround the university. These were large fully integratedcompanies that wanted ideas and people; small companies withan MIT license and who needed contact with the inventors tocomplete the technology transfer ; and small companies withoutMIT licenses who wanted access to people.Thus without explicitlocal programmes, MIT contributed to local innovation.

North Carolina State took a more pro-active approach. In aneffort to increase the odds that commercialisation would occurlocally, the technology transfer office of NC State has been veryopen to commercialising intellectual property by taking an equityposition in a local start-up, as opposed to receiving royaltypayments. But it also had the flexibility to negotiate lower royaltyrates for firms that agreed to commercialise their IP locally (anda penalty clause discouraged out-migration of the enterprise).NC State has also established PATTI (Patenting and TechnologyTransfer Initiative) that is the first attempt by a University toattract intellectual property donations from firms by offering taxbreaks in return.The initiative aimed to tie such donations to acore research strength of the University and PATTI was affiliatedwith the Centre for Environmentally Responsible Solvents andProcesses focused on CO2 technology.

4.5 Facilities and incubation

4.5.1 Incubation

Universities incubated companies using laboratories and formalincubators. New firms requiring specialised equipment andinterfacing across disciplines or requiring interdisciplinaryresearch capabilities, such as those in the biotech industry, weremore reliant on the presence of universities and researchcentres than other firms. Even for these firms, however, theconnection to the KBI became less important as the companyand technology centre matured. Generally, as companies aged,their R&D became more internalised and they established linkswith a broader range of research institutes, often located outsidethe region.

Some universities and research institutes in the study areasprovided direct support for start-up and early stage companiesthrough incubator facilities that included premises and supportservices for new ventures. In each of the UK study areas,universities provided formal incubator facilities. For example theSt Johns College Innovation Centre in Cambridge providesincubator space and business advice to University spinouts.

The Scottish Microelectronics Centre, and the EdinburghTechnology Transfer Centre are both on the campus of theUniversity of Edinburgh. Luton hosts the Dunstable InnovationPark and in Cambridgeshire there is Babraham Bioconcepts forstart-ups and Babraham Bioincubator for companies withbetween 20 and 50 employees. The Research Triangle VentureCentre is based on the NC State Centennial Campus.The TuftsCummings School has an on campus incubator.

On the other hand, MIT provided no office space or laboratoriesto companies,11 but it did have what it termed a ‘virtual incubator’facility around its campus, space where entrepreneurs can locatecompanies and have access to a full range of business supportfacilities.

4.5.2 Research parks and conventional real estate

KBIs also participated in the conventional real estate market,providing space for growing and mature technology companies.The University Park at MIT developed by Forest CityCommercial began in the 1960s with land acquisition by MIT anda recommendation by its treasurer that it consider directdevelopment of this land. MIT assembled the land “to protect itsflanks” from adverse development and to anticipate futuregrowth by the Institute. It subsequently chose to develop theland in partnership with a developer able to take a long view.MIT was also actively engaged in real estate investment. TheInstitute’s endowment and its pension funds own, as passiveinvestors, properties around the world. MIT is an active investorin Cambridge Massachusetts. According to its director of real

estate, MIT has chosen to invest in Cambridge becauseinnovation economies have the best potential for economicgrowth and the Institute believes that Cambridge is one of thebest places for innovation to occur.Ten to fifteen percent of MITsportfolio is now in real estate. A recent, and well-publicisedinvestment, is Technology Square. When Lever Bros., the soapcompany, vacated the site in the 1950s the City of Cambridgeasked for MIT’s help in redeveloping the site. MIT provided thefinancing and partnered to develop commercial office space,ultimately leased by MIT researchers and companies such asIBM. MIT sold the property in 1973 and repurchased it in 2001.It is now part of MIT’s investment portfolio, and its major tenantis Novartis, the Swiss pharmaceutical company, which hasrelocated its corporate research headquarters from Switzerlandto Cambridge Mass. Novartis wanted access to scientific talent,and its presence further strengthens Kendall Square ‘as being theepicentre of the biotech world.’

In Worcester, the expectation some twenty years ago was thatthe development of real estate adjacent to the University ofMassachusetts Medical School would attract biomedical researchfirms, and that manufacturing activity could be co-located in theregion, a former heavy manufacturing centre. The Tufts CummingsSchool of Veterinary Medicine made a more pro-active decision, tolink research collaboration with real estate development. Itsstrategy recognised that as companies develop, their real estateneeds change as do the types of collaborative links with theUniversity. In addition to its incubator, the school was developing abiomedical science park to house, among others, firms thatoutgrow the incubator. Other traditional science parks includethe Cambridge Science Park and the Edinburgh Technopole12.

4.5.3 Mixed-use developments

More recently, KBIs in both countries have helped in planning orin development of mixed use projects that build in KBI-companyinteractions.Thus, NCSU has been very pro-active for more thantwo decades in building research centres involving industry as asubstantive partner and over 40 industrially focused centresnow host some 300 companies. Its most visionary concept wasthe Centennial Campus that has become a unique 1,334 acreacademic-industry technopole that integrates academic andindustrial research facilities, leisure facilities, hotels andconference facilities. Uses in individual buildings were mixed,including, for example, national research operations, classroom,and private company space. The Centennial Campus hosteduniversity operations including the graduate school ofengineering as well as more than 70 companies and governmentagencies with ties to the University. UCSD was planning a newmixed-use science park on 30 acres of land focused very muchon research collaboration that will provide premises for bothresearch institutes and companies. The University will providethe ground leases. The development provided no speculativepremises and around $6m has been budgeted for infrastructure;funding the infrastructure was seen as the major challenge.


11Nor does Duke University, a private university in Research Triangle, provide space to companies.12 In 2003, Novartis anticipated that it would grow to 750,000 square feet and 1,000 employees in fouryears... (The move to the US was stimulated by the $20billion research budget of the national Institute ofHealth, which compares with European research budgets of less than $2billion. Source?)


4.6 KBIs and place

4.6.1 Branding

World-class universities and research institutions played keyroles in establishing a brand for an area, important in attractingcompanies, students and prospective employees. Companiesvalued the association with a brand of excellence and being seenat the centre of an industry with related institutions andrenowned companies. As one respondent from Massachusettsput it, “There is a halo effect on companies if they locate nearbrand-name institutions like Oxford or MIT”. The researchinstitution was usually the source of the brand, which was thenmarketed by local leaders (See Chapter 6). The University ofCambridge, UK is the basis of the Cambridge brand withcompanies identifying with a desire to have a Cambridgepostcode. The University of North Carolina, North CarolinaState University and Duke University are the three brand focalpoints of the Research Triangle. The MIT features heavily in theCambridge MA brand, and in San Diego it is San Diego StateUniversity, University of California – San Diego,The Salk Institute,and the Scripps Research Institute. Similarly, two universities inDundee were a good example of how KBIs could establishthemselves as being world-class in their fields, and BioDundee israpidly replacing that of an old declining industrial city based onjute. Notwithstanding this, the universities in Scotland do notappear to play such a strong individual branding role in markingtheir regions. Rather Scotland as a whole, with its numerousworld-class universities, is associated with engineering andscientific excellence, and regional leaders have created SmartSuccessful Scotland as a broader brand.

4.6.2 Regional partnerships and leadership

Universities and research institutions were often significantregional entities in their own right. In Cambridge MA, the largestemployers by far were Harvard and MIT. In Worcester, thelargest employer was the University of Massachusetts MedicalSchool. These institutions were key participants in a number ofmulti-institutional partnerships to advance the development oftheir regions. Examples in the US included the MassachusettsTechnology Collaborative, which included the deans of all thestate’s engineering schools; the Massachusetts BiotechnologyInitiative, which included the leaders of Worcester PolytechnicInstitute, the University of Massachusetts Medical School, and theTufts Cummings School of Veterinary Medicine in the Worcesterarea, and the Research Triangle Foundation, whose boardincludes the three research universities which are also thebeneficiaries of the foundation. Partnerships in the UK in whichuniversities played key roles include the Dundee Partnership,BioDundee, the Hertfordshire Prosperity Forum, and theCambridge Partnership.

Finally, the key players in these institutions often providedimportant leadership in their regions analogous to theleadership that captains of industry provided in the industrial era.Such leaders included Mollie Broad, president of the NorthCarolina university system; Jim Hunt, former governor of NorthCarolina; Frank Loew, former dean of the Tufts University Schoolof Veterinary Medicine; Charles Vest, former president of MIT;Alec Broers, former vice chancellor of the University ofCambridge; and Richard Atkinson, former chancellor of theUniversity of California at San Diego. We discuss the issue ofregional leadership in more detail in Chapter 7.

4.6.3 Using KBIs to create place

In our study, strategies to create and build places fromuniversities and research centres were in part connected to thenature of the KBI. Institutions such as MIT and the University ofCambridge played on the global stage, yet each had a clear localimpact. Institutions in both countries assumed a more activistrole in local development, but more so in the US than the UK.One reason may be that, in the US, state-based universitysystems, plus the much longer tradition of academic-industrycollaboration, facilitated an activist role by US KBIs comparedwith those in the UK. UK activism was complicated by the view,widely held until relatively recently, that the science and researchbase is primarily a national asset supporting the competitivenessand innovation of the business community nationally rather thanlocally or regionally.Another reason might be the perceptions ofthe role of KBIs by other local stakeholders, including inparticular local and regional policy makers. In the US study areas,there was a greater recognition by university leaders of themutual benefits to be derived from their engagement insupporting the growth of the local high-technology community.Substantial research funding flowed from industry to a numberof universities through sponsored research programmes.Encouraging local innovation through the exploitation oftechnologies developed in the universities provided ajustification for local/regional public sector support. Helpingretain highly skilled PhDs in the local economy providedopportunities for ‘reverse’ technology transfer and a source ofconsulting and collaborative research opportunities. Localeconomic growth and concomitant population growthgenerated more demand for student places.Although for the UKcase studies some of these benefits were recognised, there is notthe same understanding of vested self-interest in the fortunes ofthe local economy by the local universities and researchinstitutes.

It is also the case that in the UK there were few incentives forthe university to encourage commitment and involvement in thelocal economy and this typically limited technology on how toexploit local economic assets. University budgets in the UK arecentrally rather than locally or regionally decided.

Interestingly many UK academics made the point that theirpromotion and the financial well-being of their institutiondepended on doing well in the Research Assessment Exercise.This stressed the importance of publishing research in academicjournals rather than evidence of applied research endeavourtargeted to assist and facilitate local economic development.

However, the growing importance given by policy makers tolocalised clusters and the ‘technology economy’ in deliveringinnovation; and the pressures on all regions to improve theircompetitiveness, has given much more emphasis to the role ofuniversities and research institutes in local and regionalinnovation systems.

4.7 Lessons

A central message emerged and it was the importance ofinvesting in systemic academic excellence. High quality teachingand research enhanced the reputation of the institution – andthe place. It attracted the brightest students, and in turn releasedthem into the region when they had finished their studies. It wasessential to engage in the kind of activism that ultimatelyincreased research funding.

It was important to ensure that students had the kind ofeducation that made them flexible, able to take on new andnovel problems, and that provided them with the research andlaboratory skills appropriate to their field. It was clear thatgraduates should not have to get basic research training afterthey finished their studies. (Nor should the KBI have to providecompany-specific training as part of its core programme.)

A key goal was to encourage collaboration by the KBIs withcompanies in their research.This helped to ensure that studentshad the relevant research and laboratory skills, and broadenedthe funding base for research. Since most companies did notfund such research in expectation of usable proprietarytechnology, it was desirable to manage the research in as open away as possible, in order to maximise the flow of ideas.

It was desirable to take advantage of all the opportunitiesavailable to open up the KBI to business since this encouragedmany points of contact among companies, faculty and students.These interactions in turn can generate serendipitous results.Ways of managing these interactions have to evolve in a mannerthat is appropriate to the individual situation. Extending theuniversity’s resources to address the continuing education needsof former graduates and businesses in the region appeared to beone way by which revenue and business contacts could beincreased with the KBI.

Maximising the overall commercialisation potential of technologywas assisted by KBIs helping their staff to understand howcompanies use IP and to ensure that IP programmes weredesigned to optimise commercialisation opportunities, ratherthan concentrating on the shorter term goal of revenuemaximisation for the institution concerned.This is an importantarea for further research.

Facilitating connections between academics, entrepreneurs, andinvestors was important in maximising the opportunities forbusiness development. However, this did not mean that KBIsshould try to be all things to all people and recruit staffaccordingly. The best business advisors, patent attorneys, andother specialists were usually to be found outside the academicinstitution and it was desirable to find ways of referring peopleto the best.

KBIs are landed institutions, and it was appropriate for them touse these resources to their, and their regions’, advantage. If thiswas to be done successfully it required a programmaticapproach that reinforced the goals of the institution whilstrecognising the requirements of the market.

Finally, KBIs were key players in regions, because of their size,their status as major employers, and their long time horizon. Assuch, KBI leaders should engage in the kind of civic leadershipappropriate to this significant institutional position.



5.1 Introduction

The availability and characteristics of financing influenced howtechnology-based companies developed in a particular area.Different kinds of funding were essential at different stages oftechnology development, from the germination of an idea in aninventor’s basement or university research lab, to theestablishment of a successful line of products. Companies atdifferent stages of development had different financing needs.Finance was also a key component of place-building, frominvestment in the facilities that allowed universities and researchcentres to thrive, to the creation of public infrastructure.

The kinds of financing provided in the places we studied relatedto the area’s prevailing economic development policy. In general,policy makers in high tech centres sought a mix of indigenoustechnology-based firms, research and development operations,and headquarters functions of large companies. Such policyobjectives dictated financing policies focused on meeting thecapital needs of start-up and young companies; promoting thecommercialisation of new technologies; as well as facilitating thedevelopment of appropriate sites for larger companies. Thisapproach to economic development differed from efforts in the

1960s and 1970s to recruit larger companies and to encouragethem to make a major investment in a region. Such efforts wereassociated with financial incentives aimed at lowering the cost ofdoing business in a particular region. Policy makers had sincefound that when companies made investments based on costs,it was difficult to hold those companies in place in the face ofcompetition from even lower cost areas.

We found important connections between the availability offinancing and a company’s location in an enterprising place. First,high-tech companies did not necessarily relocate from place toplace in response to the availability of funds. However, theavailability of the right kind of financing made it possible forcompanies to start, to develop, and to grow past key thresholds,and to thrive in a place. Policy makers in turn tried to ensure thatthe right kind and mix of financial resources were available.Hence the concern with whether a place has a critical mass ofventure capitalists, the invention of “ignition grants” to boost thedevelopment of ideas developed in academic labs that arecommercial, and the creation of “proof of concept” and relatedtechnology development grants.

5. Financing the enterprise

Knowledge System

Built Environment

Finance System

Business System

We saw significant efforts to create appropriate regional financialsystems to support emerging and young companies and toensure that they developed in the home area. We sawconcerted local efforts to maximise the flow of genericallyavailable financial resources to a particular region; and we saw aproliferation of programmes to match entrepreneurs to ideasand resources.

People we interviewed identified two financing targetsassociated with the growth and development of high-techcompanies. One concerned the development andcommercialisation of new technologies. Of particular interestwere technologies that originated in research institutions andmoved into the business realm. Figure 5.1 illustrates this financingtarget and the two divergent funding streams that supported it.

Figure 5.1: Financing the development oftechnology13

Respondents identified this movement across the boundarybetween the research institution and the market as a specialproblem. One observer characterised this as the ‘valley of death’for new technologies.

The second and related financing target was high-technologycompanies themselves. Figure 5.2 below illustrates the range ofactivities that required financing, many occurring well before thecompany had positive net revenues to apply to the costs.

Figure 5.2: Development expenditures andcompany revenues

Respondents identified several key problems. The first involvedthe availability of funds for very early stage conceptdevelopment, before traditional venture capital investment tookplace. Others concerned the need by fledgling companies whenthey reached critical thresholds. Such thresholds coincided withthe exit of venture capitalists, an acquisition of another company,or a need to begin product manufacturing. Each transition,especially if associated with a financing “gap,” presented a place-related risk: that the company would not get off the ground orthat the company would relocate to another area. Thus somerespondents suggested the need for an ‘escalator’ of fundingsources, each laying the base for and feeding into the next.

On the subject of manufacturing, everywhere we heard debateabout whether it was worth the effort to try to keepmanufacturing in a high tech centre.Yet we heard companies saythat they wanted to keep at least the initial stages ofmanufacturing close to their R&D operations, if they could onlymake it work financially.

In this Chapter we explore the relationships between finance,the stages of development of ideas and companies, and theirconnections to place, policy, and sources of technology revealedin our business survey and site interviews. In the survey, weasked companies to describe the role of finance in theirbusinesses and decisions about business location. In ourinterviews we explored the role of finance in more detail.


Research resources

Marketing & Distribution

Production

Pilot Manufacturing

Marketing Strategy

Product Development

Mar

ket

retu

rns

Time

Product Concepts

Commercialisationresources

Technology development

Discovery Productconcept

Productdevelopment

Commercialisation

13 Adapted from a presentation by Stephen Markham, NCSU Centre for Innovation Management studies,February 10, 2003.


5.2 Summary of survey findings

Companies started where they did without much regard for theavailability of finance, whether specialised finance such as VCfunding or government grants. However, company managersreported that they considered the availability of financing insubsequent locational decisions. For start-ups, the availability ofangel and venture capital finance was the second mostimportant factor in the company’s decision to stay where it was(proximity to research institutions to use facilities was first).Thatis, it kept them in place. Once companies were in productionand selling their first product, however, the availability of angeland venture capital finance in a particular place became muchless important to their decision to remain there. Targetedgovernment assistance became more important to the decisionto remain.

The financing needs of companies in our survey also variedconsiderably depending on their size and stage of development.For start-ups, owner equity and family and friends were the twomost important sources of financing. Other important sourceswere earning, early stage and technology grants, and venturecapital. For young companies, producing and selling their firstproducts, and medium sized companies, the most importantsources had shifted to company earnings and owner equity.Young companies and medium sized companies continued torely on family and friends, loans, including those with smallbusiness loan guarantees, and technology grants. Medium sizedcompanies also relied on grants targeted to particulargeographic areas.

The following sections describe in more detail theinterconnections between finance, company development, place,and policy revealed by the interviews.

5.3 Investing in Institutions andInfrastructure

5.3.1 Overview

In this section we discuss investments in research and academicinstitutions from regional systems to universities and researchcentres, as well as infrastructure such as premises, roads, and thelike.The chapter focuses on the financial tools, while Chapters 4and 6 examine the financial targets such as knowledge-basedinstitutions and place-specific infrastructure systems.

5.3.2 Investment in research institutions

The big story was that aggregate investment in research wasitself a key to place making, according to almost all people weinterviewed.This occurred in two ways. First, the flow of nationalresearch money to a place was a key indicator of the potentialpower of that place and its store of technology. Second, ourinterviewees cited the role and timing of investment ininstitutional capital, land and buildings.

Local leaders both tracked the flow of national research fundsand sought to influence these flows. To those interested inbuilding biotechnology centres, the National Institutes of Healthwere the key funds to watch. In its study of US biotech centres(Cortright and Mayer 2002), the Brookings Institution foundNational Institutes of Health fund flows to be a key measure ofthe strength of biotechnology centres in the US. Leaders in eachof the US study areas both quoted the Brookings study and usedNIH flows in benchmarking their regions against othersnationwide.They also pursued strategies to maximise this flow.(See Chapter 4, Creating the Innovation Network.)

When asked to account for the growth of the Boston regionafter 1990, when analysts such as Saxenian (1994) and Castellsand Hall (1994) were writing of the region as a technology has-been, one interviewee suggested looking at another investmentindicator: institutional investment. He pointed out that if onelooked at the cycles of building construction in the area overtime, commercial construction had responded to economiccycles. Investment in public educational facilities also followedeconomic cycles, since they were related to state sales andincome tax revenues. However, private institutional constructionat the Boston hospitals, medical schools, Harvard, MIT, andrelated institutions, had increased steadily through

Figure 5.3: Institutional versus commercialinvestment in Boston area 1988to 2003

Institutional Construction

Commercial Construction

Economic Cycles in Boston over Time

Invsetment in N

ew B

uildings

recent downturns, and this had prepared the region for growthin the late 1990s. Institutional construction continued throughthe post 2000 downturn. Figure 5.3 illustrates this process.

5.3.3 Investment in the regional education system

Investment in the education system was another importantregional financial policy decision, especially in the US, since publiceducation was largely locally financed.This was the system thatfed most regional higher education, except for institutions ofnational and international stature that draw from wider areas. Anumber of people we interviewed in the US stressed theimportance of educational quality from kindergarten to 12thgrade level, as critical to maintaining a high quality workforce andas a quality of life issue for families. In North Carolina, leadershave chosen to invest heavily in the state’s educational systemover a period of years and as recently as 2000 had secured voterapproval for major new investments, including investments inhigher education facilities. In 2003 the state ranked fourth in thenation in per pupil spending on education. This was despitesignificant fiscal pressures on the state budget. Intervieweespointed to this commitment as a significant factor in the successover time of the Research Triangle as a high tech centre.

A counter example is California, which in 1978 passed areferendum limiting the amount of money cities and townscould raise using property taxes, which in part fund publiceducation. According to one of our interviewees in California,the state was a model for public education in the 1960s. At thetime of this study state per pupil spending in California wasamong the lowest in the nation. Massachusetts passed similarlegislation in the early 1980s, in part as the result of efforts by agroup of large high tech companies, the High-Tech Council.Thegroup was trying to counter the state’s reputation for being acostly place to do business. A number of interviewees inCalifornia and Massachusetts noted that the lack of investmentin public education was likely to have long-term impacts in thetwo states, despite the quality of the higher education systems inthe two states.

5.3.4 Infrastructure and public-purpose debt

Companies not only needed operating capital, they neededfacilities and equipment, and enterprising places needed roadsand other infrastructure. In both the US and the UK (but moreso in the former), the financing for these assets came frompublic-purpose bonds. Bonds capitalised venture capital funds (asin the case of the Massachusetts Technical DevelopmentCorporation). Bonds provided resources for facilities andequipment loans offered by the Massachusetts DevelopmentAgency. In this case, the financing package made available by MassDevelopment to a growing biotechnology company inMassachusetts kept this “teenaged company” in the state and

helped it to finance a pilot manufacturing plant there. Bondsfinanced public education improvements in North Carolina. InDurham North Carolina, the city and county issued bonds tofinance structured parking associated with the conversion of aformer American Tobacco plant to a mixed-use project designedto appeal to high-technology workers in the Triangle. In the UK,the University of Hertfordshire has expanded its campus bybuilding a mixed-use commercial, residential, and sports-relatedcomplex. The university has financed the development throughasset sales and reserves and a bond that repaid by developmentrevenues.

Public-purpose bonds have also been used to finance muchlarger infrastructure projects, especially in Massachusetts.Projects include the state’s share of Boston’s Central Artery/Third Harbour Tunnel project, the cleanup of Boston Harbour,and renovations at Logan Airport.

We suggest that the area of innovative bond financing is one forfurther exploration.

5.4 Investing in ideas and technology

This section covers investments intended to advance thedevelopment of marketable technologies. This includesinvestment in ideas before there are companies, as well asawards made to companies to facilitate technologydevelopment. As noted in the introduction, there were inherentdifficulties in funding concept development. Company executiveswe interviewed praised technology grants made to companies,including Small Business Innovation Research (SBIR) grants in theUS and SMART and SPUR grants in the UK, and others reportedwide use of these grants by start-ups and other companies. Oneinterviewee in Worcester noted that SBIRs are the biggesteconomic engine around, and a company founder reported thatthe “SBIR grant kept the company alive.”

5.4.1 University-based proof of concept financing

One funding stream involved investment in ideas that hadcommercial value but that were too embryonic for companiesto use. Generally known as “proof of concept” funding, suchinvestment was identified as important to expand the poolof new ideas and technologies that may have furthercommercialisation potential. The funding was a mechanism forgetting ideas off the shelves and into the market, even if manywere later found not to be viable. It was intended to helpresearch institutes to export their ideas and inventions from thelab to the global marketplace and to support the developmentof early stage ideas, which have reached patent level. Someinterviewees argued that small amounts should be



advanced as widely as possible to, firstly, filter ideas out ofexisting research programmes and secondly, to capture as manyideas and possibilities as possible. By definition, most of the ideasmight turn out not to be feasible, but if investments were small,one could “test and fail” cheaply. Interviewees lamented thatsuch funding was in short supply and difficult to access.

MIT created the Deshpande Centre in the School of Engineeringin 2002 to address the gap in getting research from engineeringlabs to the marketplace.

MIT’s Deshpande Centre

Origins & Aims: MIT’s Deshpande Centre was launched with a privategift of $20 million from the founder of a major electronics company.A three-person “steering committee” guides the operation, supportedby a small professional staff.The centre identifies and provides grants topromising technologies that could benefit from “proof-of-concept”funding. The centre supports research that crosses the boundaries ofchemistry, biology, and engineering. The Centre’s director is an MITgraduate who started and sold several companies.

How it operates: The Deshpande Centre has introduced a proof ofconcept funding programme, called the “Ignition Grants” as well asfollow-on funds for product development. These programmes supportthe development of specific technologies and their movement towardcommercial markets. However, while funding specific research to marketinitiatives is a significant part of the centre’s programme, it is seen bysome as less important than the centre’s efforts to connect the venturecapital community and entrepreneurs to the research community. Thecentre provides “structured networking,” for MIT graduate students; itsponsors forums that showcase MIT technology; and it sponsors otherevents focused not on technology but on “market opportunities.”Theseactivities provide participants with access to the perspectives of playersfrom other sectors (windows) and forums through which individuals canmeet each other to discuss specific mutual interests.

The Edinburgh Technology Fund in Scotland has a comparablemission.

Edinburgh Technology Fund

Origin and aims: The Edinburgh Technology Fund (ETF) was establishedin 1999 by a consortium comprising the University of Edinburgh, TheMoredun Foundation, The Roslin Institute, The UK AstronomyTechnology Centre, and the Edinburgh station of the British GeologicalSurvey. It was set up to address a gap in funding for demonstrating thecommercial value of university research discoveries.The fund received atotal of £3.75 million from the University Challenge Fund, the Universityof Edinburgh, Lothian and Edinburgh Enterprise Ltd., City of EdinburghCouncil and Midlothian Council.The funds support the development ofnew commercial initiatives by universities, bringing them to the pointwhere the venture capital market would take them up. How it operates:Consortium members submit proposals to the ETF on ways to improvethe commercial prospects of relevant projects.There are three levels offunding available. The first phase involves relatively limited amounts offunding (£5 000 - £10 000), with greater amounts available in phase 2and 3.The closer a project is to commercialisation, the greater the levelof matching funding the project sponsors are expected to contribute;this is aimed at highlighting the need for commitment to thedevelopment and exploitation of the project. All awards made by ETFobligate the consortium members to actively pursue exploitation and toreturn to ETF a share of its commercial income, with levels of return beingset down on a case-by-case basis.

Academic-based, proof of concept funds in the UK werecriticised for often only being available to university-basedresearchers, start-ups and spinouts. And, as a result, manyinterviewees suggested that similar funding initiatives be madeavailable to corporate and other non-academic start-ups andspinouts. Another criticism was that many interviewees felt thatthe proof of concept funds were being seen as research grantsrather than commercialisation tools.This resulted in them beingover-subscribed and many commercially relevant ideas not beingfunded.

5.4.2 Technology grants to companies

Technology grants were widely used and identified as significantsources of capital for new companies. The primary programmeswere SBIR, SMART, and SPUR grants.

Small Business Innovation Research Grants (SBIR Grants)

Origin and aims: SBIR/SBTT is the largest source of early-stage technologyfinancing in the U.S.The Programme is designed to stimulate technologicalinnovation, increase private sector commercialisation of federal R&D,increase small business participation in federally funded R&D and tofoster participation by minority and disadvantaged firms in technologicalinnovation. Federal agencies with extramural R&D budgets over $100million are required to administer SBIR programmes using an annual set-aside of 2.5%.Total Federal funding in FY 2003 was $1.6 billion. In 2003the main contributing departments to the SBIR/STTR programmes werethe Department of Defence (47.6%), NASA (7%), Department ofEnergy (6%), National Science Foundation (4.9%) and the Departmentof Health & Human Services (31.3).Through 2003 over $10 billion hadbeen awarded by the SBIR programme to various small businesses.

How it operates: The programme targets US for profit firms that have500 or fewer employees. Companies apply first for a six-month Phase 1award of up to $100,000 to test the scientific, technical, and commercialmerit and feasibility of a particular concept. If Phase I proves successful,the company may be invited to apply for a two-year Phase II award ofup to $750,000 to further develop the concept, usually to the prototypestage. Proposals are judged competitively on the basis of scientific,technical, and commercial merit. Following completion of Phase II, smallcompanies are expected to obtain funding from the private sectorand/or non-SBIR/SBTT government sources (in "Phase III") to developthe concept into a product for sale in private sector and/or militarymarkets. During Phase I, a minimum of 2/3 of the effort must beperformed by the proposing firm, a minimum of 1/2 of the effort inPhase II, and the Principal Investigator must spend more than 1/2 of thetime employed by the proposing firm. Every year, each contributingdepartment identifies research topics. For example, the Department ofthe Energy’s annual solicitation contains topics in technical areas such asbasic energy sciences, biological and environmental research, high energyand nuclear physics, fusion energy sciences, advanced scientific andcomputational research, energy efficiency and renewable energy, nuclearenergy, fossil energy, environmental management, and non-proliferationand national security. The intellectual property generated through theuse of the SBIR funds usually rests with the applicant company with thegovernment department having a royalty free licence to use the IP.Publication of the research results can only be done with permissionfrom the sponsoring department.

Note: SBTT is an acronym for Small Business Technology Transfer.

Interviewees from the US regularly noted the positive role thatSBIR Phase I grant funding played in the success of their businesses.One interviewee explained that because the application waspeer-reviewed, he was able to use the fundable score and positivecomments provided by the reviewers (who thoroughly understoodthe science and the diseases the business hopes to help ameliorate),to convince the NIH administrators to fund a higher than usualamount, and to reassure the accredited investors that the businesswas a solid investment.He was also able to use the grant to leverageother funds.

SMART: SCOTLAND

Origin and aims: SMART: SCOTLAND awards are aimed at creatingnew innovative companies and helping existing companies improve theircompetitiveness by developing new products and processes to thebenefit of the national economy. They originated from the UK SMART(an acronym for Small Firms Merit Award for Research and Technology)scheme, which was piloted in 1986 and fully implemented in 1988.TheUK scheme evolved over the years to incorporate, and merge with,other similar schemes, but its objectives remained broadly the same.With devolution, the responsibility for the SMART awards in Scotlandshifted to the Scottish Executive and became known as SMART:SCOTLAND.

How it operates: The award is used to carry out technical andcommercial feasibility studies lasting 6-18 months. Companies with lessthan 50 employees that have either an annual turnover not exceedingEURO 7 million or a balance sheet not exceeding EURO 5 million areeligible for the award. They are awarded on a competitive basis and,although entries can be submitted at any time, judging takes place onthree occasions per year. Support is made available at 75% of the eligibleproject costs up to a maximum of £50 000. One third is paid up frontto the winners and the remainder is normally paid quarterly againstclaims submitted. Applicants need to show, inter alia, that the proposedproject will:1. Represent a significant technological advance for the UK industry or

sector.2. Significant technical risks are associated with the project.3.The applicant owns, or has the rights to exploit, the intellectual

property needed to undertake the project, the applicant will own allintellectual property arising from projects supported by SMART:SCOTLAND

4.The commercial prospects for the end product or process are good5. Realistic and effective routes have been identified for realising the

commercial potential for the product or process.6.The necessary management and technical expertise and resources are

in place to complete the project.7. Both the project and the business are financially viable.

The UK Government undertook an evaluation of the SMART awards in2001, showing that the scheme had for the most part been verysuccessful. The report did however recommend a number of changesand the programme in England was formally closed and replaced by theGrant for Research and Development scheme in 2003.

SMART: SCOTLAND awards were viewed very positively as animportant source of early stage funding. Interviewees said theawards forced young entrepreneurs to be professional; they gavecredibility to entrepreneurs; and they were relatively flexible.Because the awards were allocated on a match basis, private-sector parties were responsible for doing the necessary duediligence.This permitted the allocation of funds on a simple andnon-bureaucratic basis. Notwithstanding this, some interviewee’s

criticised early-stage funds such as the Smart Awards based onthe difficulty many early-stage entrepreneurs had in securingmatching funds. Furthermore, some interviewees stated that theawards were not integrated with other early-stage funding initiativesand the funding cycles/deadlines created problems. Lastly, it was feltthat the funds concentrated too heavily on the development ofthe technology and not enough funding was allocated to marketresearch and the development of the company itself.

SPUR Grants

Origin and aims: SPUR is an R&D support scheme whose aim is to helpsmall and medium-sized businesses improve their competitiveness bydeveloping new products and processes to the benefit of the nationaleconomy.

How it operates: The scheme provides grants on a discretionary, non-competitive basis for development up to pre-production prototypestage of a new product or process that involves a significanttechnological advance. Companies with less than 250 employees thathave either an annual turnover not exceeding EURO 40 million or abalance sheet not exceeding EURO 27 million are eligible for the award.A fixed grant level of 35% of eligible costs, up to a maximum grant of£150,000 may be offered in arrears to projects of between six monthsand three years in duration, which involve eligible projects costs of atleast £75,000. Applications can be submitted, and are appraised, on anon-going basis. Inter alia, applicants need to show that the proposedproject will:1. Represent a significant technological advance for the UK industry or

sector concerned.2. Significant technical risks are associated with the project.3.The applicant owns, or have the rights to exploit, the intellectual

property needed to undertake the project, the applicant will own allintellectual property arising from projects supported by SPUR andSPURPLUS

4.T he commercial prospects for the end product or process are good5. Realistic and effective routes have been identified for realising the

commercial potential for the product or process.6.The necessary management and technical expertise and resources are

in place to complete the project.7. Both the project and the business are financially viable.

SPURPLUS GrantsOrigin and aims: In addition to SPUR, a limited number of SPURPLUS

grants of up to £500,000 at 35% of eligible costs are available to supportthe development up to pre-production prototype stage of world-beating products and processes that demand particularly expensiveleading edge technology.

How it operates: Companies must have less than 250 employees andprojects must cost at least £1 million and be between 6 months and 3years in duration. SPURPLUS applications are adjudicated using the samecriteria as those used to adjudicate SMART awards and SPUR grants.Neither SMART awards nor SPUR and SPURPLUS grants can be used tofund defence-related research.

SPUR and SPURPLUS R&D grants encouraged existing companies toenhance their products and processes through innovation andhave helped to facilitate the formation of new leading edgebusinesses. According to interviewees in Scotland, theprogrammes have been particularly effective in encouragingcommercialisation of Scotland’s science base.



5.5 Investing in company development

5.5.1 Overview

In addition to using the technology grants discussed above,executives of early stage companies we interviewed patchedtogether financing from an assortment of other sources: loansfrom family and friends as well as their in-kind contributions. Asthe president of a five year-old biotech start up in Massachusettsnoted:“I married well: one brother-in-law renovates labs, and theother is a [local] realtor.”

Angel funds were important and positively regarded.Entrepreneurs saw angel investors as knowledgeable about thetechnology and more aligned with the entrepreneur thanventure capitalists. VC funds were controversial. Someentrepreneurs didn’t like them, and one we intervieweddescribed counselling he had received from a mentor about theimpact VC funds were likely to have on him and his company,preparing him for the loss of control! When entrepreneurscould, they avoided taking this money. If the company had asource of revenue, it was able to avoid taking VC money. Forexample, some entrepreneurs used their equipment to docontract manufacturing for other companies while theyundertook their own product development. In other cases, thecompany was able to produce and sell early products, althoughnot in volume.

Those who accepted VC financing reported that it caused thecompany to grow faster than it would have otherwise, in somecases too fast, encouraging a company to enter a new marketthat it then could not serve. It then had to withdraw from thatmarket and contract.

The exit strategies used by VCs had place-related implications,especially if it resulted in the acquisition of the company. Theacquiring company might or might not leave the core companyin place. In some cases, the acquiring company was buying theintellectual property, and the company needed to maintain closecontact with the inventors to complete the technology transferprocess. In this case, the company might remain in place. In othercases, companies were acquiring marketing, distribution, clinicaltrial, or manufacturing capacity. The result could be a companythat remained relatively small but had multiple locations.

Meanwhile, none of the medium sized companies we interviewed,except those that had resulted from the acquisition of severalfirms, had developed without resorting to VC funding in theirstart up phase. “Constraints on growth are capital, capital,capital,” said a young San Diego biotech entrepreneur.

5.5.2 Angel and venture capital funds

Angel and venture capital investors helped grow companies innumerous ways. They helped them take products to market,both by providing capital and by acting as mentors at both atechnical and business level, placing experienced business peopleon to the company board and appointing experienced, externalCEO’s.

The angel and venture capital investors that we interviewedconsistently reported the importance of being located in aparticular area and near their investments. As one venturecapitalist said, you need to be near investee companies to “growthe child.” “Near” in another case meant being able to visitinvestees three times per week. This was necessary becausetechnology-based activity was complicated and developed at arapid pace. Communication between investors andentrepreneurs was seen as critical. In addition, focusinginvestment in a geographical area allowed these investors to seeopportunities early on.That is, they relied on the local networkas a source of information. Similarly, they often invested in aparticular person “who can expand and develop the technologyor idea”, rather than a product, and they wanted to know whothey were investing in and be able to “keep an eye” on them.Furthermore, most investors wanted to have regular formal andinformal input into the running of the business and thereforeneeded to be close enough to attend board meetings, etc.Because the technology was often complex, entrepreneursneeded face-to-face interactions for them to sell their idea andfor investors to understand them.To help investors understandthe technology, they often relied on technical experts to advisethem. These advisors came from local research institutions andbusinesses. Investors also favoured having a management teamassist the entrepreneur to develop the technology and company.Investors reported that finding such management expertise wasvery difficult, making it important for the investor to know andhave contact with the local management pool. Similarly, investorssaid that trusting and having an on-going relationship with thelocal business support services (legal, accounting), greatlyassisted in the successful development of a young business.Finally, many venture capitalists wanted to tap into the local angelnetworks to get access to potential investments. Having a localpresence and face-to-face interaction greatly facilitated this.

Thus investors, as a general rule, tended to invest in proximategeographical regions. However, the decision-makers weinterviewed pointed out that in places with perceived limiteddeal flows, and in times of economic slow-downs, investorslooked beyond their immediate areas to fund appropriateventures. When these investors did venture further a field, theyusually entered into syndicates with investors from that regionso they could still achieve proximity benefits. Our intervieweesnoted that having a ‘local’ presence was not so much definedinterms of geography as in accessibility.A high proportion of the

Scottish investors pointed out that it was easier for them tostrike a deal in London, which is only an hour away by plane,than, for example, in Aberdeen.

Our interviewees noted that places that attracted retired CEO’sand serial entrepreneurs often became good pools of venturecapital and angel funding, and that quality of life factors played astrong role in attracting such people. Thus places with goodenvironments, such as San Diego as an example, often had adisproportionate supply of angel funding. Similarly, as oneinterviewee said: “Seattle has Microsoft, which created 250millionaires. Now they are venture capitalists.”

Meanwhile, venture capital is increasingly made-up of formallyconstituted companies that invest and manage funds pooledfrom institutional investors, the banking sector, universities andeven the public sector. The objective is generally to invest inabove risk companies with high growth potential that willprovide returns in excess of 30 percent.

The establishment of critical mass of investors appears to bevery important for two main reasons.The first is that if there area limited number of angel and venture capital investors, theytend to be thinly spread across technology types and cannotspecialise in any one sector or technology. This can result in apoor understanding of the market and the technology, which inturn can result in poor investments and consequently greaterrisk aversion. Secondly, having a limited number of investors maymean having a limited number of ‘lead investors’. If companiescannot secure a deal with one of these ‘lead investors’, it is verydifficult for them to convince lesser investors to invest in theircompany.These are the reasons interviewees cited constrainedangel and venture capital investment in Scotland.

Venture capitalists in the UK also complained about the limitedinvestment opportunities and lack of ‘deal flow’. Similarly, the lackof exit opportunities in the form of a company buy-out or apublic listing was often highlighted as a problem. Conversely, aUS policy maker with a background in business pointed out thatan advantage of having a mix of large and small companies in theBoston area was that the exit of venture capitalists did not meancompanies had to move. “We don’t want our hatchlings takenaway.”

Another issue identified by companies in both countries, butmore so in the UK, was the entry level of many venturecapitalists.Venture capital investment was high risk because it wasin an information poor environment involving new ideas andtechnologies with long time horizons in untested markets. As aresult, the screening and selection of deals is an intensive andexpensive process and post-investment monitoring andsupervision was required. It was therefore often not viable forinvestors to invest small sums of money into a company. In theUK, the entry level appeared to be between £2, 000, 000 and

£5, 000, 000, although some venture capitalists did indicate thatthey would invest less initially provided the total investmenteventually reached this level.Another reason for the low level ofearly stage investment by venture capitalists was the fact that therecent drop in the valuation of companies meant that it was noweasier to invest in the second and third round of companyfunding.This reduced the risk but not necessarily the return andconsequently investors were choosing to invest in the latterstages of a company’s development.

Growing companies often needed to raise substantial fundsbeyond that provided by venture capitalists, and the publicmarkets were an important source of new capital. This alsoprovides an exit point for venture capitalists. In the US, theNASDAQ was a key market for technology stocks, however,interviewees pointed out that the lack of a public market fortechnology stocks in the UK constrained the use of the initialpublic stock offering (IPO) as an exit strategy there.The ‘IT Bust’at the end of the 1990s cooled investor enthusiasm for high-techcompanies in the UK, and markets such as the AlternativeInvestment Market (AIM) in the UK do not play the same roleas NASDAQ does in the US. Furthermore, many intervieweesstated that the capital markets in the UK were undervaluingtechnology-based companies and thus limiting the ability ofcompanies to raise capital through these markets.The alternativeexit strategy for venture capitalists with investments in UK firmswas for the firm to be acquired at this point, often by out-of-country firms inclined to relocate the operation elsewhere.

5.5.3 Creating local venture funds

Policy makers in each country created regional venture funds forseveral reasons. One was the lack of a venture capitalcommunity in a particular area.The other was that the thresholdfor deals was too high to meet the needs of local companies. Forexample, in 1978 the Massachusetts legislature created theMassachusetts Technology Development Corporation, a publicpurpose venture capital fund, to address what was at that timea capital gap for start-up operations and early stage technologycompanies.The fund was capitalised with state bonds but is nowself-supporting.

Some UK policy makers have identified the high entry level forventure capital investment as a policy problem, and focused onthe ‘gap’ in early-stage funding for companies who need between£250, 000 and £2, 000, 000. In response to this, a number ofpublic venture funds have been, and continue to be established.For example, Scottish Enterprise established Scottish EquityPartners and then later privatised it, while some English RDAshave recently established such funds in the English regions.



Scottish Enterprise has sought to overcome the shortage ofcapital by establishing joint investment funds such as the ScottishCo-Investment Fund with angel investors and private venturecapitalists. Similarly, many banking institutions invest in hightechnology through venture capital funds such as East ScotlandInvestments.

The Scottish Co-Investment Fund

Origin and aims:The Scottish Co-Investment Fund (SCF) is a £20m fundrecently launched by Scottish Enterprise and financed by the ScottishExecutive to increase the amount of risk money invested in start-up andearly stage ambitious Scottish companies.

How it operates: The Scottish Co-Investment Fund invests in partnershipwith private sector investors - venture capital funds, business angels andbusiness angel syndicates.The fund can invest up to £500,000 in a singledeal. The private sector partner finds the investment opportunity,negotiates the investment deal and offers to invest their own equity cash.If the opportunity needs more money than the private sector partnercan provide, the partner can call on the Scottish Co-Investment Fund toparticipate, on equal terms, with the SCF becoming part of theinvestment syndicate. In 2003/04 the Scottish Co-Investment Fund willconclude arrangements with approximately 15 private sector investmentpartners and invest £6m in 25 companies.

Doran and Bannock (2000) have highlighted many of the issuessurrounding public venture capital funds in the US, and ourdiscussions with venture capital firms raised similar pertinentpoints regarding such funds in the UK. To begin with they aredriven by local economic development objectives and thereforeare regionally based. This constrains the company in terms ofaccessing profitable deals outside of the region. Secondly, it isoften difficult to attract and retain competent staff because theycannot offer the same remuneration packages and careerprospects as the private sector. Lastly, there is an inherentcontradiction with public venture capital firms. On the one hand,the company is expected to be commercially viable and yet onthe other hand it is expected to invest in deals that privateventure capitalists are not prepared to invest in.

5.5.4 Brokers: Improving access to financing

In every study area we found organisations focused onconnecting entrepreneurs, inventor, and investors. A number ofpeople engaged in this kind of activity described themselves as“brokers.” For some organisations, brokering these connectionswas its central mission. The Centre for EntrepreneurialDevelopment in North Carolina was undertakingentrepreneurship education. It was running forums at which investors could meet inventors and entrepreneurs, and it offeredforums for investors alone on various topics of interest, forexample, a new direction in technology development.CONNECT in San Diego was a 650 strong membershiporganisation that also offered entrepreneurship education and

investor, inventor and entrepreneur forums. An intervieweeobserved that the key to the early success of CONNECT wasthat the early entrepreneurs and service providers hadconnections outside the region, and CONNECT was effective atbringing investors to the region by showing them goodtechnology and deal flow. CONNECT Scotland was a replicationof the San Diego CONNECT programme, begun at theUniversity of Edinburgh but now an independent organisation.Hertfordshire Business Link assists small and medium sizedcompanies in getting finance through an angel brokerageprogramme and a “fit for business” programme that helpedbusinesses to become investor-ready.

Other organisations performed this broker function as acomplement to other core activities. Incubators, such as theMassachusetts Biomedical Initiatives (MBI) brought venturecapital investors to Worcester to make connections with start-up and young companies there. The North CarolinaBiotechnology Centre itself provided early stage financing tobiotech companies, and it worked with angel and VC networksto help companies get the next stage of financing.The San DiegoRegional Technology Alliance helped would-be entrepreneursand technology companies to win federal grant awards, and italso put these companies in touch with investors, sometimesthrough CONNECT and sometimes independently. As part ofits mission to promote the development of commercialisabletechnology, MIT’s Deshpande Centre sponsored events thatshowcased this technology to investors, among others. Wefound deal brokers that worked quite closely with investornetworks, for example, LINC Scotland, which defined itself as adeal broker for angel investors. Finally, universitycommercialisation offices also maintained links to investorsinterested in university-owned technology.

5.5.5 Maximising the use of available programmes

In the US particularly, we found local leaders seeking tomaximise the flow of financial resources to their regions.Previously, we discussed such efforts with respect to federalresearch funds. But we also saw such activity with respect toother kinds of nationally available resources. For example,interviewees in San Diego reported with pride that it was thelargest centre in the nation for Small Business Administrationloans. In a parallel fashion, the Massachusetts DevelopmentAgency’s annual goal is to ensure that the state uses its entireallocation of industrial revenue bonds.14

14 Each state receives an annual allocation of authority to issue industrial revenue bonds.Within the state, thisauthority is distributed to different bond-issuing entities. In the case of MassDevelopment, if other entities issueless then their allocation, MassDevelopment steps in to make up the shortfall.

5.6 Lessons: using finance to support place

Our exploration of the relationships among finance, the stagesof development of ideas and companies, and their connectionsto place, policy, and sources of technology suggests the followinglessons for sustaining enterprising places:

• Invest in systemic academic excellence. High quality teachingand research enhanced the reputation of the institution – andthe place. It attracted the brightest students, and in turnreleased these into the region when they finished their studies.Engage in the kind of activism that will increase researchfunding.

• Investment in institutional assets was an important investmentin place. Maximise the use of these assets in the community.

• Invest in the development of embryonic ideas. However, toensure that the market picks the winners, consider investing incollaboration with business.

• Pay attention to what works. For example, technology grantssuch as SBIRs in the US and the SMART and SPUR awards inthe UK received high praise from companies and were heavilyused.

• Venture capital funding was critical to move companiesbeyond certain thresholds. However, we did not explore thistopic in sufficient detail to make specific recommendations,and there was considerable debate over public entry into thisdomain.This is an area to explore.

• Maximise the use of currently available financing programmesby making sure companies are aware of and have access tothem.

• Pay attention to companies at key junctures beyond the start-up and design appropriate financing programmes. One suchjuncture is when a company begins pilot manufacturing.Trackcompany development to facilitate retention at key junctures.

• Explore the use of bonds as financing tools. This is one areawhere the US has useful experience.

• Invest in infrastructure and engage in the kind of activism thatwill bring the necessary infrastructure to the region.



6.1 Introduction: issues and players

Companies look for locations that will provide them with keyinputs, whether these are human resources and premises oraccess to knowledge-based institutions. Thus, as section threeshowed, three things mattered the most when a companydecided to locate in a particular place.These were the locationof the company’s roots; the availability of appropriate premisesand infrastructure; and the quality and availability of the existingworkforce.Workforce-related factors were the most importantin holding companies in place.

For start-ups15 the roots were social and environmental: wheredid the founders live, where did they have networks andcontacts, what was the quality of the residential environment andsocial and cultural amenities? Roots of medium-sizedcompanies16 were more operational and thus where did existingemployees live?

The availability of the right premises and infrastructure followedroots in importance to start-ups, and it was even moreimportant to companies in the next stages of growth. Start-upsvalued low-cost space.Young companies17 narrowed their sightsto premises and infrastructure: factors that facilitate production.

Specific factors included the cost and suitability of space,transportation, parking, and communications infrastructure. Forcompanies that had crossed the start-up threshold and hadestablished manufacturing and sales operations (but remained“medium sized”), these premises-related factors became evenmore important and another factor - availability of facilities formanufacturing - rose in importance.The quality and availability ofthe local workforce was of some importance to start-ups andmedium sized companies as they made their initial decisions tolocate in a particular place, but as companies began to produceand sell their first product they tended to bunker down and toaddress immediate operational issues before re-focusing oncompany growth.

Workforce-related issues were the predominant factors holdingcompanies in a place.Young and medium sized companies facedworkforce-related issues.These companies were in competitionwith other similar companies with similar needs, especially as itrelated to IT and marketing and sales personnel, who they saidwere in short supply at the time of the survey. Bringing workersfrom other areas to their home was problematic because of thehigh cost of housing, and wages in these areas also tended to behigh.

6. Creating places

Knowledge System

Built Environment

Finance System

Business System

15 Definition of startup; invention and proof of concept stage, prototype product/service.16 Definition of medium-sized company; established manufacture and sale of product/service.17 Definition of young company production and sale of first product/service.

The quality of the place was based on a judgment about howwell it was able to meet the ongoing needs of the technology-based companies. As these needs changed, then what the placeprovided has to adapt or risk becoming a relatively uncompetitivelocation for the companies concerned. Successful places in thisrespect are therefore those that were able to accommodatechange in a timely fashion.

In this section we are concerned to examine what the evidencefrom the research suggested was important in enabling places toadjust to meet the needs of technology-based companies. Theability of the place to adjust its resource base in a mixedeconomy depends on policy actions by both the market and thepublic sector. This section is concerned to assess in the casestudy areas the strategies that were employed by the relevantagents to:

• provide physical place and infrastructure• provide appropriate premises and facilities• provide social and professional place and thus to develop

environments that were attractive to technology workers andpotential entrepreneurs through the development of theworkforce; the fostering of networks and contacts; and theattraction of an entrepreneurial base

• brand and market the place.

Places vary according to a number of physical, economic andsocial characteristics that affect the ease with which they canadjust to meet the needs of technology-based companies andtheir employees.They differ in terms of their relative accessibilityand thus how well they are connected with other places.Therewill also be differences in the quantity and quality of services thatthey can offer to businesses and residents, reflecting where theyare in the settlement hierarchy. And the economic legacy of theplace is clearly formative in determining the nature of theexisting human resource base, the land and premises stock andthus the ease with which it can be switched to new uses. Thequality and quantity of the housing stock and the availability ofgood quality services including education and health will affectthe attractiveness of the place to inward businesses and theirworkforces.

6.2 Physical place and infrastructure;making liveable places

The quality of the residential environment was a key issue inattracting skilled people to an area.This has been the subject ofmuch study (Castells and Hall (1994), Castells (2001), Florida(2002), Salvesen and Renski (2002).The in-depth interviews withleading companies in the study areas provided further insight asto what contributed to a high quality environment. Therespondents listed a number of features.These included

short travel times; low congestion levels; affordable house prices;the quality of local schools and social facilities; the quality of thecultural facilities, including nightlife, shopping, the design andappearance of a place; and the presence of peers and colleagues.All of these features were seen to contribute towards themaking of a high quality environment. On the other side, stresseson the physical characteristics of successful centres wereimportant liveability constraints.These included traffic congestionand the high cost of housing, both of which interfered with therecruitment of new employees.

The company executives surveyed said that the cost of housingwithin the locality was the most important barrier torecruitment (ranked 1st). Analysis by study area indicated thatthis was particularly true in Cambridge UK, San Diego, andMassachusetts, but much less of a concern in Scotland (ranked7th).The larger, more mature technology-based companies, wereoften able to compensate their employees for the high houseprices through higher wages. However, start-ups and companiesemploying large numbers of lower paid technicians were in lessof a position to do so. Similarly, people in support sectors suchas education, health and entertainment, which contributesignificantly to the quality of life of technology-based employees,could not afford to pay the high house prices and rentals oftenassociated with technology-based centres.This undermined thequality of the services that could be provided in these areas andconsequently threatened the quality of the environmentnecessary to attract the high-tech skills and people to drive thegrowth of these high-tech centres.

As places matured, problems associated with commutingincreased and this was particularly so in places likeMassachusetts and North Carolina. Road and rail infrastructurewas seen as a critical locational requirement for companies.From the interviews, many companies stated that theirworkforce catchment area was not determined by distance butby the ease and time taken for their employees to get to work.Considering the importance to a company of being able torecruit the right employees, commuting and congestionproblems were seen to be real problems in San Diego andCambridgeshire, and a growing problem in Scotland. Companiesneeded to interface with each other in terms of everydaybusiness activities and therefore employees had to be able totravel within a technology centre with relative ease. In addition,many technology-based companies operated in niche marketsthat were global by nature and therefore there was a need notonly to be able to get to national and international airportseasily, but for these airports to provide direct and regular flightsto key global locations. The lack of direct international flightsfrom nearby airports was an issue raised by respondents fromboth Cambridgeshire and Scotland.

The survey and the in-depth interviews both highlighted theimportance of communication infrastructure – electronic andphysical in developing a technology-based centre.



Telecommunications and access to broadband in particular wereregularly raised as problematic in Scotland and Cambridgeshire,compared to the US case study areas. This infrastructure wasavailable in the main centres of these regions but was ofteninsufficient in the outlying areas.This forced many companies tolocate in these centres, which put pressure on the existinginfrastructure, generated congestion problems and had an inflationary price effect.We should also mention thatcompanies were often concerned about the adequacy of waterprovision and specialised facilities to handle hazardous productsin some cases (e.g. radioactive substances).

Overall, from the survey and interview results, the provision ofland and hard and soft infrastructure were deemed crucial forthe development of technology-based centres. The problemsthat arise and the constraints on achieving coordinated policyactions were common to both UK and the US. But there wereoften significant differences in the type of response that waspossible at both the local and the regional level. We examinethese in further detail in the next chapter, given the number ofplayers that had to be involved and the complexity of theinteractions that arose.

The changes required across the settlement pattern of an area,including those to its built environment, encompassed a range ofland use and planning considerations.There was also the need toinstall new infrastructure, and the ability to finance this at leastpartly from local resources was central to success.There neededto be sufficient resource levers to bring about the changesrequired. A lack of flexibility in this respect characterised thesystem in the UK compared with that of the US. A lack ofbuoyancy in the local tax base and a heavy reliance on centralgovernment for the funding of key infrastructure had even ledsome areas in the UK to resist accommodating the growth oftechnology-based activity in their area.

6.3 Providing premises and more

The notion that sheer proximity to a research centre would besufficient to enable businesses to benefit from technology-basedspill-over effects was misplaced. Many research parks founded onthis misconception have learned the relatively hard way thatsuch spillovers do not necessarily occur, and that the market maynot be sufficiently developed to allow for the real estate activityto stand alone as a profitable venture. Another popular vehiclein the real estate industry has been the creation of a sciencepark with, again, the view that the product label would besufficient to lure in companies attracted by technology-basedmarket opportunities. The developer took the real estate riskand offered multi-tenanted space. An example of this approachis the Massachusetts Biotech Park.

In advanced centres, land in proximity to universities was at apremium – the market was developed, and there has been anopportunity for institutions and private developers thatunderstand this market to take advantage of this. Examplesinclude the MIT’s Technology Square and the Cambridge SciencePark. The Science Park concept reinforced the place but notnecessarily at a financial cost to the technology- based institution,although a variety of models were possible. Experience ofScience Park developments reinforced the need to take thingsslowly and to be able to respond to the needs of the market. Aclassic example of this was the Cambridge Science Park wherebecause the principal landowner was a Cambridge college it waspossible to adopt a longer-term view in relation to economicreturn. Moreover, the design, marketing and development ofScience Parks have to be customised to the specific context.There was no generic model that will work automatically in alllocations.

Following on from the Science Park itself has been thepromotion of incubators and shared research facilities. Examplesincluded Brabraham Bioscience Technologies, the MassachusettsBiomedical Initiatives in Worcester and NCSU Centennial Parkin Raleigh NC. The research services offered can varyconsiderably. Thus, the Massachusetts Biotechnology Initiative,was formed to support the flow of business to theMassachusetts Biotechnology Research Park in Worcester. Thedirector of its business incubators was a former state legislator,and its board included some of Worcester’s most influentialbusiness leaders. In Scotland, the Scottish MicroelectronicsCentre opened in 2000 and undertook research anddevelopment and incubated new companies in the semi-conductor industry. It provided wafer fabrication equipment andtrained students in fabrication. Research was undertakenthrough the Institute of Micro and Nano Systems (IMNS) and“allowed companies to get close to the University of Edinburgh’shot house of ideas”. The University covered the capital andoperating costs of the building.

Other examples of the development of incubator unitsundertaken by universities in collaboration with other partiesincluded the Cranfield Technology Park that provided anexample of how local public agencies can coordinate activitywith developers and also knowledge-based institutions to meetthe needs of technology-based companies.Thus, Mid BedfordshireCouncil in partnership with the University built an incubatorfacility (the University provided the land). This subsequentlyproved too small and the Council then formed a Partnershipwith St Modwen Development Ltd who bought the originalincubator facility from the Council and struck a partnershipagreement with the University. Planning obligations meant thatthe development had to commit £1.5 million the constructionof off-site roads. The ‘Park’ had a close relationship with theuniversity’s commercialisation office.

In the Luton and Dunstable Innovation Park, the university wasable to secure regeneration funding from central government todevelop an incubator in an existing building. The developmenthas subsequently been expanded to embrace other buildings.There are pros and cons relating to incubator developmentsbeing on a university campus and managed by universities. Oneproblem in this case was that the university found it difficult tomeet the needs of companies, such as enhancedcommunications, quickly enough. Moreover, interactions withuniversity research staff in fact proved elusive.

In the case of the Babraham Bioscience Technologies, a privatecompany has been set up. It was responsible for thedevelopment of a 160 hectare biotechnology research park. Partof the research park will eventually contain an incubator calledBioconcepts and a technical support services company calledBabraham Technics. The idea was to get venture capitalists anduniversities to feed companies and ideas to the incubator thatwere not quite investor ready. Bioconcepts then assessed theopportunity/idea and determined whether a company should beformed or whether a licensing opportunity should be explored.To overcome the catch-22 situation whereby early-stage fundingrequired demonstration but this, in turn, required early-stagefunding, Bioconcepts is developing a “Technology DevelopmentGroup” with an equipped and financed laboratory to helpdevelop the idea. Furthermore, companies will be able to accesstechnical support services such as libraries, specialist supplies,analytical equipment and laboratory technicians throughBabraham Technics, thereby reducing their burn-rate and time tomarket. Payment for the use of Babraham Technics and theTechnology Development Group will be through a creditssystem that will be allocated to the company initially and paidback later in the form of cash or equity. A key objective ofBioconcepts was to accelerate the concept stage through theuse of the Technology Development Group and BabrahamTechnics The intention was to reduce the first two years of aseven-year biotechnology product development process totwelve months.

In Scotland, the Alba campus was part of the Alba initiative thatbegan in 1997 and came about as a result of the recognition thatScotland needed to diversify its industrial base.The campus wasowned by a private company in which Scottish Enterprise as theDevelopment Agency had a 50 percent share, and the other 50percent was owned by a development group. This companyowned 96 acres. The biggest building was owned by theoccupier.The Alba Centre was owned by the company and waslocated on the campus. It had a lot of short-term space and anincubator facility that was the result of collaboration betweenfour universities.

A further, more recent example, of how the real estate industrywas responding to the needs of technology-based industries wasprovided by the Granta Park development in Cambridgeshire.

Granta Park was zoned in planning terms for Research andDevelopment. The lease terms offered varied according to thetype of building. If it was a non-specialist building then it had leaseterms of two years plus. If the building was specialised and large(25, 000 ft), then the lease term was twenty years. Somediscussion of the economics of such development was alsohelpful. As a general observation, those who financed thedevelopment of such facilities (and particularly the banks),tended to have strong views as to the location that they believedwas viable. In the Cambridgeshire Park at the present time itcosts £1,150 per square metre to construct A-grade office spaceand £2,500 per square metre to construct specialised laboratoryspace. Office rentals on the park were the same as those inCambridge itself and laboratory space was let at between £20-£30 per square foot per month. The Park had 4 to 5 anchortenants and most of the tenants were companies relocatingfrom Cambridge who needed more space. There was growingdemand for B-grade office space for young, growing companies.Some of this demand was satisfied by larger companies sub-letting the space that they had set aside for expansion.Companies located in Granta Park because they were growingquickly and needed to recruit graduates.There were not a lot ofexperienced biologists around and therefore companies had toemploy graduates and train them. Being close to Cambridge wascrucial for this recruitment. Although the company may not getall its graduates from Cambridge University, Cambridge did havethe ability to attract graduates into the area from all over thecountry. The location was also close to the support industries(lawyers etc.) in Cambridge; there were good transport links toand from the area; and it was a pleasant environment with agood image.

Overall, the research has identified a number of initiatives thatinvolve the real estate industry and key players from knowledge-based institutions working together to produce successfuloutcomes. Much has been learned as to what makes BestPractice.



6.4 Social and professional place

Building a place that had a positive and dynamic businessenvironment required a number of key elements to cometogether that included the training of the workforce; thefostering of business networks; and the encouragement ofentrepreneurship in its broadest sense.

6.4.1 Human resources

The importance of recruiting the right type of human resourceswas confirmed in the survey results and the in-depth interviews.In the survey companies in Massachusetts ranked the quality andavailability of a local workforce to be of more importance in thedecision to locate within an area (ranked 3rd) than Cambridge(ranked 6th) and Scottish companies (ranked 7th). Informationtechnology specialists, marketing & sales personnel and clericaland administrative staff were identified in the overall surveyresponse as being the most important to a company. BothCambridge and Scottish companies ranked IT specialists as themost important employee in recruitment, whereasMassachusetts and San Diego companies ranked them secondafter marketing and sales personnel. Interestingly, world classexperienced scientists and newly graduated engineers andscientists were ranked relatively low down in importance. Incomparison, the in-depth interviews suggested that the ability toemploy high quality graduates and attract leading-edge scientiststo an area was a key reason for locating there, particularly inScotland where local graduates could also be employed at arelatively low cost. This feature was mentioned by numerousoperational managers as the key factor leading them to establisha presence in Scotland.

To explore these survey findings further and establish the rolethat human resources played in determining company location,the in-depth interviews with companies in the case study areaswere examined in detail. The majority of respondentsinterviewed commented upon the importance of there being acritical mass of technology-based companies to attract skilledpersonnel to an area. This is because it reduced the risk to allinvolved. Starting a company in an area with a concentration oftechnology-based firms was what one Cambridgeshirerespondent called, “ undertaking a risky venture in a low riskarea”.This was because if the venture failed, there were usuallyother opportunities to start new ventures or for employees totake up employment in one of the existing companies in thearea. Similarly, an individual was more likely to move to an areawhere there were numerous employment opportunities, so thatif one failed, the individual could find another without having touproot themselves, and possibly their family, to find employmentelsewhere. In addition, individuals were likely to locate in areaswhere there were also employment opportunities for theirspouses and partners, thereby furthering the need for there to

be a critical mass of companies and opportunities. Consequently,companies were likely to locate with other similar or relatedcompanies to take advantage of the labour pool that wascreated as a result of this concentration. This phenomenoncreated a virtuous circle where the presence of a labour poolattracted companies, which in turn attracted further skilledindividuals.

High-tech employment was often seen as temporary, risky andflexible by nature and therefore employees were becomingincreasingly reluctant to relocate to take advantage of someemployment opportunities. For this reason there was a growingmove away from the “I.B.M. – I’ve Been Moved” syndrome, withmore and more companies having to set up where they canemploy the requisite people and skills. For this reason, Florida(2002) has observed that the question should not be whycompanies locate in certain places but rather, why do thepeople?

Constraints on recruitment identified in the survey wereassociated with the quality of the environment. But they werealso referred to the skills base within the local area, as well aslevels of competition from companies sharing the same labourpool. Both Scottish and Massachusetts companies ranked thelack of specialised managerial and marketing skills in their localarea as a critical barrier to recruitment (ranked 2nd and 3rdrespectively). Scottish companies ranked the lack of specialisedtechnical/scientific skills as of even higher priority (rank 1st). Incomparison, the lack of specialised skills appeared to be less ofan issue for Cambridge companies. Instead, competition fromother companies sharing the same labour pool was ranked 2ndafter concerns over the cost of housing in the local area.

Concerns over the lack of specialised skills to meet the needs oftechnology- based companies were frequently discussed in thein-depth interviews across all of the case study areas. Companiesidentified the need to up-date skills and re-train both technicaland professional staff, especially within such a changingtechnological and business environment. In particular, laboratorytechniques, quality control and project management wereidentified as the key skills required. For this reason, an area’sability to provide on-going training and tailor-made courses wasseen as very important

Training the existing workforce was an important policy issue. Incontrast to the role research universities play in trainingscientists, engineers, and business executives, a different group ofeducational institutions provided on-going courses required tocontinuously train the labour force to meet the specialised skillneeds of the local companies. And while many of the premierresearch universities in the US were private, virtually allinstitutions that do ongoing workforce education were public.The community and further education colleges in San Diego,North Carolina and Hertfordshire are examples of institutions

that played this role. Institutions other than research universitiesoften provided training to the existing workforce and theytended to be public bodies.

Another key finding regarding human resources arising from thein-depth interviews was that technology-based economiestended to create “hour-glass” employment profiles with largenumbers of low-paid, low skill jobs and high-paid, high skill jobson either extreme, but very few medium-paid, semi-skilled jobsin between. Some of the policy responses to this problem, forexample in San Diego, have been to encourage technology-based manufacturing and to create training programmes forpeople to “up skill” into better paying jobs.

Company founders identified the inability to recruit experiencedbusiness managers to take on the role of CEOs and businessmentors as a major inhibitor to growing a technology companyand region.This problem resulted from the fact that different skillsets were required to Research the technology and Develop thetechnology. Most education institutions tended to address theformer but not the latter. High-tech CEO’s were seen to beimportant not only in terms of running the day-to-dayoperations of the company, implementing cost and stockcontrols and taking products to market, but also for the contactsthey brought to a company and the experience they had inraising finance. The lack of experienced CEO’s was identifiedacross all the study areas but seemed to be more acute in theUK regions. Some UK respondents suggested that managementwas viewed differently in the two countries, with seniormanagement being something that people aspired to in the US,while in the UK, management was something one did if youfailed as a scientist.

Due to the varied set of skills required by a CEO of atechnology-based company, there were varying views as to howthis skill constraint could be overcome. On the one hand, manyrespondents felt that large corporates were required in an areato recruit and train people in management and marketing skills,who could then take up posts in young, growing technology-based firms. This view was particularly expressed inCambridgeshire in the UK. On the other hand, others arguedthat the skills and experience that one attains from working in adepartmentalised corporate are not those that are needed tomanage and grow a technology company. Similarly, they arguedthat individuals trained in large corporates usually lack theentrepreneurial spirit required to be a CEO of a technology-based, high growth company. Technology-based CEO’s neededto have gone through the process of starting and growing atechnology-based company.An area could only attain a sufficientnumber of such individuals by growing the local technology-based company base or by attracting such individuals from othertechnology-based areas. Some respondents also noted thatmore MBA programmes were needed that were designed andfocused around the management and growth of technology-

based companies. However, there was a counter argument thatMBA programmes do not generate the right kind of technology-based CEO with the unique set of required skills andexperiences. Not withstanding this, the absence of quality MBAprogrammes in Scotland was seen as one of the reasons for theshortage of such people. The exception being the businessprogramme associated with the Royal Society of EdinburghFellowship Schemes, which was designed around the needs oftechnology-based spinouts and start-ups. Many respondentsconsequently viewed this programme positively. In short, MBAprogrammes had to cover the entire technologycommercialisation process – from technology discovery to thepossible public listing and globalisation of the company.

Trade associations and industry weres well represented on thevarious curricula boards in the different study areas and provideinput into the design of the various technical curricula. However,there appeared to be a need for a greater input by industry intothe business-related curricula of the various institutions. Wherethis has occurred through the Royal Society Fellowship Schemesin Scotland, for example, the quality and applicability of therelated business programmes has been acknowledged as verygood.

6.4.2 Entrepreneurship and business development

Turning good ideas into products in the market required a rangeof entrepreneurial actions that included training people to beentrepreneurs and the provision of specific business advice andsupport through the whole business development process, frombasic research to a marketable product and then production.Theevidence from the case study regions pointed to a number ofdifferent approaches to the encouragement of entrepreneurialactivity by the technology-based community.

One aspect was the provision of training to academics in orderto enable them to become entrepreneurs, and the creation of acadre of entrepreneurs who could lead technical companies.Central to the human resource issue was the often-stated pointthat there was a greater degree of entrepreneurship in the USthan in the UK.The UK has however taken significant steps in thepast few years to increase the level of entrepreneurship in thecountry. In Cambridgeshire, the Centre for Entrepreneurship hasbeen established and in Scotland the Institute forEntrepreneurship.

In addition, the Scottish Executive has set up the ScottishInstitute for Enterprise (SIE), which is in the process of beingrolled out in all 13 of Scotland’s universities. Besides trainingpeople in how to start new businesses, one of the mainobjectives of this initiative was to highlight to graduates thatbeing an entrepreneur was a viable and attractive career option.



Each partner university had a designated commercialisationpractitioner. In addition to student support at each school, SIEruns an annual business plan competition plus an annualconference showcasing the finalist plans and offering networkingopportunities to students. It also has a patent fund for students.The SIE director from 2001 to 2003 was the director ofsemiconductors at Scottish Enterprise, seconded to SIE. Thecurrent SIE director was previously the director of the EdinburghTechnopole.

In Scotland, a networking and entrepreneurship educationprogramme modelled on the successful CONNECTprogramme initiated by the University of California at San Diegohas been initiated. It began at the University of Edinburgh in1997, but since 2001 it has been independent from theUniversity. There were three main programmes: springboard,bootcamp, and annual investment conference. The programmebrought researchers, entrepreneurs, and investors together.Also,in Scotland the Technology Transfer Partnership was a new namefor a traditional programme formerly known as the TeachingCompany Scheme. It provided a central arrangement for smalland medium sized enterprises to get consulting services fromthe faculty of six universities and smaller research institutions,including the University of Edinburgh. It was funded by the UKDepartment of Trade and Industry and its name changed whenDTI changed the programme. Academics are seconded tocompanies to work on projects that the company defines in anapplication to the centre.The Centre provides grants to supportwork.

Another example of the approach was the MITEntrepreneurship Centre. MIT has an objective of creating acadre of entrepreneurs who understand technology. Someargued that what made the entrepreneurship centre take offwas that they put an entrepreneur in charge. When it startedthere were two courses and two teachers. Now there are 22courses and 1,500 students. Three quarters are MBAs and aquarter are in engineering. The core audience is managementschool-based and the Centre’s Director reports to the Dean ofthe Sloan School, MIT’s graduate school of management. Thecentre also brought together seasoned executives for seniorlevel training and this represents a formal educational initiative.Corporate sponsors gain access to technology and people.Theywere “elephants in search of gazelles, in search of the fountain ofyouth”.

A further initiative was the MIT Enterprise Forum that linkedentrepreneurs, new businesses, and commercialisable ideas tothe venture capital community. It provided both “windows” onMIT and interactive forums and was promoted by the MITAlumni Association.

Many UK research institutions have introduced entrepreneurshipprogrammes into their curricula to encourage and guide spinout

and start-up activity. However, the role that these institutionsplayed in producing successful entrepreneurs has been relativelylimited to date. The 2002 Ernst & Young UK survey of 460“Entrepreneur of the Year” finalists show that only approximately41percent of the finalists had a university degree (Burrage 2002).

A further example was the North Carolina Centre forEntrepreneurial Development. In the early 1980s there were anumber of concerns by business, the university and local publicagencies in the North Carolina Research Triangle that there wasa relative dearth of new companies being established in the area.Moreover, the universities and core cities in each of the threeareas that comprise the Research Triangle appeared to bestanding apart from each other in the development ofcommerce and enterprising activity. A number of key playersincluding the local universities came together to establish aCentre for Entrepreneurial Development. It is an educationalnon-profit body with a staff of 18, of which 9 or 10 are ineducation. The others deal with external affairs or back-officeoperations.

At first, the Centre focused on the provision of entrepreneurialeducation. People came to learn and network. However, theagenda was rapidly expanded to focus on the provision ofbusiness mentoring and education in a broader sense, includingissues relating to finance and capital.The Centre was funded bythe private sector and thus, companies that provided businessservices such as accounting companies.The idea was that no oneoutfit or individual owned the Centre and it is neutral territorywhere everyone can get involved. It had a truly entrepreneurialculture that seemed almost to be in the atmosphere of the placeand it was highly regarded by the business community. In its firstfive years, it focused on assisting companies. In the last five years,it has expanded its remit to consider issues relating to theencouragement of entrepreneurial activity and out-reachamongst the public and university sectors.The broad flavour ofthe work of the Centre and the way its activities transcendedthe realms of technology, business and other sectors is illustratedby the comments made by the Centre’s Director when she wasasked to describe a typical week-“ Today, I went to NC State tomeet with the VP for Extension programmes. It was a non-agenda’s meeting. I had a meeting on fund-raising anddevelopment. I had a meeting on special initiatives – we aredoing a S.E. Biotech conference. I had a meeting with womenentrepreneurs – a boot camp gathering.”

Every two years it undertook a survey of the founders of high-growth companies and asked how the Research Triangle wasprogressing.The surveys are on the website.The Centre workedwith companies from the idea stage to the go/no go stage. Itdealt with funding, leadership programmes for technical CEOsand promoted conference gatherings.The centre did not investitself. It regarded entrepreneurs as being blind to technology,whilst scientists were blind to entrepreneurship.Thus: “We take

them both out of that comfortably. We use successfulentrepreneurs as a swat team. We address the issue of cultureshock. We work in small groups – fifteen people, and promoteearly intervention. We do a quarterly angel investor forum. It islike many others, but, we also do one with angels alone. Forexample, we brought in the Dean of Engineering to do apresentation on new technology, such as, this is what photooptics are. We have had significant grants. Foundations are lessand less important now because of the economy.We were partof the NC Biotech forum. But our mission is to work in NorthCarolina with a focus on the Triangle.We are funded by businessinterests here. It is a transition issue. There is a Centre forEntrepreneurship now at Flagler (Duke’s business school). Ourforums seem like the bar scene in Star Wars – we gather peopletogether who look different and speak different languages, butthey are all entrepreneurial!”

6.5 Fostering business and industry networks

Many of the initiatives discussed earlier in this section werehelping to provide networking opportunities along withpremises and support for entrepreneurship. However, therehave been activities that focused specifically on the building ofnetworking activity and which built bridges between business,academia and public policy agencies. In Scotland, TechnologyVenture was an example of this and it assisted companies inspecific sectors to compete globally and create new integratedproducts.Technology Ventures was a private company funded bySE and the Scottish Higher Education Funding Council. TheScottish Executive brought the two bodies together. It was,however, independent of both and brings business, academia,Scottish Enterprise and others together every six weeks todiscuss key issues.

Another example was the Scottish Optoelectronics Associationthat was started by Scottish Enterprise to establish links with theuniversities and other companies – general networking, to helpdevelop a strategy for the sector. In 2002, a strategy based onSE’s Cluster Strategy was developed by all parties, to be thevoice of industry and maintain the profile of the opto-electronicsindustry.This was a good example of seeking to get universitiesto pool their resources. Research needed to be market focused.One way of doing this was through the creation of Centres ofExcellence such as the Institute of Photonics at the University ofStrathclyde where there was a good interface with business.

The Business Gateway was a programme through which ScottishEnterprise tried to coordinate the business support functions itfunds. Participants included local chambers (which providedbusiness services to businesses with 25 employees or less); theScottish Federation of Business; university commercialisation

offices; tourist board; and the business support functions of thelocal authorities. Scottish Executive funds LINC, whichintroduced companies and investors and brought investorstogether to pool risks.

A more recent initiative in Scotland that sought to enhance thedevelopment of technology-based businesses was theIntermediary Technology Institutes. The rationale behind theestablishment of the institutes was that: “Successful economiesaround the world have a research base that extends beyondbasic science, into pre-competitive research areas with a focuson being driven by global market opportunities”. Research hassuggested that institutes or organisations that helped optimiseand organise technology generation and exploitation contributedsignificantly to regional economic growth in the long-term, withthe initial impact occurring after 5 years. While the examplesaddressed the specific strengths and weaknesses of theirrespective regions, they all focused on the entire spectrum of thedevelopment process from basic research all the way through tomass product development.The intention therefore was to buildon Scotland’s research base and to target those sectors withparticular potential and competitive advantage. ScottishEnterprise has committed £450 million to the Institutes over thenext 10 years. There were comparative initiatives in the USwhich targeted and financed specific technological research witha commercial application, through SBIR and SBTT grants.

It is early days as yet, but it is intended that the IntermediaryTechnology Institutes will:• attract leading global players, local companies and researchers

to participate in identifying future market opportunities• generate market-focused intellectual assets by commissioning

work from leading researchers in existing research institutionsin Scotland and worldwide

• create pre-competitive market-focused technology platformsthat will strengthen existing Scottish companies and/or createnew firms

• facilitate the movement of staff between researchorganisations and industry

• retain technology graduates for Scotland by providing careerdevelopment opportunities

• capitalise upon existing science and technology strengths todevelop a critical mass of expertise and a reputation ofsuccessful exploitation in specific market niches

• act as a proxy for corporate R&D and significantly increase thelevels of R&D in Scotland

• stimulate technology-based companies in Scotland to createtheir own demand for near-market research.



The operation of the ITI’s involves three processes.The first is toidentify emerging market and business opportunities in whichScotland can play a leading role. The second requires thedevelopment of a technology base or platform where therelevant technology is researched and developed. The lastprocess involves the commercialisation and productdevelopment of the technology through member companies,start-up companies or licensing arrangements. These processeswill be carried out by research and commercialisation steeringgroups, which will be made up of predominantly global industrialplayers and academics with global reputations in their researchfields. Each Institute will have a core staff of approximately 15people who will manage the steering groups and the day-to-dayoperations of the Institutes. External engagement with theinstitutes will be on a membership basis.

The energy, life sciences and communications and digital mediatechnologies were the first sectors to be incorporated intoinstitutes. The Media institute, located in Glasgow, is headed byDavid Creed, former vice president of Sony Europe. The LifeSciences institute is located in Dundee and is being led by theentrepreneur John Chiplin, creator of GeneFormatics, whorelocated to Scotland from California, USA.The Energy instituteis based in Aberdeen and is headed by Tony Amor who workedfor Shell International Petroleum and Natomas Company beforebecoming President of Thermal Power and his own consultingcompany in San Francisco.

Ultimately, the ITI’s will be evaluated in terms of the way thatthey:• increase and sustain the birth rate of indigenous high value-

added, technology-based companies• increase the level of exchange between the research and the

corporate sector in Scotland, helping in the transfer of skillsand increasing corporate R&D

• further establish and connect Scotland with key overseasmarkets, promoting Scotland as an important centre forspecific technologies and as a location for foreign directinvestment, portfolio direct investment and mobile skilledlabour

• create a sustainable flow of market relevant technologycompanies that will attract more local and internationalventure capital to Scotland

• significantly increase the retention of graduate andprofessional skills in Scotland.

We also found in some regions a number of market-basedcompanies that provided advice and consultancy to technology-based companies. The extent of this varied considerably.Cambridgeshire in the UK provided one of the best examples ofthis sort of development, with a number of such companies.TheTechnology Partnership was set up in 1987 by a number ofindividuals who had worked for one of the first companies ofthis sort in that region, PA Consulting. The Technology

Partnership helps to grow specific technologies in terms ofproduct application and spin out and develop companies asappropriate.

Again in Scotland, the Biotechnology Association has beencreated to provide a non-biased voice of industry. Most of theirfunding came from membership subscriptions and therefore thiskept them committed to raising issues on behalf of industry.Companies supported them because they tended to be toosmall themselves to be heard on their own. The industry wasdominated by SME’s and therefore there was a need for anoverarching organisation that could speak on their behalf. Theysought to raise awareness of the issues facing the industry andhad good links with the Scottish Enterprise Biotech Group.Theyhave done a lot to improve international linkages but it isrecognized that the need to do more to network and connectthe local supply-chains and different regions – Cambridge,Oxford, Manchester etc. There are some national initiatives inthis regard such as UK Biomanufacturing, and the evidencepoints to a number of companies wanting to know how they canaccess technology transfer from places like Cambridge andOxford.

Companies faced a number of problems accessing internationalcontacts, markets and collaboration opportunities, all related tothe human resource issue of a shortage of good, experiencedbusiness managers. Contract opportunities were partly broughtto companies by the business managers they recruited andthrough its activities, the Biotechnology Association can facilitateand network opportunities. They have strong connections withthe universities in terms of establishing links between theirmember companies and the universities and show-casing whatthe universities have to offer.

During discussions with the Biotechnology Association the viewwas expressed that there does seem to be a greater feedbackby industry into the curricula content in the further EducationColleges than in the universities and the example was given ofthe Scottish College Biotech Consortium which comprises fourcolleges across Scotland who work very closely with industryregarding short-course and e-learning provision. Courses include– clean room validation, good manufacturing practice etc.Therewas the feeling that these local initiatives must have a nationalfocus with a national input.The interaction between universitiesis considered to be improving. At the post-graduate level therewere a number of interfacing initiatives and also activities thatbrought the various university technology transfer officestogether.

There were a number of examples of organisations in the USstudy areas that promoted the well-being of technology-basedindustries in specific places. In some cases these bodiesadvocated for a favourable macro environment (i.e. low taxregimes). But in others the involvement was more sophisticated.

Thus, the Massachusetts Technology Collaborative was createdby the Commonwealth as a ‘semi-autonomous economicdevelopment authority, with a broad charter to do projects thatwould promote the growth of technology-based industries orutilising technology in some way that would promote jobcreation’. The Board of Directors was appointed by theGovernor with the informal understanding that it wouldrepresent certain constituencies, including all the Deans of all theengineering schools in Massachusetts, including privateuniversities. MIT has always been on the Board although this isnot a formal requirement. Over time the entity has become asmall agency that advises a group of companies within oneindustry. An example of the former has been work for themedical device industry to create a trade association for theindustry in Massachusetts, as well as a number of other initiativesincluding the provision of broadband communications indifferent regions. MTC owns its own campus.

The North Carolina Biotechnology Centre represented one ofthe earliest approaches to assisting technology-based companies. In1981, the Governor in North Carolina, Jim Hunt, formed acommission to assess the possibilities for basing a regionaleconomy on living organisms. This commission recommendedthe establishment of a private non-profit centre for biotechnology.Atthe time there were three places where biotech research wasbeing done: San Francisco, Boston, and Cambridge UK. Thedevelopment in North Carolina of biotechnology was the resultof targeted intervention that recognised that the State was in forthe long haul with any tangible evidence of success at least tento fifteen years away. It was essential to build a community ofrelevant parties and the intention was not to duplicate anythingthat was currently in place.The Centre was seen as an importantvehicle in the process. It needed resources and a toehold in everyphase of the process required to establish a critical mass ofactivity. A key regional asset was the Duke University medicalschool.

Initially it was suggested that the Centre be part of the Board ofScience and Technology.That idea was floating around before thecentre was finally constituted as a not-for-profit body.The Centreworks closely with the three Universities in North Carolina tofund university research (the research must havecommercialisation potential), and encourages businessdevelopment by working closely with entrepreneurs and theDepartment of commerce. They have been involved in thespinout of 63 companies, 48 of which have survived.There are50 people at the Centre and it receives 50 percent of itsoperating funds from the state. It gives loans rather than makesgrants and the emphasis is on creating an entrepreneurial spiritby providing an infrastructure that helps to develop people withcapability. The Centre holds a forum every fortnight where arange of business support are were discussed. Attendance isusually 150 to 200 people.There is a core that comes often, andothers that come for topics of special interest.They bring together

trusting and purposeful people with creative ideas over time.They work closely with the Technology Transfer offices of theuniversities.

The North Carolina Microelectronic Centre (MCNC) wasfounded in 1981. In the late 1980s, through legislative decree, ittook on supercomputing for the universities. During the early90s, the State supported some research projects. Now, however,the Centre is a private non-profit institution fully supported byits constituents. MCNC has a 23-person board. There are fivefrom NC State/ Carolina. The universities are the keyconstituency. Some seats are statutory.There are both businesspeople and community people on the board.There is some $28million in revenue. Its research contracts are all from federalagencies like the Department of Defence. MCNC has spun outa number of companies. One made $270 million and these fundswere used to set up an endowment.

MCNC takes equity in spinouts and provides a spinout withaccess to it’s scientists. It may take a seat on the board of thespinout company. Help is given in finding management expertise- outside of MCNC. It has a partnership with the Council forEntrepreneurial Development to assist companies to beentrepreneurial. Venture funds are the ongoing fuel for theorganisation rather than relying on the State. The DefenceDepartment enables the Centre to retain IP and license tocompanies.There are 50 PhDs at the Centre and there is verylittle turnover. It is argued that ‘an entrepreneur knows there isreliable assistance here,’ and it is seen as a research-basedeconomic development organisation. In terms of the number ofpatents and disclosures, the Centre does 10 times that of NCState, and NC State is the leading university producer. Theresearch arm has 90 employees. The supercomputer andnetwork operation has 75 employees.The Centre sees itself asserving the whole university system: public, private, andcommunity colleges. It has developed a Grid Networkingcomputing system that enables academics and the businesscommunity to access one pedabyte worth of data andapplications in bioinformatics. Thus, it is the central holder ofgenome information in North Carolina. Having thesupercomputing facility is important since there are around 800scientists using the supercomputing facility at any one time,representing 80 to 90 research projects.



In San Diego, Biocom represented yet another example of thissort of organisation. BIOCOM’s first function was educatingcompanies; its second role was to advocate and encouragepolicy responses that would assist technology-based companies.As one respondent noted:

“We work on three levels of public policy. We areinvolved with public policy from day one. When westarted-up in the mid-1980s, local elected officials didn’tknow what biotech was about. This was still a defenceindustry area. Biotech needed to build reasonablefacilities but there were no city standards. A year later,Mycogen wanted to build a greenhouse, but the citymanager said the company could only build in an areazoned for agriculture. We worked with the mayor toeducate him on what the industry was all about.

“We work on issues of local infrastructure – roads andwater.Water is a big issue since San Diego imports 90%of its water from Northern California and Colorado.During the drought of the 1980s, the mayor proposedthat companies use water for only two hours each day.In response, the Water for Industry Programme wascreated in which biotech and other industries reducetheir water usage.A reclaimed water plant is now in use– wastewater is recycled through a cooling tower andthis water is used for landscaping. Companies that makeuse of reclaimed water will not have their tap waterturned off.

“In the early 1990s, the issues were more at the statelevel – funding for research and education in the UC andstate university system, and regulatory issues.The issue isthe cost of doing business. California has environmentalregulations that go beyond the federal regulations. WeCA are also liberal on social welfare; workers’compensation and disability are a huge expense for smallcompanies.

“In 1999, BIOCOM focused more on national/internationalissues, like stem cells.We’ve finished a new draft of ourissues and principles agenda. It’s designed to educate themembership and inform elected officials.We also createspokespeople for the industry. Last year, we created theSan Diego Political Action Committee, whichsupplements our public policy efforts. They collectpolitical donations, do a scorecard and have an advisoryboard that serves as overseers – 6 CEOs that determinepriorities. We are focused on ensuring the success ofbusinesses. Last year, we fought the proposed increase inwater rates.At the state level, we proposed legislation tocreate conformity between the state and federal level onoperating losses; we wanted state credits for operatinglosses. We almost got the bill passed. We work closelywith the governor’s office and the mayor’s office.”

“It is also clear that organisations like BIOCOM spent aconsiderable amount of their time interfacing with theirorganisations.This was seen as crucial.Thus:

“There is a lot of cross-pollination in the membershipand leadership of three groups focused on business–thechamber, the EDC and BIOCOM.” “All have strongpolicy programmes and work together in a lot ofcoalition efforts especially with other trade associations.For example, group of all trade association heads fromtelecom, electronics, the software industry, BIOCOMand UCSD Connect sent a delegation to the World TradeCentre on a trade mission. The idea was to catalyse aconvergence of technologies.With San Diego’s strengths inthese technologies, it is one benefit we have over otherareas and it has a heavy impact on medicine.”

The Regional Technology Alliance RTA was an example of yetanother interfacing initiative in San Diego. It was one of sixregional technology alliances in California. Its origins lay in theearly 1990s when California went through a profound period ofdefence downsizing and the state legislature wanted to helpsmall scientists, engineers, and technology folks to remain andfind federal research grants. It set up a matching grantprogramme, to match the federal R & D funding which did notpay for the commercialisation components such as marketresearch. The overall intention was to help would-beentrepreneurs and winners of federal awards, develop thebusiness side of their technology. Originally, Regional TechnologyAlliances were established in LA, Silicon Valley and San Diego,because these were the hardest hit areas. Later, three otherareas were added. Each is a private, non-profit, organisation withsome annual state fund for managing the matching grantprogramme. San Diego’s was established in 1993. Each evolvedunique capabilities depending on the needs and assets of thecommunity.Along with UCSD CONNECT, described earlier, SanDiego’s RTA helped to fill a genuine gap in the existing policystance at the time. CONNECT helped to commercialiseuniversity technology, but no one was working to communicateto the overall community in technology and it was that to whichthe RTA was addressed.The Alliance had four components to itswork: the California Technology Investment Programme,entrepreneurial services, research, and a programme in under-served communities that have a lack of computer literacy andInternet connectivity (bridging the digital divide locally).The RTAworked with VCs, angels, very successful business mentors, andgrowth-spurt companies, but also in workforce development,economic development, public policy, and community economicdevelopment.

6.6 Branding, marketing and promotingplace

The research described in this Report has indicated that certainplaces become thriving locations for technology-based activityby evolving from, and taking advantage of, existing infrastructure,institutions and industries. This evolutionary process can beserendipitous (right place, right time, key individuals etc), and/ ormore formally driven by a research agenda and other policyinterventions. As we say elsewhere in this Report, it is often theresult of both processes. However, it is clear from the researchthat the process can be influenced and the outcomes significantlyenhanced.

We conclude this section by summarising some of the generalobservations that have emerged from our analysis in the casestudy areas about what makes for the successful promotion andbranding of a technology-based enterprising place.This is clearlya very large and important area and we are only able to providean indication of the many approaches adopted.The institutionalformats and key considerations behind this process are thesubject of the next section of this Report.

One of the central lessons that emerged from the research wasthat the promotion of a successful technology-based location didnot occur overnight. It required a sustained and resourcedcommitment over many years and it was about the long haulrather than the quick result. It is for this reason that thepromotion and indeed management of the process does requireinstitutional vehicles that are likely to be there for someconsiderable time. In some cases this may be achieved throughthe Development Agency model and this has been a strongfeature of the Scottish model in the UK. However, there were anumber of variations on the core approach depending on howthe delivery vehicle is constituted, who pays for it and,importantly, how it coordinates what it does with other keyplayers that have to be involved if successful outcomes are to beachieved.

Promotion was delivered best when it was the result of acollaborative endeavour. In our case studies, this meant the coreuniversities working alongside the relevant players that we haveidentified throughout this Report. These were namely thoseinvolved with the delivery of finance, real estate and theprovision of a wide range of resources that are often mainly thedelivery responsibility of government, either centrally or locally.And the key players had to see the benefits to them, and thearea taken as a whole, as a result of the promotion process.Theapproach adopted in the Research Triangle in North Carolina isof great interest in this respect and contains features that havehelped to build it as a formidable location for technology-basedactivity. The role of the Research Triangle Institute has beenfundamental.

As with virtually all of the examples examined in our casestudies, the creation and then promotion process reflects theimportance of a small number of motivated people who hadvision and the institutional connectivity to get things done.Theyrecognised that it would be a long slog.

In Massachusetts, the broad approach was indicated by theMassachusetts Alliance for Economic Development. This bodywas formed in 1993 in recognition of the need for the public andthe private sector to come together to promote Massachusettsas a place to do business. It was a consortium of the state's utilityand telecommunications companies, real estate associations, andthe public sector in the shape of the Massachusetts Office ofBusiness Development (2002).They founded the MassachusettsAlliance for Economic Development.The Alliance's founding wasan outgrowth of recommendations made by the Governor'sCouncil on Economic Growth & Technology, a body of civic andbusiness leaders that advised the Governor on issues relating tothe competitiveness of Massachusetts.

Originally the Alliance was seen as a non-partisan, professionally-staffed organisation that would serve as the Commonwealth'scentral source of available property information for expandingand relocating companies.The Alliance's Site Finder Service wasalso founded, focusing on helping companies find appropriateproperties for facility expansion in Massachusetts. The serviceprovision has since been expanded to include a Research andInformation Service and an Ambassadors programme, bothdesigned to provide decision-support to companies evaluatingMassachusetts as a location for their business. As onecommentator remarked:

“We market MA as a place to do business, through ourinformation services, site finder services and research.We work hand-in-glove with site finder service providerson research; for example, a biopharmaceutical companyconsidered a number of different locations across thecountry. We were finding appropriate sites for them toconsider, and also trying to demonstrate why MA wasthe best place to locate–looking at labour force issues,where their closest suppliers were, etc. Some of this isfairly standard stuff, but companies have uniqueinformation requirements that we try to meet.”



“We also have an Ambassadors’ network–a commitmentfrom CEOs of different companies to be peer resourcesfor visiting executives. This doesn’t necessarily meanCEO to CEO, sometimes a Director of Operationsmight be the best contact, or a CTO, but they havepledged themselves to be peer resources.“We are very focused on implementation. We want tosee companies locate here, and it is one of the ways weevaluate our work. We also try to educate the publicthrough forums, which we hold once or twice a year.Another thing, we can bring in our private sectormembers. We have a structure of corporate members,principally, utilities, architecture and engineering firmsand some financial services, and public sectorrepresentation from MassDevelopment. Our principalsource of funding is from these groups, which pay a feethat ranges depending on the sort of entity they are. Butthere is more private sector member support.

“Our agenda is set up on a customised basis. It getspeople together, if we need to reach across departmentlines we do so. No other public organisation can do this.We are not a quasi-public organisation technically– thegovernor doesn’t appoint our board of directors –but weare not totally private.”

Other examples of the different institutional formats that areused to promote and market the particular place across ourcase study areas could be given. It is noticeable, however, thedifferences that tend to exist between the UK and the US bothin terms of the representation of the private sector interests andthose of the knowledge-based institutions. Moreover,representation is often at a level senior enough to make a tellingcontribution to decision taking.”

6.7 Incentives are still important in manyareas

A further issue that was noticeable from the interviews in thecase study areas was that the attraction of technology-basedcompanies to specific areas was not unaffected by the availabilityof specific incentive packages. Whilst there has perhaps been along tradition of the deployment of specific public policyinitiatives in Scotland in the UK it was also of interest to notethat there was also often fierce competition in the US in relationto the incentives package that was available specifically betweenareas.There was often concern as to whether the cluster-basedbenefits themselves would be sufficient, given the internationalcompetition for such investment.Thus, by way of illustration, onecommentator in North Carolina notes:

“I worked on the Company XXX Pharmaceutical [siteselection].They didn’t or couldn’t build a new facility inYY, where they were. They looked at MA, NC and EastGermany [where they got lots of cash as an incentive tolocate there]. Unlike NC, [we don’t offer] upfront landand cash. [However,] we did 46 different tax cuts andhave a single sales tax factor.We only tax the amount ofsales within state. For a company that sells nationally, it’svery beneficial.”

And promoting bodies went to great lengths to customise theirpitch to meet the needs of the individual technology-basedcompany and, importantly, their workforces. In some cases therewas the ability to use local business taxes to good affect.Thus:

“About 40percent of the state is in an EOA (EconomicOpportunity Area). If a project is one of these areas, thecity can offer a TIF(Tax Increment Financing). Thebusiness enters into this agreement, in which 100% of theincreased property tax revenue [goes] back to thebusiness, and the tax investment tax credit is increasedfrom 3percent to 5percent.

“In the bill the TIF, which is just related to commercialand industrial property, now extends to urban areas forhousing.The DIF (District Improvement Financing) wouldsegregate the increased tax revenue from thedevelopment to specific purposes. So we could projectthe increased tax revenue and separately segregate theprojected revenue, as it comes in, to be used to improvethat district.”

And it was also recognised in the US that financial incentives tocompanies themselves were only a part of the inducement.Theprovision of quality soft infrastructure was also crucial.Thus:

“Our mandate is broad enough [to include housing].At aFall 2000 [agency] retreat [we agreed that] housing is aneconomic development issue. Our housing starts are50% of what they should be. We view it as a supplyproblem. In accordance with Smart Growth principles,we need to increase housing at all price levels. Buildinghousing with subsidy is important, but building overall isimportant [to reduce the shortfall in supply].”

Many other examples could be given.

A key feature that emerged from the research was thatsuccessful technology-based locations sought to enhance theirattractiveness through the provision of a range of infrastructureinitiatives that enhanced the public realm. In some cases, as inDundee in Scotland, this meant redeveloping the City Centre

and establishing a quality retail pitch, as well as building arts andentertainment in the cultural quarter of the City. These thingsmattered in the scheme of things, as did the successfulpromotion of new images that reflected where the place wishedto be, rather than the past and decline that had often only toorecently occurred.

6.8 The role of research and critical review

It was also of interest to note from the case study research thatthe most successful enterprising areas for the development oftechnology-based activities were those that placed strongemphasis on ensuring that they remained at the forefront inexploring new research leads and agendas, even if the paybackmight be a long way off.The ways in which the key players in theareas sought to ensure this varied in terms of how they foundfunding, which institution they used to undertake and, promote,research findings and the like. However, the emphasis given tothis in the US case study areas was again striking.

Moreover, successful places did not stand still but sought toreview their relative position on a regular basis. One excellentexample of this is the Emerging Issues conference held recentlyin the Research Triangle in North Carolina. This two-dayconference brought all of the key players from across theTriangle to examine and benchmark the relative competitivenessof the Triangle as a technology-based location. Attractingspeakers from around the US and indeed the world, andensuring high level representation of the key movers andshakers, the emphasis was on focusing and honing the futurepolicy agenda across all the realms and the boundary interfaces,to ensure that the Triangle stayed amongst the world leaders asa place for technology-based activity.

6.9 Summary

Enterprising places were able to meet the needs of technology-based companies and their workforces by adjusting theirresource base through actions taken by the relevant partiesfrom across the public and private sectors.The key characteristicof successful solutions was that they provided strategic planningfor these technology-based centres that was bold and visionary,and supportive of the growth of technology-based companies.Moreover, as we shall argue in the next section, there was anemphasis on ensuring that strategic planning policies werestronger and more coherent for the city-region and so helped toco-ordinate transport infrastructure, housing and economicdevelopment more effectively. The policies did not provide apurely local response but also related to regional and nationalissues. They did not, for instance, confine themselves to theimmediate area, but instead benefited the broader sub-regionaland regional clusters of high tech business activities.

They also shared a much more integrated and comprehensiveapproach to infrastructure provision - transport, housing andbusiness premises - which were more effectively linked to landuse planning policies. Similarly, they took a longer-term view insecuring commitments from companies in anticipation of thescale and pattern of technology-based development.

The institutional arrangements adopted in the best examplestended to share common traits.They have each introduced newarrangements in their area to ensure delivery and commitmentto planning for the scale and speed and development required.Stakeholder partnerships had been introduced at the city-regionlevels including not only public bodies but also privaterepresentatives.The partnerships were driven by representativesfrom the respective organisations that could authorise realcommitment (and thus usually people at the Chief Executivelevel). Members of the partnerships tended not to be heavilypolitically motivated nor have vested interests.The partnershipsso formed had clear objectives that were deliverable and action-orientated, with actions being reviewed constantly. Thisheightened the partnerships' credibility and helped to ensurethe delivery of their policies to support the growth of thetechnology-based areas.

The evidence from the case study areas was that the ability tofacilitate change varies considerably across the key players in therelevant realms.There was a wide variety in terms of the formatof the intermediaries and instruments used to broker change.The next section moves to investigate these factors in furtherdetail and identifies the implications for the institutional formatof policy response and the resources required.


This section deals with how regional entrepreneurs createvision, deliver needed resources, capture regional return, andmaintain momentum through new regional institutions.

7.1 Introduction

What stood out from this research was that having the rightasset base at a particular point in time - the right companies, theright universities, the land, the right workers - did not necessarilylead to a place being enterprising and successful. A place’ssuccess was determined rather by the continual development ofthese assets. This was usually the product of dynamic andeffective partnerships between the parties from each of therelevant realms within a region.Organisations that embodied these partnerships had thefollowing attributes:

• Connection with, but separation from, government. In eachplace, political leadership and the political climate changedsignificantly over time. Some separation from governmentpermitted organisations to maintain their operations in thisclimate of change.

• Connections to multiple realms.This allowed the organisationto draw resources from different sources as the capacity ofthese sources shifted.

• Structures that enabled entrepreneurship. That is,organisations had both access to resources and the ability tomobilise and deliver them autonomously.

• Independent credibility: they could influence key decision-makers in the core sectors of government, industry,universities, and in other civic enterprises.

The research also indicated that enabling partnershipsconcerned to maintain the momentum of technology-basedlocations had to be able to influence and effect land useavailability and the provision of key infrastructure. This meantthat they needed access to the levers of planning and localtaxation. Flexibility in this respect was noticeably different in theUS when compared with the UK

We also observed that regional entrepreneurship was crucial. Ifthe growth and development of technology-based enterprisinglocations was to be maximised, then it was necessary to bringtogether expertise that spanned the fields of entrepreneurshipand economic development. Interestingly, in our research wefound examples of good practice in both the US and the UK,although there did tend to be important differences between


7. Regional entrepreneurship,institutions and vision

Knowledge System

Built Environment

Finance System

Business System


them in the involvement of business per se in local development.This was no different for technology- based activity than it wasfor other areas of industry and commerce.

The research also indicated that geography mattered.Technology-based clusters did not respect or follow the specificadministrative boundaries associated with traditional governancepatterns. It was thus necessary for those seeking to enhance thegrowth of the cluster to recognise key city-region interfaces.

7.2 Civic enterprise: issues and players

Influential policy leaders we interviewed had paid seriousattention to the academic literature and to practicalunderstandings of the processes of innovation and

entrepreneurship. Innovation was acknowledged to come fromfine researchers at universities and research centres as well asfrom “the shop floor” in companies (Little 1963). Developmentstrategies reflected significant attention to breaking downorganisational and disciplinary barriers and facilitating the kind ofboundary crossing necessary to promote the growth of newcompanies and, correspondingly, dynamic regional growth.

Academics have long noted that innovation often occurs at theboundaries of scientific disciplines (Kuhn 1970), of policy (Schön1971), and of organisations (Peters and Waterman 1982,Saxenian 1994). Such analyses pointed to the ways rigidorganisational or industrial boundaries have inhibited theprocesses of innovation and entrepreneurship. More recentattention has been paid to institutions that foster collaborationamong businesses and other organisations in industry clusters(Porter, San Diego, 2001).

University-based:• Real estate programmes• Commercialisation of technology• Entrepreneurship education• Technology research centre

Government-based:• Technology support• Public champions• Enterprise education

Real estate and finance:• Region-based non-profits• Private developersGovernment-based:• Venture funds• Land and business dev. corps• Industry associationsBusiness-based:• Industry associations• General business support & advocacy

Government-based:• Economic development agencies• Land and business dev. corpsHigh-tech oriented non-profits:• Industry specific support• Entrepreneurship support• Region specific• Business development orgs

Figure 7.1:An array of intermediaries

Knowledge System

Built Environment

Finance System

Business System

In the US, regional leaders from Silicon Valley to Pittsburgh,established to emerging high tech centres, have come togetherto work for the development and sustenance of their ownregions.These leaders give centre stage to social observers suchas Neal Pierce (1993), who noted the importance of newregional units he calls ‘citistates’. These leaders were advised byfirms such as the Silicon Valley-based Collaborative Economics,founded in the early 1990s by three former employees ofStanford Research Institute (Collaborative Economics 1999).Principals Henton, Melville, and Walesh (Henton et al 1996) havedocumented the role of what they term “civic entrepreneurs” inregional economic development.With the support of leading USprivate foundations, they have created a national supportnetwork, the Alliance for Regional Stewardship, to advance ideasof regional citizenship, stewardship, and governance.

To achieve innovation and entrepreneurship in their owncommunities, the leaders we interviewed were acting to breakdown boundaries between traditional organisations and realms.The goal was to make these boundaries sufficiently permeableto allow ideas and information to flow in new ways, leading tonew ideas. This meant enabling new connections betweenpeople. An important focus were connections betweenuniversities and business: moving inventions from universitylaboratories to commercial markets and moving innovatorsacross the boundaries of different organisations. People weinterviewed uniformly categorised rigid boundaries, which theyoften-called “silos,” as a central constraint to innovation. Weheard complaints about industry silos in San Diego, leadershipsilos in Worcester, and cluster silos in Scotland.

Our respondents described an array of programmes designedto span specific boundaries, for example, a programme tofinance market testing for university inventions.When we lookedmore deeply, however, we found these programmes to beembedded in new organisations that built cross-realmcollaboration into their ongoing operations. Some of theseorganisations operated at the edges of traditional institutions.Others operated between traditional institutions, through newand separate organisations. Figure 7.1 identifies in a schematicway the kinds of organisations we found.

These organisations institutionalised collaboration by buildinginto their structures the perspectives of the different constituentrealms, through board memberships and through staffappointments. We refer to these organisations as‘intermediaries’. These intermediaries paralleled Porter’sInstitutions of Collaboration (Porter, San Diego, 2001) andHenton et al’s (2002) “civic intermediaries,” although we usedthe term to apply only to formally construed organisations,rather than ad hoc alliances, as Henton does.

Other organisations sought to make new geographicconnections – fostering enterprise in dense sub-city nodes - for

example, Kendall Square in Cambridge MA - whilesimultaneously enabling regional problem solving. Atkinson andGottlieb (2001, 7-8) pointed out that in the US, the NewEconomy had transformed the spatial order of economic activity.It had drawn development from older downtowns to thesuburbs, creating both dense sprawl in newer growth areas,thinning the metropolis in older areas, and making the workingeconomy whole regions, many of which cross state boundaries.Old political boundaries in the UK have become similarly ill-suited to current economic activity. In study areas in eachcountry, we encountered efforts to define more functionallyrelevant economic areas with appropriate organisationsempowered to act at an appropriate scale. We called theassociated organisations ‘regional partnerships’. Henton et al(2002, 10) defines the decision-making processes of suchorganisations in the US as governance: “the informal process ofbusiness, government, and community collaboration that shapesdecisions and actions in a region.” This is distinct fromgovernment: “ the formal structure that makes policy decisionsand allocates public resources.”

Within this system of intermediaries and partnershipsenterprises, we found entrepreneurs – individual leaders thinkingand acting “outside the box.”These entrepreneurs were active ineach realm and their actions shaped the realms in a way tofoster the growth and development of the enterprising place.Some emerged from traditional institutions, changing them fromwithin. Others built new organisations.They were central to thedevelopment and function of the new institutions, and theinstitutions themselves facilitated the development of the kind ofregional leadership on which successful technology-basedcentres depended. We called these “regional entrepreneurs,” aterm parallel to the civic entrepreneurs identified by Henton etal (1996).

Enterprising places in relation to the activities of technology-based industries were those that had institutional structures thatcould accommodate the needs of the sector and manage theprocess of change involved. However, effective institutionalformats were not in themselves sufficient to attain successfuloutcomes. The changes required across the settlement patternof an area, including those to its built environment, encompassed arange of land use and planning considerations. It was alsonecessary to install new infrastructure, and the ability to financethis was central to success. There had to be sufficient resourcelevers to bring about the changes required.

This chapter discusses the new institutions, the process ofexperimentation that has led to their creation, and theentrepreneurs central to their success. In so doing, we revisitsome of the programmatic activity discussed in earlier chaptersto set that activity in a new institutional context.Throughout weare concerned to assess the scope for the transference of bestpractice between countries and the places within them.



7.3 Three generations of intermediaries

Intermediaries sat on or between the boundaries of differentrealms that embraced technology, policy, finance, and place.Some of the organisations we saw dated back fifty years, wellbefore the dawn of the New Economy. Given that the continuedoperation of these organisations depended on their continuingrelevance and productivity, their very longevity was testimony totheir effectiveness. Others were much more recent.We also sawthe evolution of new forms of intermediaries over time, as theyadapted to current demands. First generation intermediariesdeveloped on the boundaries of traditional institutions, asentrepreneurs within those institutions sought to adapt theiroperations to new circumstances. Second generationintermediaries developed as separate organisations spanningtraditional institutions and the realms of policy, place, and finance.Third generation intermediaries added the knowledge realm.

We also found that the characteristics of intermediaries in boththe US and the UK had changed over time. Intermediariescreated through the 1970s were largely governmentcorporations or traditional trade associations. More recentintermediaries were smaller, mission-driven non-profitcorporations.A key difference between intermediaries in the USand the UK was the role of the public sector. The initiative formuch intermediary activity in the US came from the privatebusiness and non-profit communities. In the UK, public actionwas a more important driver. UK organisations were also morehierarchical relative to each other, often responsible forimplementing centrally defined programmes. In the US, Boardand staff members often had experience in two or more of thecore realms. In the UK, board and staff members were oftenrooted in one realm.

7.3.1 First generation intermediaries

First generation intermediaries opened the individual realms oftechnology, finance, policy, and place to industry using basic two-way connections between the realm and particular enterprises.They included:• public corporations that enabled government to do its

business using private corporate models• centres and departments embedded in universities and

research centres with mandates to make connections withindustry

• industry organisations with mandates to make connections topolicy makers.

These organisations tended to be rooted in a particular realm,while involving some stakeholders representing other realms.

Table 7.1 First generation intermediariesConnection Type Examples

Policy-Industry Government-based Massachusetts Land BankScottish Development Agency

University-Industry University-based MIT Industrial Liaison Office

Teaching Company Scheme

UCSD Corporate Affiliates

Industry-Policy Industry-based Mass High-Tech CouncilSan Diego Association for Corporate Growth

The following are examples drawn from our study areas of firstgeneration intermediaries.

Government-basedIn Massachusetts, the private corporation has long been a modelfor public action.18 In the 1950s the Massachusetts governmentcreated public corporations known as “public authorities” tomanage revenue-producing line operations such as the ports,public housing, and urban renewal. The state’s largest publicauthority, with over 20 000 employees in 2002, was theMassachusetts Port Authority, created in 1959 to operate LoganAirport, the port of Boston, and the various bridges.19 The statelegislature created the Massachusetts Land Bank to convert tocivilian use former military facilities being shed by the federalgovernment. It also created the Massachusetts Industrial FinanceAuthority to issue tax-exempt bonds to support industrialdevelopment. These entities had small boards of directors andprofessional management that reported directly to the boards.The state legislature capitalised these organisations with publicfunds and/or land, but after an initial period of public support, theorganisations were expected to pay for ongoing operations withrevenues. Each had the power to raise capital by issuing revenue-backed bonds.20 The state governor made some or all Boardappointments, but with terms phased so that it would takeseveral years until a new governor could gain control of a board.

In the 1950s, the Scottish Land agency sought to use thecountry’s land resources to attract industry, and it was successfulin bringing IBM to the country. In 1965 the British parliamentcreated the Highlands and Islands Development Board and in1975 the Scottish Development Agency to provide a broaderrange of support to the business community in Scotland and tobuild international competitiveness. The Scottish DevelopmentAgency’s focus was on the lowlands, including Edinburgh andGlasgow. The agency held and developed commercial landspeculatively, and it used incentives to attract multi-nationalcorporations to Scotland.

University-basedIn making connections to business, universities often chose firstto establish relationships with large companies. These effortsbrought companies into the university, to showcase research andnew technologies, to facilitate corporate recruiting of graduates,

18 Note the history of the public authority in the US: for public housing development etc. See Annemarie Walsh,1978, The Public’s Business.19 Model was the New York Port Authority.20 There is an annual limit to total amount of tax-exempt bonds any state can issue, and state legislatures distributebonding authority among bond issuing organisations.

and, in the process, to enhance corporate giving and researchsponsorship. Examples are the MIT Industrial Liaison Programmeand UCSD’s Corporate Affiliates programme, both described inChapter 4.

US universities undertook such efforts earlier than universities inthe UK. During the 1960s in much of the UK, industry anduniversities often worked in isolation from each other.As an IBMexecutive in Scotland reported: “there were three blocks skills,industry, and government, and in those days there was no liaisonbetween those three areas.” Since UK universities are publiclyfunded, there has been less of a focus on corporations as asource of donations or research support. One of the earliestefforts to make a university- industry connection, begun in 1975,was the Teaching Company Scheme described in Chapter 4.Themost active early participants were polytechnics such as NapierUniversity in Scotland.

Industry-basedIndustries also sought to reach out to policy makers, in manycases joining together to speak with one voice. An example wasthe Massachusetts High Tech Council, described in Chapter 5.Other industry associations included Chambers of Commerce:the Association for Corporate Growth in San Diego: areachapters of the American Electronics Association: the SoftwareIndustry Council, biotechnology industry associations: and othertrade associations.

7.3.2 Second-generation intermediaries

Second generation intermediaries integrated several of therealms of policy, place, and finance within their structure. Theygenerally emerged in the 1980s and early 1990s. In some cases,existing single-focus agencies merged to create an organisationwith a more comprehensive mission. Others sought to exploitthe presumed benefits of proximity to universities: this was theera of the university-related research park.Yet others sought toexploit advantages the region had in technology. And othersfocused on providing venture financing.These second generationinstitutions focused on the development, or enhancement, of aparticular kind of asset: land, financial assets, an expensivecommonly needed facility, and intellectual property. Theseintermediaries also responded to various regional developmentproblems, for example, those posed by the demise of thecomputer industry in Massachusetts, or by the relocation off-shore of the Scottish branch plants of multi-nationals.

Table 7.2 identifies some of the second-generationintermediaries with respect to the realms they connected andthe type of activity they undertook.

Table 7.2 Second-generation intermediariesConnection Type Examples

Finance – Place Multi-strategy MassDevelopmentpublic corporation Scottish Enterprise

Regional Development Agencies

Technology-Place Central Technology Massachusetts Technology Asset Collaborative (in 1980s)

MCNC

Policy – Place Land development Mass Alliance for Economic DevelopmentWorcester Business Development Corp.Cambridge Science Park

Policy – Finance Business-based Mass Technology capital gap Development Corp

Scottish Equity PartnersLINC

Technology-Industry Technology Transfer MIT’s TLOUniversity of Edinburgh Technology Transfer Centre

As the focus of economic development policy shifted from largecompanies to small and medium sized companies, newintermediary structures appeared that increased the connectionsenterprises had to each other and that facilitated connectionswith the other realms. Some were organisations created inearlier eras that re-orientated their operations to better reflectthe needs of the “new” regional economy in the 1990s; otherscame into being during the 1990s. In the US, these increasinglyoperated as autonomous organisations in that they were notaccountable to outside organisations. They ranged from privatenon-profit organisations to public corporations (describedpreviously), subject only to indirect state control.

The following are examples drawn from our study areas ofsecond generation intermediaries.

Evolving public corporationsThe Massachusetts Land Bank and the Massachusetts IndustrialFinance Authority merged in the 1990s to form theMassachusetts Development Finance Corporation, orMassDevelopment, which was empowered to provide a range offixed asset financing for business facilities and equipment.MassDevelopment also undertook land development of stateand federal properties such as those previously under theauthority of the Land Bank, especially the 4,000-acre formerarmy base, Fort Devens. The legislature capitalised theorganisation and granted it authority to issue bonds such asprivate tax-exempt revenue bonds; it was expected to finance itsoperations from revenues.

In Scotland too, economic crisis prompted a reorganisation ofthe institutional support system for business.The most significantmove was the merger of the Scottish Development Agency andthe Scottish Training Agency and the creation of ScottishEnterprise (SE) in 1992. SE consisted of a central “strategic” bodyand 12 Local Enterprise Companies (LECs).



The 12 LECs had their own boards, made up of local peoplefrom the public, private and voluntary sectors, with an interest intheir local areas. Members of the LEC Boards were volunteers,and the staff were employed by Scottish Enterprise, butseconded to the LECs.The LECs worked closely at a local levelwith organisations in their respective areas, either throughprojects and programmes they devised and implemented orthrough the local delivery of programmes mandated by ScottishEnterprise National. Scottish Enterprise National operated at astrategic level identifying and supported projects that were ofnational importance. Every year, an LEC Board submitted itsplans along with an application for funding to Scottish EnterpriseNational. Once Scottish Enterprise approved funding, itcontracted with the LEC to deliver the economic developmentactivity outlined in its plans.

Scottish Enterprise, like the Welsh Development Agency, was anexample of the Regional Development Agency (RDA) approachto delivering development programmes at arms length fromcentral government policy makers. On the 1st of April 1998similar bodies were created in the eight English regions with theninth in London, established on the 3rd July 2000 following onthe heels of the establishment of the Greater London Authority.The RDAs have the statutory requirements of furtheringeconomic development and regeneration; promoting businessefficiency, investment and competitiveness; promotingemployment; enhancing development and the application of skillto employment; and contributing to sustainable development atthe regional level. The work of the RDAs is guided by regionalstrategies that have been agreed by Government. As part of theSpending Review 2000 in England, the RDAs were asked toincrease their role as strategic leaders of regional development.This involved drawing-up Regional Strategies that set out thepriorities for economic development and regeneration in theirregions.

Investing in technology-related facilitiesBeginning in the 1980s, several states in the US developed non-profit organisations whose mission was to advance thedevelopment of certain kinds of technologies in their homeregions. One example was the Massachusetts TechnologyCollaborative, created in the 1980s to improve chip design bygiving engineers in the state experience with fabrication, throughaccess to a common fabrication facility. Among other boardmembers, the Deans of all the engineering schools inMassachusetts, including private universities such as MIT, sat onthe board during the 1980s. North Carolina set up a similarorganisation, the Microcomputer Centre of North Carolina(MCNC). Both organisations evolved into quite different entitiesin the 1990s.

Land and sitesThe development of real property, intended to enhance theattractiveness of the region to high tech companies, was often

done by organisations that incorporated the different realms.Anexample in Massachusetts was Worcester BusinessDevelopment Corporation (WBDC), a subsidiary of theWorcester Regional Chamber of Commerce, with a mission toattract new businesses to the area through the development ofindustrial parks. Although its Massachusetts Biomedical ResearchPark (See Chapter 6), was adjacent to the fledgling University ofMassachusetts Medical School, the intent was not to advance theinterests of the school (as was the case in the development ofUniversity Park by MIT, for example).The intent was to use theschool and the park to enhance the attractiveness of the region.To help accomplish this, WBDC’s board incorporated keyleaders from business, government, the universities, and otherkey interests in the region.

Similarly, Massachusetts developed another cross-realmorganisation whose mission was to facilitate companyrelocations to the state. A consortium of utility andtelecommunications companies, real estate associations, and thestate office of business development, founded the Mass Alliancefor Economic Development. It was organised as a tradeassociation, relying on member fees. It served as a central sourcefor property information for high technology and othercompanies interested in locating in the state. The organisationalso had an “ambassadors” network through which membercompany executives act as peer resources for visiting executives.(See Chapter 6.)

FinancingPlace-based financial institutions sought to fill gaps that existed atvarious places in the local financial system, supporting newtechnology enterprises. Since new ventures require specialisedcapital, and since venture capital is known to be highly place-related, policy-makers have tried to increase the number of newand growing ventures by creating place-based equity investmentinstitutions. Examples included Scottish Equity Partners and theMassachusetts Technical Development Corporation. Theseorganisations used public money but were structured withprivate boards. See Chapter 5.

Technology transferIn the mid 1980s universities in both the US and the UK beganto focus more on technology transfer. In 1984 the University ofEdinburgh established the first technology transfer office inScotland. MIT’s Technology Licensing Office (TLO) wasreorganised in 1985, in response to federal legislation regardingpatent rights for inventions resulting from federally-fundedresearch. The essential function of the TLO was to licensepatents on MIT-owned inventions to businesses that woulddevelop the technology commercially. Most TLO staff havesubstantial private sector background.The TLO had no board orsteering committee: the director reported directly to centralMIT administration and ultimately to the MIT Corporation.

7.3.3 The third-generation: building the researchinfrastructure

Third-generation intermediaries incorporated a greater role foruniversities, not only as sources of education and technology, butalso as players in regional economic development strategies. Thenew organisations (and re-constituted existing ones), wereintegrated more firmly into the four realms of place, policy,finance, and technology.This was the result of the convergenceof four streams of analysis in economic development. The firststream was cluster analysis, developed out of the work ofMichael Porter. The second was the analysis of the role ofnetworks, exemplified by the work of Annalee Saxenian. Thethird was work focusing on the role of technology transfer andthe commercialisation of university research. The success ofStanford and MIT had contributed greatly to the interest in thisarea. Finally there was the substantial body of work documentingthe importance of the flow of national research funds, in thedefence industry, in medicine, and in science. Examples includedland and facility developments that incorporate organisedconnections between research-related functions and businessdevelopment; various kinds of technology-business incubators;research institutions with built-in industry connections; andentrepreneurship organisations that made explicit connectionsto the university and finance realms. While second generationintermediaries focused on projects, third generation intermediariestook a more systemic approach, seeking to build a research tobusiness system. Leaders we interviewed described this as the“research infrastructure,” which largely involved institutionsmaking the technology-business connection, including the use ofpublic funds to support the development of particular kinds oftechnology.

Table 7.3 Technology-related Intermediaries [Note:There are significant overlaps in this chart, as the intermediaries in each placeincorporate more and more connections with each other.This is particularly true in Scotland]

Connection Examples

Organised adjacencies Alba CampusNC State Centennial Campus

Technology-orientated incubation Institute for System Level Integration

Scottish Microelectronics CentreMass Biomedical Initiative

Finance-orientated connections Scottish Intermediary Technology InstitutesMIT Deshpande CentreEdinburgh Technology Fund

Comprehensive university services Edinburgh Research and Innovation, Ltd.

Network-oriented connections MIT Enterprise ForumScotland CONNECTMassMedic

Entrepreneurship Scottish Institute for EnterpriseMIT Entrepreneurship Centre

Organised adjacenciesDuring the 1970s and 1980s, the developers of science parksassumed that if you put enterprises next to universities orresearch centres, there would be spillovers. However, it is clearfrom many second-generation efforts that such spillover effectscould not be taken for granted. (See Chapter 6). Such venturesundertaken after the mid-1990s sought to solve this problem byusing design to create more opportunities for such spillovers tooccur and to broker interactions more actively. Examplesincluded the Alba Campus in Scotland and the CentennialCampus at NC State University in Raleigh. (See Chapter 6.)Another, more recent, example was the Worcester GatewayProject, a joint development of the Worcester PolytechnicInstitute (WPI) and the Worcester Business DevelopmentCorporation, on a brown-field site near WPI’s main campus.Thesite will contain a mix of uses, including a federally supportedbioengineering facility, campus housing, office, and retail space.The state is providing brown-field cleanup and infrastructure.

Technology-orientated incubationBusiness incubators developed early on, focused on the jointneeds of small companies, and they were often developed inconjunction with universities. The next step was to createincubators that enhanced the development of certaintechnologies as well. In addition, the managers of theseincubators used the facility as a jumping off point to promote thedevelopment of the region. Examples included the ScottishMicroelectronics Centre and the Massachusetts BiomedicalInitiatives (MBI) in Worcester, both described in Chapter 6. MBIhad several incubator facilities for biotechnology companies, andit supported a network of financing and related services. Itsboard included some of Worcester’s most influential businessleaders. Its mission was not just the incubation of biotechcompanies, it was the promotion of the region as abiotechnology centre.

Enhancing research Third generation research intermediaries drew together multipleuniversities as well as key players in the other realms to enhancethe innovation network in a region.The Intermediary TechnologyInstitutes (ITIs) in Scotland are good examples. Each ITI broughttogether Scottish Enterprise, multiple universities, and companiesin the relevant industries. Research and commercialisationsteering groups, comprising global industrial players andacademics with global reputations in their research fields haveestablished overall direction of the institutes. Similarly, theEdinburgh Technology Fund, created in 1999, involved aconsortium of institutions including the University of Edinburghand four research institutions in the region. Funds were intendedto complement funds from other sources such as ScottishEnterprise and the UK Department of Trade and Industry.

Comprehensive University servicesBy the turn of the century, the increased focus on technologytransfer had produced new ways of organising the universitytechnology transfer operations. Some universities elected to



create technology transfer operations shared by severalinstitutions. Another alternative was to create an independentoperation to manage a range of industry-orientated functions,including technology transfer.The University of Edinburgh was anexample. In 1999, the university created the Edinburgh Researchand Innovation Ltd. This was a private for-profit companydesigned to manage technology licensing and outside research;act as a central consulting service for university staff; manage theEdinburgh Technology Transfer Centre – the university’sincubator - and oversee the university’s interest in the EdinburghScience Park (known as the Edinburgh Technopole). ERI hadmultiple functions. Its technology licensing was a formal part ofthe commercialisation process. In its consulting arm it acted as a“broker” between academics and companies. In its researchoperations it acted as an agent of the university and individualacademics as grant seekers.Although ERI was formally a private company, it is a whollyowned by the University and returned all profits to it. Thedirector reported to the University’s Director of CorporateServices, who in turn reported to the Principal.

Network-orientated connectionsParallel to institutions that directly supported research anddevelopment were organisations focused on connecting theright players.The idea was to maximise the odds of productiveinteractions by optimising the opportunities for informalconnections. Multi-service support organisations also supportedsuch connections. The leaders of these organisations emphasisedseveral factors as key to their success. One was that theorganisation itself was situated on neutral turf. A founder ofCONNECT discussed the creation of a “firewall” between theorganisation and its university sponsor, to ensure that theorganisation would be seen as an “honest broker.” Several otherinterviewees emphasized the brokerage role, and someindicated that independence from government was a key to thisfunction.

Examples of such organisations included CONNECT; the NorthCarolina Centre for Entrepreneurial Development; the MITEnterprise Forum (which is affiliated not with MIT directly butwith its alumni associations around the world), and TechnologyVentures Scotland.

Interestingly, several of the organisations that functioned assecond generation intermediaries when they were created inthe 1980s, evolved into third generation intermediaries duringthe 1990s. An example was the Massachusetts TechnologyCollaborative (MTC), which sold its chip fabrication facility,leased the property to a private firm, and transformed itself intoa public interest consulting organisation that supportedtechnology-based business in general. Its more recent activity isdescribed in Chapter 6. MTC received state funds for itsconsulting operations; it used lease revenues to finance otherparts of its operation; and it housed an endowment, Renewable

Energy Trust, which financed the development of alternativeenergy products.

EntrepreneurshipFinally, recognition that building technology companies requiresspecial skills and attributes has led to the development oforganisations focused on teaching those skills. In some cases,entrepreneurship education occurred within the university, as at theMIT Entrepreneurship Centre. In other cases, entrepreneurshipeducation crossed university boundaries (Scottish Institute forEnterprise, see Chapter 6), or is embedded in an independentregion-based entity (Centre for Entrepreneurial Development inNorth Carolina).

7.4 Regional collaboration and partnerships

Regional partnerships sought to make the geographic as well ascross-realm connections necessary for action at the regionallevel. There was general agreement that a fundamental role forgovernment was to create a planning environment for business.Similarly, the provision of infrastructure was taken as mainly apublic responsibility, although private sector financing involvementwas becoming of increasing importance. Downs (2004), usingcategories developed by Foster (2001), described a range ofboth institutional and non-institutional strategies used in theUS to address regional issues such as traffic congestion. Weencountered similar strategies in this study.

7.4.1 Nodes and networks: the dilemma of geography

The institutional problem associated with planning and theprovision of infrastructure in technology-based centres wasidentified as a mismatch in geography, between governmentalunits and economic units on the smallest scale. High-technologycentres could be quite bounded. For example, one respondentnoted that the Biotech industry was centred in a few blocks inKendal Square, not the entirety of the city of Cambridge MA.Similarly, people we interviewed in the Research Triangle notedthat the boundaries of the Triangle were both clear andprecipitous: the centre did not extend far into the hinterlands.

Meanwhile, planning and infrastructure delivery required decisionsto be made on a larger regional scale. Labour markets andhousing markets were also regional. Our respondents definedregions in terms of travel time: how far one could drive in onehour. Government administrative units did not correspond toeither scale. Municipalities tended to be bigger than localisedcentres of enterprise, but too small for planning or infrastructuredelivery. US states and UK counties did not fit either. Forexample, policy makers in Scotland sought to define Scotland asa region, yet there was a clear economic distinction between theHighlands and Islands, and the south.

Land use planners in technology-based centres in both the UKand US faced competing demands: to provide for future jobgrowth and development needs, and to retain the quality andcharacter of the area, so that the location remained attractive toentrepreneurs and other high-tech businesses. In both countries,there was increasing emphasis on “sustainable” development andsmart growth.

In general, the stock of infrastructure tended to be heavilyconcentrated in the older urban areas, whilst many technology-based companies sought location centres in more peripheralareas.The old patterns of transit did not accommodate the newpatterns of growth well, with people wanting to move aroundthe periphery rather than to go back and forth to the old urbancentre. Sometimes the problem was inadequate city-regioncommunication infrastructure, as in the example ofCambridgeshire in the U.K. In virtually all the case study areas weconsidered in the research, growth brought increases incommuting and changes in commuting patterns, creating trafficcongestion on roads that were operating above their designcapacity. Technology-based development also created significantneed for access to international airports and broadbandcommunication.

Civic and business leaders in both the surveys and interviewsnoted the importance of continued investment in transportationand communication infrastructure (in the US and the UK), andhousing (especially in the UK), to the continued viability andcompetitiveness of the centres we studied. It was of interest tonote that there were differing constraints on housing andpremises construction between the US and UK, but in bothplaces the high cost of housing was seen as a problem.

The sphere of economic influence associated with enterprisingplaces also provoked a number of important policy implications.In the early phases of the development of technology-basedcentres it has sometimes been argued that benefits might betransmitted to relatively depressed neighbourhoods in bothurban and rural areas. In fact, this has proven to be a very elusivepolicy objective to secure. For example, people we interviewednoted that the planners of Research Triangle NC anticipated thatactivity in the triangle would create “trickle down” effects in thewider region. That has not occurred, and policy makers theretoday are trying to figure out how to broaden the group ofbeneficiaries to the wealth created in the triangle. We heardsimilar comments from people across both the UK and US casestudies, and such issues need very careful consideration in thestrategic development of enterprising places.

7.4.2 Existing planning institutions

Policy makers in each country in our case study areas facedsimilar dilemmas: how to align decision-making with respect toplanning and infrastructure needs and delivery?

In the UK there is strong centralised control of regional and sub-regional planning practices and procedures. These regulationscontrol the development of housing, commercial space, andhighways. In the US, planning is the prerogative of localgovernments, as long as they follow accepted procedures for fairdecision-making.

The UK planning system provided a hierarchical frameworkof statutory development plans. National planning guidance(Planning Policy Guidance (PPGs) in England and Planning Policy Statements (PPS) in Scotland) ensured conformity acrossthe country by setting out government priorities with respect tothe use and development of land. Local planning authoritieswere heavily regulated and must work within the frameworkdictated by PPGs and PPS mandated by central government.Thus local governments could not independently decide topermit new housing or commercial development unless suchdevelopment was permitted under central plans. At best, thesystem created long lead times in land use planning and the co-ordination and delivery of infrastructure.This has often resultedin a belated response to growth pressures within technology-based centres. Concern has been growing about whetherexisting structures of government were capable of delivering andmanaging growth of technology-based centres within thecurrent planning system.

Other structural problems created disincentives for localauthorities to respond to the needs of technology-basedcompanies.Thus, local government had only limited control overlocal business taxation with further centralisation actually takingplace in the early 1990s. The great majority of spendingprogrammes remained centrally controlled.The unequal powerrelationship between local and central agencies of governmentweakened the budgetary authority and competence of localauthorities. Dependence on the national level also encouragedthose concerned in managing growth pressures within a high-technology centre to leave conflicts unresolved, (i.e. they canpass the buck to a higher tier, rather than develop horizontalrelations to resolve local issues). Although there were county-wide decision-making bodies - the county councils - they hadlittle autonomous political clout. The UK planning policyframework was subject to inter-authority as well as central-localdisputes. Protracted public consultation exercises often result inconsiderable uncertainty and difficulties in reaching a consensuswith respect to predicting growth forecasts and infrastructuredemands within high-technology areas.



Planning in the US was much more decentralised. Statesessentially have the power to regulate land development, andstates, in general, delegated this power to individual cities andtowns. Land development was controlled through local zoningregulations, although states impose certain requirements if theyfind localities are acting in discriminatory ways. For example, inMassachusetts state law required that localities permit thedevelopment of a certain amount of housing for low andmoderate income families: the state could over-ride local zoningdecisions if it found a locality was being too restrictive. USlocalities could also raise local taxes, issue bonds, and expendrevenues as they saw fit (as long as they acted in fiscallyresponsible ways).

The combination of local power to regulate development andlocal power to tax and spend would appear to allow moreflexibility in the US in the provision of local infrastructure,housing and business premises in high-tech centres, compared tothe UK. However, it is important not to make too broad ageneralisation since there were some important exampleswhere the British response to land use issues was perhaps fasterthan the American equivalent, with an example being theaccommodation of new development on brown-field land.

7.4.3 Leader-initiated strategies for regional visionand governance

In our study areas, regional leaders responded to the need tocreate policy frameworks at the regional level by creating avariety of cross-regional collaborations, which we called regionalpartnerships. These facilitated the development andimplementation of planning policies appropriate for thejurisdictions that spanned the new enterprising places.They alsopermitted the development of a central vision for the place.

These partnerships took different forms in the different placeswe studied. They ranged from stand-alone conferencesconvened at critical economic junctures, to staffed organisations.

In Massachusetts, the most politically decentralised place westudied, the partnership involved a period of gathering togetherthe major stakeholders across the state. This was done at twoperiods of time, each following an important economicdownturn. In each case the gathering was organised on aregional basis, and the product was a document to guide statepolicy and to support and coordinate the many autonomouslocal initiatives.

Massachusetts Regional Competitiveness Forums

While Massachusetts and its technology highway, Route 128, werefamous as centres of high technology industries through the 1980s, bythe early 1990s the demise of the large computer companies, thenational recession, and the crash of the speculative real estate andconstruction booms dealt severe blows to the state’s economy and itsimage. The state’s newly elected leadership responded by launching amajor strategic review of the state’s economy and its economicdevelopment initiatives. Through the University of Massachusetts, theleadership reached out to business and academic leaders, organizedregional meetings, and commissioned research on the economic issuesfacing the state.The result was a strategic document issued in 1993 calledChoosing to Compete: A Strategy for Job Creation and EconomicDevelopment.The key focus of this strategy was on the state’s educationand training programmes and regulatory and permitting agencies, and it setthe stage for continued funding of several large infrastructure projectsinitiated under previous administrations.

In 2001, after the crash of the telecommunication and dot.com stocks,the state undertook another strategic review, again through theUniversity of Massachusetts, and again using extensive outreach toacademic leaders, community groups, and knowledgeable individuals.Thenew strategic framework, Toward a New Prosperity: Building RegionalCompetitiveness Across the Commonwealth, focused on building sevenregional coalitions as fundamental organizing units for economicdevelopment.

Leaders in Hertfordshire also used periodic stakeholderconferences, but these evolved into an ongoing forum for thedebate of policy and the advocacy of specific initiatives insupport of policy agreements.

Hertfordshire Prosperity Forum

In response to the economic recession of the early 1990s and thedecline of the defence industry, the key-players in Hertfordshire haveconvened three county wide conferences to address the situation. Thefirst conference resulted in the “Bright Green Industrial Strategy,” aneconomic strategy focused on ways to raise education and trainingstandards, develop key employment sites and promote inwardinvestment in order to restructure the county into a technology-basedeconomy. At the second conference, held in 1995, participantsestablished the ongoing Hertfordshire Prosperity Forum. Its role was tochampion Hertfordshire’s cause in socio and economic development, todirect the review of the strategy, to provide a strategic forum for debateand to guide research and special projects. At the third conference, heldin 1999, participants revised the county’s economic strategy to includenew objectives.

The Forum has been particularly successful in bidding for funds. Forexample the county was one of the first counties to secure funding toestablish a Business Link office and it has been successful in bidding forSingle Regeneration Budget regeneration funds. In addition, the Forumhas been successful in assisting in the identification and development ofkey business sites such as the former Hatfield Aerodrome and theproposed Bio-science Park in Hemel Hempstead. The Forum has alsobeen responsible for the establishment of an information observatoryfor the county, the establishment of various networks and alliances suchas the Aerospace Alliance and HertsNetwork and improved marketingand branding for the county. As of 2003 the Forum had some 40partnership organisations and linkages to a number of other strategicpartners.

Taking the organisation of the partnership one step further,leaders in the Research Triangle region of North Carolinaestablished a permanent entity to create a regional vision andcoordinate the implementation of individual initiatives. In thiscase, leaders made use of an organisation called the ResearchTriangle Partnership, created in 1990 in regions across the state.The original intent was to coordinate regional recruitment offirms to the state. In 2004 the partnership assumed responsibilityfor coordination of a broad economic development strategy forthe Research Triangle region.

It was of interest to note that initial groups in both areasconvened, then disbanded until the need for another conventionbecame manifest, then reconvened. In the interim, key playerskept up their connections with other key players through theirparticipation in ongoing project-based institutions.

Staffed regional partnershipLike Massachusetts, North Carolina policy makers created sevenregional planning areas to span that state: the region containingthe Research Triangle included 13 counties, an area thatrespondents indicated went well beyond the real boundaries ofthe Triangle impact area. Each is defined as a RegionalPartnership and has staff.

Research Triangle Regional Partnership, North Carolina

The partnership was created in 1990 to coordinate the recruitment offirms to the region. Similar partnerships were created across the state. In2001, the partnership brought in Michael Porter of Harvard BusinessSchool to undertake an analysis of the region’s economy, and for thenext several years, a 37 member task force of business and highereducation leaders worked to create a plan for economic developmentin the region.The result was a document called Staying on Top:Winningthe Job Wars of the Future, released in 2004.The document outlined afive-year plan, and the implementation will involve dozens ofintermediary organisations like the ones described here. The strategycalls for focusing the region’s business, academic, and economicdevelopment resources on a shared vision of job creation. Funding is tocome from institutional partners, who agreed to redirect their existingresources in support of the initiatives outlined in the plan, private fundraising through business organisations, grants from national and regionalfoundations, corporate and public sponsorship, and revenue generation.The Partnership and its staff will coordinate the effort.

7.4.4 Delivering infrastructure

Infrastructure investment required action at, and beyond, themunicipal level. The differences between the US and UK in theplanning and financing structures for infrastructure deliveryaffected the nature of the solutions sought in each country.

Regional decision-making in California

San Diego Association of Governments (SANDAG)

This is a regional decision making agency for the area's 19 jurisdictions.All 18 Cities and County governments are involved in identifying regionalpriorities.They co-ordinate local priorities within a regional framework.These actions affect transportation and land use planning, which have adirect impact on projects to reduce traffic congestion, provide housingand strengthen the economy and protect the environment. SANDAGhas advanced a number of innovative transportation programmes.Directors approved an innovative $516 million financing package tocomplete a number of major transportation projects. They worked inclose partnership with the California Transportation Agency to takeadvantage of the financial market and will use nearly $150 million inbonds to advance construction of highway and transit services.SANDAG is also streamlining regional planning that will integrate localand regional plans for land use, transportation systems and infrastructureneeds. In March 2002, Governor Davis awarded $1 million to SANDAGto jump-start the Regional Plan process for the San Diego region.SANDAG is also suggesting the creation of a new regional agency. Billshave been introduced in both houses of state legislature dealing withregional governance for the San Diego region.

Regional decision-making in Cambridge UK

Cambridgeshire Horizons

This non profit-making company was developed from an informalarrangement formerly known as the Infrastructure Partnership. It was setup by the Cambridgeshire local authorities to drive the development ofnew communities and infrastructure forward in the Cambridge-subregion in accordance with the Structure Plan Strategy for the Cambridgesub-region. Cambridgeshire Horizons is governed by a Board withrepresentatives from all the local authorities in the Sub region, togetherwith representatives from other sectors that have a key role in deliveringdevelopment and infrastructure: including health, housing and centralgovernment agencies. It is funded by its partners along with theDepartment for Communities and Local Government. The partnerscomprise English Partnerships, the East of England Development Agency,Cambridgeshire County Council, Cambridge City Council, and theDistrict Councils of Fenland, South Cambridgeshire East Cambridgeshireand Huntingdonshire. The work of the group is divided into four mainareas of enhancing the quality of life, assisting in major infrastructureprojects, co-ordination of housing development projects and securingfunding. While Cambridgeshire Horizons does not have any statutorypowers and cannot make planning policies its role is to cut acrossorganisational boundaries, seek to overcome barriers to growth and tryto resolve different views. It works closely with the local authorities andoperates openly with all Board meetings open to the public The goal forthe area is to provide 47,500 new homes by 2016, 50,000 new jobs andover £2 billion on infrastructure development to help create sustainablecommunities.

There have also been recent proposals to speed up the co-ordination and delivery of UK planning policy in general.The UKPlanning and Compulsory Purchase Bill is introducing RegionalSpatial Strategies which are to be produced by regionalchambers, including a mixture of indirectly elected local authorityrepresentatives and other regional interests.This is to strengthenregional planning functions and facilitate the implementation ofplanning policies. It will also allow regional spatial strategies to bemore independent of central government. This regionalisation



programme may counter-balance central control tendencies inthe UK and result in more local discretion in funding and policymaking in technology-based centres, in turn becoming moresimilar to the US experience.

7.5 Entrepreneurship and institutions

In most of our study areas, interviewees credited specificindividuals with advancing the development of the place.Theseindividuals exercised leadership through the hands-onparticipation in specific projects, putting in their own time andmobilising the resources necessary to bring these projectsabout. In some cases, the individuals worked from their base inthe traditional realms of technology, government, or industry. Butthey extended their vision beyond the traditional boundaries ofthese institutions.The following are some examples.

We saw a number of examples of the importance of universityleadership in both countries. An important leader in San Diegowas Richard Atkinson, former chancellor of the University ofCalifornia at San Diego. Described as a charismatic leader whoencouraged faculty to commercialise their research, he wascredited with the creation of the widely replicated CONNECTprogramme. Frank Loew, former dean of the Tufts CummingsSchool of Veterinary Medicine near Worcester, MA was creditedwith opening this new veterinary school to the community andfostering entrepreneurship as an institutional characteristic. Theschool developed a unique faculty that excelled at basic andapplied research, bringing substantial outside research funds intothe university, and thriving without tenure. As he put it: “Arelationship is not going to happen if the university CEO turnshis or her back.The people running these organisations, includingthe faculty, are key. They need to be accomplished at reachingout and developing robust relationships. There is a need forcommunity involvement and leadership with communityinitiatives by university leaders.” When we asked who wasbehind the successful partnership building efforts in theResearch Triangle, we were told Mollie Broad, head of the NorthCarolina university system, along with governor James Hunt andthe area’s business leadership. And Alec Broers, former vicechancellor of the University of Cambridge was credited withmaking significant changes in attitudes toward entrepreneurshipin the Cambridge region.

Entrepreneurship within the university was also important. MIT’stransformation of the real estate adjacent to the Institute intospace that would eventually accommodate companies fromsmall biotech firms to the Swiss pharmaceutical giant Novartisoriginated, our interviewees said, from Glenn Strehle, whoserved as MIT’s treasurer from 1975 to 1998.When he came toMIT, the trustees presented him with a problem: MIT washolding an assortment of under-performing real estate assets

adjacent to the Institute. Most of the property around MIT wasitself depressed. Strehle chose to address this problem broadly,as a development opportunity. He advocated that MIT itselfbecome an active player rather than a passive investor in thearea, and he sought to involve all elements of the Institute in theplanning. He also stuck with this effort over time, activelymanaging the real estate activities for ten years before hiringsomeone to head the real estate operations. His successors tooka similar entrepreneurial approach to the various issues andopportunities that arose during their tenure. MIT now holds asignificant amount of highly desirable real estate in Cambridge,Massachusetts.At UCSD, we heard about Mary Walshok, directorof the university’s extension programmes and important in thedevelopment of CONNECT. She both ran the programmes thatbrought the university in direct contact with area businesses, andwrote and spoke about the nature of the university-industryconnection.As the president of a San Diego intermediary noted:“The enabling organisations and key leaders like Mary Walshokand CONNECT were so, so critical. The university was theanchor to a lot of technology, and we had Mary, this brilliantsociologist, who saw all, heard all, and was on all the boards.”Andthe leaders of the Hertfordshire Prosperity Forum askedUniversity of Hertfordshire pro vice-chancellor Tim Wilson tochair the Forum for important institutional reasons: as aninstitution with a long time-horizon and thus less political thansome of the other participants, the university was in a positionto mediate between various public bodies and between businessand the public councils.

Business leaders also played key hands-on roles, especially in theUS, and they did more than simply lend their names to an effort.An example is a story we heard about the president ofWorcester’s largest bank, who met for fourteen Mondays in arow with the state’s commissioner of capital assets to negotiatethe transfer of state land to an intermediary in Worcester for thedevelopment of the Massachusetts Biomedical Research Park.

We saw entrepreneurship and leadership in government as well.In North Carolina, governor James Hunt, during his tenure ofalmost 25 years and beyond it, committed himself to work onthe development of the state’s educational infrastructure, andthe growth of industry in the Research Triangle region and otherparts of the state.When asked about the role his staff played inresearching the various issues, Hunt replied: “This is not staffdriven. You have to learn about this yourself, so you canpersonally explain it to people, to the voters.” Similarly, formerMassachusetts state senator Gerry D’Amico is credited withpersonally negotiating much of the intergovernmental issuesassociated with the development of the MassachusettsBiomedical Research Park and its support infrastructure inWorcester. As one respondent put it: “Individuals make choices.The biotech park is in Worcester because Gerry D’Amicopushed (then Massachusetts governor) Mike Dukakis to comehere on a Saturday afternoon and talk about it. You don’t justneed government, you need a component of leadership.”

Tenacious and effective leadership was also present in theintermediary organisations we studied. In these cases,entrepreneurs built the organisations, secured the necessaryresources, and delivered to their customers in much the sameway that the heads of high technology companies did. Examplesincluded Monica Doss of the Centre for EntrepreneurialDevelopment in North Carolina; Robert Smailes, director ofEdinburgh Innovation and Research; Kevin O’Sullivan, director ofthe Massachusetts Biomedical Initiatives; and Sharon Bamford,former head of the Edinburgh Technopole and now director ofthe Scottish Institute for Enterprise.These are only a few, therewere many others.

7.6 Conclusions

Broad regional partnerships enabled geographic connections tobe made that were necessary to create a vision of the regionand its future. Intermediaries enabled cross-realm connections.Both provided mechanisms for the leaders in different realms,within business, academia, government, and civic society, to testand build trust relationships with their peers in other realms.Thisprocess looked to be necessary for the development ofappropriate strategies for future development.

History mattered when it came to policy-initiatedintermediaries. For example, in Massachusetts, the privatecorporation has long been a model for public action.As a result,the institutional structure in the state was heavily weightedtoward intermediaries that undertook activities in the publicinterest, but that remained at arm’s length from government. Incontrast, in Scotland, the central UK government has long takendirect responsibility for public action. With devolution ofauthority from London to Scotland, the Scottish Executiveassumed more responsibility.While we saw many intermediariesin Scotland, most implemented centrally defined programmesand were directly accountable to the Scottish Executive forfunding and for actions.

With respect to intermediaries we found the following:

• Intermediaries were essentially organic, growing out of place-specific industrial structures, inherited competencies andleadership. They were similarly focused and mission driven,given their origins in specific problem solving.

• Intermediaries facilitated the transformation of places tobecome competitive regions by providing mechanisms for theleaders within business, academia, government, and civilsociety, to test and build trust relationships with their peers inother realms. This process was necessary for thedevelopment of appropriate strategies for futuredevelopment.

• The relationship testing and trust building came from the real-time experience of participants in solving problems on theground.Through these experiences, participants were able toform partnerships. Intermediaries institutionalised the mostsuccessful partnerships and those focused on long-termissues.

These intermediaries and partnerships provided economicgovernance in their regions, enabling their transition to therequirements of the technology-driven global economy. Theydepended on the participation and support of other moretraditional public and private organisations. Because the neworganisations were agents of change, they required theparticipation of the senior executives from the various partners,people who could make decisions and commit resources to thenew initiative. The new organisations had clear missions andmarkets, delivered products to these markets, and survived onlyif their partners and products found them effective over time.

Civic enterprises in the US included more diversity in realms andwere more private sector orientated than those in the UK,which were heavily dominated by public players. This hadadvantages in that the enterprise maintained access to criticalresources despite capacity shifts over time. Independence fromgovernment, but with access to government resources, allowedthe enterprise to operate through significant political changesover time.The enterprises generated/ provided an arena for newregional leadership.



The ability of the UK to compete in the New Economydepended crucially on it developing and nurturing itstechnology-based companies. Many of these companies realisedcompetitive advantage by clustering geographically aroundknowledge-based institutions.The success of these clusters wasan important factor in the ability of the technology-basedcompanies to grow. However, the research described in thisreport indicated that certain places were more enterprising thanothers in sustaining such activity. And there were importantlessons to be learned as to how best to bring players in thedifferent realms of technology, finance, place and policy togetherin order to maintain the momentum. We summarise thembelow.

8.1 Key lessons: building the knowledge base

The central lesson was that investing in systemic academicexcellence was of primary importance. High quality teaching andresearch enhanced the reputation of a university and the place.This drew the brightest students, and many of these remained inthe region when they finished their studies.

Respondents identified the flows of research funding to an areaas a key factor driving academic excellence, innovation and newenterprise development. Leaders in successful centres madeconcerted efforts to increase these flows.

The research highlighted the importance of ensuring thatstudents had the kind of education that made them flexible, ableto take on new and novel problems, and that provided themwith the research and laboratory skills appropriate to their field.Respondents made it clear that graduates should not have to getbasic research training after they finish their studies. (Nor shouldthe KBI have to provide company-specific training as part of itscore programme.)

Collaboration by the KBIs with companies in their researchhelped to ensure that students had the relevant research andlaboratory skills to make them attractive workers, and itbroadened the funding base for research. Most companies didnot fund such research in expectation of usable proprietarytechnology. Respondents stressed the desirability of managingthe research in as open a way as possible, in order to maximisethe flow of ideas.

The availability of multiple opportunities for contact amongcompanies, faculty and students generated serendipitous resultsin terms of innovations and enterprise. Respondents notedinherent potential conflicts, and they suggested that strategies tomanage these interactions had to evolve in ways appropriate toindividual situations.

Respondents favoured extending the university’s resources toaddress the continuing education needs of former graduates andbusinesses in the region as one way by which business contacts(and revenues) could be increased with the KBI.

Respondents indicated the necessity for university staff toincrease their understanding of how companies used intellectualproperty if overall commercialisation of technology was to bemaximised. They noted that the goal of maximisingcommercialisation opportunities conflicted, in some cases, withinstitutional goals relating to revenue maximisation. This is animportant area for further research.

Respondents saw facilitating connections among academics,entrepreneurs and investors as key to maximising theopportunities for business development. However, theycautioned that KBIs should not try to be all things to all people,and build staff accordingly. Respondents suggested theimportance of recognising that the best business advisors, patentattorneys and other specialists were usually to be found outsidethe academic institution and said it was desirable to find ways ofreferring people to the best.

KBIs were landed institutions, and we found them using theseresources to their, and their regions’, advantage. Successfulstrategies took a programmatic approach that reinforced thegoals of the institution whilst recognising the requirements of themarket.

Finally, KBIs were key players in regions because of their size,their status as major employers, and their long-term horizons.We found KBI leaders who recognised this, who engaged in thekind of civic leadership appropriate to this significant institutionalposition, and whose actions were credited with having asignificant effect on the success of the centre.

8. Main conclusions and implicationsfor the United Kingdom


8.2 Key lessons: using finance to supportplace

Our exploration of the relationships among finance, the stagesof development of ideas and companies, and their connectionsto place, policy, and sources of knowledge suggested a numberof lessons for sustaining enterprising places. Respondentshighlighted the importance of the following:

• Investment in institutional assets as an important investmentin place. Respondents suggested maximising the use of theseassets in the community.

• Investment in the development of embryonic ideas withinuniversities and research institutions. However, to ensure thatthe market picks the winners, respondents suggestedinvesting in collaboration with business.

• Paying attention to what works. For example, technologygrants such as SBIRs in the US and the SMART and SPURawards in the UK received high praise from companies andwere heavily used.

• Venture capital funding to move companies beyond certainthresholds. However, we did not explore this topic in sufficientdetail to make specific recommendations, and there wasconsiderable debate over public entry into this domain.This isan area to explore.

• Maximising the use of currently available financingprogrammes by making sure companies were aware of andhad access to them.

• Paying attention to companies at key junctures beyond thestart-up. One such juncture was when a company began pilotmanufacturing, and respondents discussed the need forfinancing programmes appropriate to this stage.

• Using bonds as financing tools.The US had useful experiencein this area.

• Investment in infrastructure. Leaders of successful centresengaged in the kind of activism that would bring thenecessary infrastructure to the region.

8.3 Key lessons: maintaining the place

Key leaders in the public and private sectors sought to meet theneeds of technology-based companies and their workforces byadjusting the area’s resource base. They provided strategicplanning for these technology-based centres that was bold andvisionary, and supportive of the growth of technology-basedcompanies. Moreover, there was an emphasis on ensuring thatstrategic planning policies were stronger and more coherent forthe city-region, coordinating transport infrastructure, housingand economic development more effectively.The policies did notprovide a purely local response but also related to regional andnational issues.They did not, for instance, confine themselves tothe immediate area, but instead benefited the broader sub-regional and regional clusters of high tech business activities.

They also took an integrated and comprehensive approach toinfrastructure provision – transport, housing and businesspremises – which were more effectively linked to land useplanning policies. Similarly, they took a longer-term view insecuring commitments from companies in anticipation of thescale and pattern of technology-based development.

Successful centres in relation to the activities of technology-based industries were those that had institutional structures thatcould accommodate the needs of the industry and manage theprocess of change involved. However, effective institutionalformats were not in themselves sufficient to attain successfuloutcomes. Centres required public policy actions with respect toland use and planning, the installation of new infrastructure, andthe ability to finance this at least partly from local resources.There needed to be sufficient resource levers to bring about thechanges required.

Overall, from the survey and interview results, the provision ofland and hard and soft infrastructure was crucial for thedevelopment of technology-based centres. The problems thatarose and the constraints on achieving coordinated policyactions were common to both the UK and the US. But therewere often significant differences in the type of response thatwas possible at both the local and the regional level. A lack offlexibility in this respect characterised the system in the UKcompared with that of the US. A lack of buoyancy in the localtax base and a heavy reliance on central government for thefunding of key infrastructure had even led some areas in the UKto resist accommodating the growth of technology-basedactivity in their area.

8.4 Key lessons: building organisations

The success of high-technology centres in the US has beengreatly assisted by the establishment of the intermediaryorganisations discussed in Chapter 7 that implemented highpriority economic development strategies and could operateacross and thus transcend traditional institutional boundaries.We found that the ability to facilitate change varied considerablyacross the key players in the relevant realms.

There was a wide variety in terms of the format of theintermediaries and instruments used to broker change acrossthe relevant realm boundaries. Successful intermediaries had thefollowing characteristics:

• They were essentially organic, growing out of place-specificindustrial structures, inherited competencies and leadership.They were similarly focused and mission-driven, given theirorigins in specific problem solving.


• They facilitated the transformation of places to becomecompetitive regions by providing mechanisms for the leaderswithin business, academia, government, and civic society, totest and build trust relationships with their peers in otherrealms. This process was necessary for the development ofappropriate strategies for future development.

• The relationship testing and trust building came from the real-time experience of participants in solving problems on theground. Through this experience, participants were able toform partnerships. Intermediaries institutionalised the mostsuccessful partnerships and those focused on long-termissues.

• They maintained a separation from government. In each place,political leadership and the political climate changedsignificantly over time. Some separation from governmentpermitted organisations to maintain their operations in thisclimate of change.

• They maintained connections to multiple realms.This allowedthe organisation to draw resources from different sources asthe capacity of these sources shifted.

• Their organisational structures enabled entrepreneurship.Thatis, the organisation had both access to resources and theability to mobilise and deliver them autonomously.

• They had independent credibility, that is, they could influencekey decision-makers in the core sectors of government,industry, universities and in other civic enterprises.

Broad regional partnerships enabled geographic connections tobe made that were necessary to create a vision of the regionand its future. Intermediaries enabled cross-realm connections.Both provided mechanisms for the leaders in different realms,within business, academia, government and civic society, to testand build trust relationships with their peers in other realms.Thisprocess looked to be necessary for the development ofappropriate strategies for future development.

Intermediaries and partnerships provided economic governancein their regions, enabling their transition to the requirements ofthe knowledge-driven global economy. They depended on theparticipation and support of other more traditional public andprivate organisations. Because the new organisations wereagents of change, they required the participation of the seniorexecutives from the various partners, people who could makedecisions and commit resources to the new initiative. The neworganisations had clear missions and markets, delivered productsto these markets, and survived only if their partners andproducts found them effective over time.

Within the system of intermediaries and regional partnershipswe found entrepreneurs – individual leaders thinking and acting“outside the box.” These entrepreneurs were active in eachrealm and their actions shaped the realms in a way to foster thegrowth and development of the enterprising place. Someemerged from traditional institutions, changing them from within.

Others built new organisations. They were central to thedevelopment and function of the new institutions, and theinstitutions themselves facilitated the development of the kind ofcivic leadership on which successful technology-based centresdepend.We called these “regional entrepreneurs.”

Regional entrepreneurship was crucial to success. The UShad a number of development professionals with multiplecompetencies and relevant management expertise.The researchdemonstrated clearly that if the growth and development oftechnology-based enterprising locations wasto be maximised, it was necessary to bring together expertisethat spanned the fields of entrepreneurship, land use planningand finance (including local government financing issues). In theUK there was a shortage of individuals with the skill baserequired and we saw an urgent need to provide educational andtraining support to enhance this important component of thehuman resource base.

Intermediaries and partnerships in the US included morediversity in realms and were more private sector-orientated thanthose in the UK, which were heavily dominated by public players.This had advantages in that the enterprise maintained access tocritical resources despite capacity shifts over time. Independencefrom government, but with access to government resources,allowed the enterprise to operate through significant politicalchanges over time. The enterprises generated/ provided anarena for new regional leadership.


It was recognised from the outset that it was important togather information from a significant number of key technology-based companies in a range of locations within the US and theUK. As a result, a number of study areas were identified in thesetwo countries.The areas were selected so that they representedconcentrations of technology-based companies that were atvarious stages of development (e.g. embryonic technology-based centres, mature technology-based centres) and haddifferent economic and policy contexts. In the UK, the EastRegion and Scotland were chosen, with specific attention beingpaid to Cambridgeshire, Hertfordshire and Bedfordshire in theformer, and the "Central Belt" and Dundee in the latter. In theUS, Massachusetts, North Carolina and San Diego were chosen,with specific attention being paid to Cambridge and Worcesterin Massachusetts and the Research Triangle in North Carolina.

Our research involved field interviews with 193 leaders oftechnology-based companies, universities and their variousdepartments, government, and others responsible for facilitatingthe development of the centre.We supplemented these with asurvey of 251 technology-based businesses, the ‘targets’ ofeconomic development policies.Table A.1 shows the distributionof the interview and survey respondents across realms andstudy areas. Note that the ‘others’ interviewed werepredominantly leaders of intermediary organisations plus someinvestment and real estate firms.

Table A.1: Interview and survey respondentse

Region Technologys University Government Other Total-based and research

companies centres

Interview Survey Interview Interview Interview Interview

Eastern Massachusetts 20 35 14 3 12 49

Research Triangle 3 12 4 2 9 18

San Diego 4 18 3 1 7 15

Total US 27 65 21 6 28 82

Scotland 30 67 20 6 24 80

Cambridgeshire 10 47 2 3 5 20

Eastern except Camb. 2 72 5 1 4 12

Total UK 42 186 27 10 33 112

All regions 69 251 48 16 61 194

Total by realm 320 48 16 61 445

In order to facilitate the comparison of the responses across theareas, a set of semi-structured questions was developed andapplied consistently across the study areas. The questionscentred on the history of the company’s development; theimportance of the area’s attributes to this development; theissues and constraints pertaining to these attributes; and thepolicy measures that had been, or should be, put in place toenhance them.

In addition to the interview process, companies from differentstages of development, technology types and locations (seeTables A.2 and A.3), were surveyed in the form of a structuredpostal, web-based and telephone questionnaire. Thequestionnaire asked companies to rank the importance of theplace-related attributes to their business success andconsequent location decision, to identify the geographical scaleover which these competencies operate, and to identify thepolicy measures that had been, or should be, put in place toenhance them.

Table A.2: Company survey by region and company’sstage of development

Start-up Young Medium Mature Other Totalcompany sized company

company

I* C** I C I C I C I C I C

Scotland 25 14 22 7 14 5 2 5 48 46

Cambridgeshire 21 4 8 10 3 18 1 4 3 2 36 38

East Region 22 19 25 11 23 1 6 5 6 58 60(excluding Cambridgeshire)

Massachusetts 11 3 8 12 1 7 1 1 1 21 24

North Carolina 5 4 2 1 5 1 1 10 9

San Diego 8 3 2 4 1 2 1 2 12 11

Total 92 10 55 75 24 67 2 19 12 17 185 188

*I (Initial) – Stage of development of the company when it initially chose its current location**C (Current) – Current stage of development of the company

Table A.3: Company survey by region and companytype

Manufacturing Services Total

East Region (excluding Cambridgeshire) 32 40 72

Scotland 34 26 60

Cambridgeshire 11 23 34

Massachusetts 17 15 32

North Carolina 6 6 12

San Diego 7 2 9

Total 107 112 210

Although 250 responses were received, not every respondentcompleted the stage of development question.

In order to identify the technology-based centres, it was firstnecessary to develop a common list of technology-basedindustries for the two countries and to identify the location ofhigh-technology centres and regions in the two countries.Butchart (1987) defined high-technology industries as those thatspend a “substantially above average" percentage of turnover onresearch and development and employ a "substantially aboveaverage" percentage of scientific, technical and engineeringpersonnel. Using this approach, he identified 19 StandardIndustrial Classifications that fell into this category.

Annex 1: Methodology


To overcome the problem of having different lists of high-technology industries for the UK and the US, we decided to usethe Butchart list, but to exclude from it any industry that did notappear on the US high-technology lists (US Department ofLabour, Cortright and Mayer (2001), DeVol (1999)), and toinclude any industry that did not appear on the Butchart list butappeared on all the U.S lists. The final list of high-technologyindustries used in the research is shown in Table A.4

Using location quotients of these industries, the number ofpatents per 100,000 population filed and granted by area, andthe public and private expenditure on research anddevelopment by area, the high-technology regions of the twocountries were identified (See Maps X & X). Once thetechnology sectors had been mapped, smaller study areas wereidentified in both countries to focus the research.The areas wereselected so that they represented high-technology centres in

various stages of development (e.g. embryonic high-technologycentres, mature high-technology centres), and had differenteconomic and policy contexts.

The key research institutes were also mapped for the EastRegion and Scotland in the UK. Overlaying these maps on thehigh-technology location quotient maps suggested that therewas a relatively strong relationship between the existence ofsuch institutes and high-technology activity.

1992 UK 1992

SIC UK-SIC Industry Name

24.16 Manufacture of plastics in primary forms

24.17 Manufacture of synthetic rubber in primary form

24.40 Manufacture of pharmaceuticals, medicinal chemicals,and botanical products

30.00 Manufacture of office machinery and computers

31.20 Manufacture of electricity distribution and control apparatus

33.20 Manufacture of instruments and appliances for measuring,checking, testing, navigating, and other purposes except industrialprocess control equipment

33.30 Manufacture of industrial process control equipment

32.20 Manufacture of television and radio transmitters andapparatus for line telephony and line telegraphy, plussome radio and electronic capital goods

32.20/2 Manufacture of radio and electronic capital goods

32.10 Manufacture of electronic valves and tubes and otherelectronic components

35.30 Manufacture of aircraft and spacecraft

33.40/2 Manufacture of optical precision instruments

33.10 Manufacture of medical and surgical equipment andorthopaedic appliances

33.40/3 Manufacture of photographic and cinematographic equipment

64.20 Telecommunications

72.00 Computer and related activities

73.10 Research and experimental development innatural sciences and engineering

1987 US 1987

SIC US-SIC Industry Name

2821 Plastics

2822 Synthetic rubber

283 Drugs

357 Computer and office equipment

361 Electric Transmission and distribution equipment

381 Search, detection, navigation, guidance

382 Laboratory apparatus and analytical, optical, measuring,and controlling instruments

366 Communications Equipment

367 Electronic components and accessories

372 Aircraft and Parts

376 Guided Missiles and space vehicles and parts

3827 Optical equipment and lenses

384 Surgical, medical, and dental instruments and supplies

386 Photographic equipment and supplies

481 Telephone Communications

737 Computer Programming, data processing, and other computer related services

8731 Commercial physical and biological research

8733 Non-commercial research organisations

8734 Testing laboratories

Table A.4: Hi-tech industry categories in the UK and US


Annex 2: Cluster mapping and study areas

UK CASE-STUDY AREA 1: SCOTLAND (A) Central Belt

High-technology companies

Absolute Quality (Europe) Ltd.Vicki Woods, Managing Director

Alcatel Optronics UK Ltd.Richard Laming, Chief Technical Officer

Arrayjet Ltd.Howard Manning, Managing Director

Blaven Technologies Ltd.Billy Mitchell, Managing Director

Compound Semiconductor Technologies Ltd.Neil Martin, Chief Executive

ExpressOn BiosystemsPeter Stiberio; Chief Executive

Glycologic Ltd.Richard Tester, Director

IBM UK Ltd.Ronnie R Ahlfeld, Site Manager

Image Fusion Systems Ltd.Andrew Mark Peacock, Director

Intel CorporationDuncan Bremner, Director

Jabil Circuit Ltd.Trevor Kay, Senior Director of Operations – Europe

Microscience Technologies Ltd.Richard Ord, Managing Director

MotorolaMichael Kay, Director Global Software Group

NallatechAllan Cantle, President and Chief Executive Officer

National Semiconductor LtdGerry Edwards,Vice President andManaging Director

Nikon Precision Europe GMBHRod Clayton, General Manager UK and Eire

PanTherixChris Latham, Chief Executive and Research Director

PPL TherapeuticsGeoff Cook, Chief Executive Officer

Q-One BiotechDavid Onions, President

Quintiles Ltd.Angus Bell, General Manager

R-Biopharm Rhône Ltd.Carol Donnelly, Marketing Manager

Scapa Technologies Ltd.Michael Norman, Chief Executive Officer and President

SpektraEuan Robertson, Director of Strategy and Growth

Stem Cell Sciences UK Ltd.Timothy E Allsopp, Principal ScientistIan Garner, Chief Operating Officer

Sun Microsystems Scotland B.V.Hugh Aitken,Vice President Operations

Viragen (Scotland) Ltd.Alan J Dickson, Operations DirectorKaren Jervis, Director of Technology

Voxar Ltd.Andrew Bissell, Founder and Chief Executive Officer

XilinxColin Carruthers, Senior Manager

Universities and research centres

Glasgow Caledonian University, Research and CommercialDevelopment OfficeJohn Marshall, Director

Heriot-Watt University,Technology and Research ServicesGillian E McFadzean, Director

Moredum Scientific Ltd.Juan Escala, Managing Director

Napier University Ventures Ltd.Brendan T McGuckin, Commercialisation Manager

University of Edinburgh, Division of Engineering andElectronicsPeter M Grant, Head of Division

University of Edinburgh, Research and Innovation ServicesBob Smailes, Managing Director

University of Glasgow, Institute of Biomedical and LifeSciencesJohn R Coggins, Director

University of Glasgow, Research and Enterprise OfficeKevin Cullen, Deputy Director

University of Glasgow,Yoshitomi Research Institute ofNeuroscienceBrian Morris, Co-director

University of Strathclyde, Hunter Centre forEntrepreneurshipColin M Mason, Professor of Entrepreneurship

University of Strathclyde, Research and Consultancy ServicesHugh G Thomson, Director

Edinburgh TechnopoleSharon M Bamford, Director

Scottish Microelectronics CentreIain Hyslop, Chief Executive

Facilitators/Networking organisations

Biotechnology Industry Assoc.Barbara Blaney, Director

CONNECT ScotlandIan McDonald, Chief Executive Officer

East of Scotland TCS CentreAnne Keane, Centre Manager

Edinburgh Bio-AllianceJohn Withers, Chairman

Electronics ScotlandJane Richardson, Chief Executive

LINC ScotlandDavid Grahame, Executive Director

Murray Beith Murray WSSandy Finlayson, Partner

PharmalinksAlan Harvey, Director

Scottish Institute for EnterpriseCarl Togneri, Director

Scottish Optoelectronics Assoc.Chris Gracie, Chief Executive

Targeting Technology Ltd.Arthur Slight, Business Adviser

Technology Ventures ScotlandDouglas S Mundie, Chief Executive

The Royal Society of EdinburghAnne Ferguson, Research Awards Manager

Edinburgh Chamber of CommerceHeather MacNaughton, Business Manager

Midlothian Chamber of CommerceGregor Murray, Chief Executive

Financiers

3iKevin Lyon, Managing Director

CoppertopIan Ritchie, Director

Edinburgh Technology Fund Ltd.Keith Winton, Chief Executive

Gap Fund Managers Ltd.Nelson Gray, Director

Royal Bank of ScotlandMatt Walker

Scottish Equity PartnersAndrew Davison, Investment Director

Real Estate

The Alba CampusNeil Francis; Director

Government

Scottish EnterpriseRobert Crawford, Chief Executive

Scottish Enterprise Edinburgh and LothianDavid Caughey, Buss. and Commercialisation ManagerDavid Crichton, Chief Executive

Scottish Executive, Enterprise and Lifelong Learning Dept.Eddie W Frizzell, Head of Department

UK CASE-STUDY AREA 1: SCOTLAND(B) Dundee


University of Abertay Dundee, Business SchoolNicholas Terry, Head of School

University of Abertay Dundee, Research and EnterprisePaul Durrant, Director

University of Abertay Dundee,Vice PrincipalMichael Swanston,Vice Principal

University of DundeeSir Alan Langlands,Vice Chancellor

University of Dundee, Centre for Enterprise ManagementMichael Horner, Director

University of Dundee, Dept. of Economic DevelopmentPam Siler, Division Leader

University of Dundee,Town and Regional Planning Dept.Greg Lloyd, Head of Department


Dundee Chamber of CommerceMervyn Rolfe; Chief Executive


Annex 3: Organisations and peoplecontacted during the research


Government

Dundee City CouncilStan Ure, Business Development ManagerMike Galloway, Planning and Transportation

Scottish Enterprise TaysideKevin Bazley, Manager Business Growth TeamNick Day, Director Competitive Place

UK CASE-STUDY AREA 2:THE EAST REGION(A) Cambridge


3G LabStephen Ives, Chief Executive Officer

AbcamJonothan Milner ; Managing Director

Accelrys Ltd.Stephen P Warde, Director Marketing Communications

AnalysysDavid Cleevey; Chairman

Cambridge Positioning SystemsPeter Duffet-Smith; Founder

Cambustion Ltd.Nick Collings; Founder

Internet Pro Video Ltd.Martin Sebborn; Managing Director

NCipher Corporation Ltd.Nicko van Someren; Chief Technical Officer

SynopticsPhil Atkin; Managing Director


Institute of BiotechnologyChristopher R Lowe, Director


The Technology PartnershipGerald Avison

Babraham Bioscience TechnologiesDavid J Hardman, Chief Executive Officer

Real Estate

Cambridge Science ParkDr Fairbrother; Director

Granta ParkRoger Quince, Managing Director

Financiers

3iLaurence Garrett, Local Director

ET CapitalAnnie Brooking, Director

The Cambridge Gateway FundAlex Pasteur, Investment Manager

UK CASE-STUDY AREA 2:THE EAST REGION (B) Hertfordshire


Jemmac Software Ltd.Mark Fisher, Director

Cranfield Aerospace Ltd.David Gardner, Managing Director


University of HertfordshireTim Wilson;Vice Chancellor

University of Luton, Business Development OfficeFrank Burdett; Director

University of Cranfield – Central Innovation InitiativeSteve Cousins

University of Cranfield, Enterprise IntegrationPeter Sackett; Director

University of Cranfield, Commercialisation OfficeTony West; Head


Business Link HertfordshireJohn Collier ; Director

Hertfordshire Chamber of Commerce and IndustryTim Hutchings, Chief Executive

Real Estate

Luton & Dunstable Innovation ParkMike Anstey; Director

Cranfield Technology ParkDavid Newens; Campus Development Officer

Government

Hertfordshire County CouncilJohn Pryor,Team Leader

US CASE-STUDY AREA 1: SAN DIEGO


CancerVaxDavid Hale, President

IDEC Pharmaceutical CorporationWilliam Rohn, President

MitoKor Walter Moos, Chairman

SAIC Edward Hendrick Jr, Senior Vice President for TechnologyCommercialisation


San Diego State UniversityStephen Dahms, Executive Director, CSUPERB

UCSDMary Walshok, Dean of Ext. Programmes

UCSD – Real EstateNancy Kossan, Director of Real Estate


San Diego Regional Technology AllianceTyler Orion, President

BIOCOM Joseph Panetta, Director

San Diego Regional Economic Development Corp.Julie Meier Wright, PresidentAndrea Moser, Director of Marketing and Communications

San Diego Workforce Partnership Terri Bergman, Director Planning, Evaluation and ResearchGary Moss, Labour Market Information Coordinator

Greater San Diego Regional Chamber of Comm.Kelly Cunningham, Economist

Government

San Diego Association of Governments (SANDAG)Marney Cox, Director of Regional Economic Planning andResearch

US CASE-STUDY AREA 2: CAMBRIDGEMASSACHUSETTS(A) Worcester


BASF/Abbott BioResearch CenterRobert I Kamen, Former President

ViaCell, Inc.Morey Kraus,Vice President and CTO

Expressive Constructs Ind. d/b/a ECI BiotechMitchell Sanders, President and CEO

GLSynthesis, Inc.George E Wright, President

Biomedical Research Models, Inc.Dennis L Guberski, President

Antigen Express, Inc.Robert Humphreys, President and COO

IDEXX Veterinary Services Inc.Scott Hamilton, Director of Futures

Biosource Inc.Marc Andleman, President

Q-One Biotech, Ltd.Z Mark Plavsic,Vice President Operations

NP Medical Inc.Peter N Kotsifas, General ManagerAndy Cote, Director Research and Development

Capsule Technologies Inc.Robert S Winnecki, President

Bioheart, Inc.Jack Harvey,Vice President Cell Process DevelopmentQuality Assurance

Gene-IT Inc.Robert Ranauro, EVP Worldwide Business Developmentand General Manager

VerillonWilliam B Beck, President and CEO

Universities and research centre

Becker CollegeFranklin M Loew, President

The Cummings School of Veterinary Medicine at TuffsUniversityJoseph P McManus, Associate Dean of Administration andFinance


D’Amico ConsultingGerard D’Amico, Principal

Manufacturing Advancement CenterJohn J Healy, Director

Massachusetts Biomedical InitiativesKevin O’Sullivan, President

Worcester Business Development CorporationDavid Forsberg, President

US CASE-STUDY AREA 2: CAMBRIDGEMASSACHUSETTS(B) Boston


Alkermes Inc.James Frates,Vice President, CFO,Treasurer

AVANT Immunotherapeutics Inc.Una Tyan, CEO

DiacrinE Michael Egan, COO

Novartis institutes for BioMedical Research Dr. Bernard Aebischer, Global Head of Research FacilitiesOperation

Raytheon CorporationGreg Shelton,VP Engineering,Technology, Manufacturing andQuality


University and research centres

MIT Technology Licensing OfficeLita Nelsen, Director

MIT Office for Corporate Relations – Industrial LiaisonProgramCarl A Accardo, Senior Advisor, Office of CorporateRelations and Director, MIT Tokyo OfficeDonald A McGowan, Associate Director

MIT Department of Chemical EngineeringCharles L Cooney, Professor of Chemical and BiochemicalEngineeringRobert Langer, Professor of Chemical and BiochemicalEngineering

MIT Treasurer’s OfficeGlen Strehle,Treasurer EmeritusSteven C Marsh, Managing Director, Real Estate

MIT Deshpande Center for Technological InnovationKrisztina Holly, Director

MIT Entrepreneurship CenterKen Morse, Managing Director

MIT Sloan SchoolBill Pounds, Former Dean of Sloan School, now School ofManagement Professor Emeritus

Lincoln LaboratoryRoger Sudbury, Director of External Relations

Whitehead InstituteThomas Ittelson, Director Intellectual Property Office


Massachusetts Department of Business and Technology/Department of Economic DevelopmentBarbara B Berke, Secretary

Massachusetts Development Finance AgencyDavid T Slatery, Senior Executive Vice President

Massachusetts Office of Business DevelopmentJoseph Donovan, Director of Emerging Technology

Massachusetts Alliance for Economic DevelopmentSusan Houston, President

Massachusetts High Tech CouncilChristopher Anderson, President

Massachusetts Technology CollaborativeThomas E Hubbard,VP Technology Development andAnalysis

Artery Business CommitteeRichard Dimeno, President and CEO

Real Estate

Meredith & GrewThomas J Hynes Jr, PresidentYanni Tsipis, Assistant Project Manager

Lyme PropertiesDavid Clem, President

Alexandria EquitiesThomas J Andrews,Vice President Regional MarketingDirector Massachusetts

US CASE-STUDY AREA 3: NORTH CAROLINA


IBMBarry Eveland,Vice President of Logistics Personal SystemsGroup

IBM Vic Weinstein, former Director of Real Estate

SAS Institute Inc.Les Hamashina, Director Corporate Public Affairs

University and research centres

Duke UniversityTallman Trask, Administrative Vice President

MCNCDave Rizzo, President

North Carolina Biotechnology CenterSteven Burke, Senior Vice President for Corporate Affairsand External RelationsKenneth Tindall, Senior Vice President for Science andBusiness Development

Research Triangle InstituteReid Maness

NC State University, Centennial Campus PartnershipBob Geolas, Coordinator Centennial Campus


Council for Entrepreneurial DevelopmentMonica Doss, Executive Director

Greater Durham Chamber of CommerceThomas White, PresidentEdward Conner,Vice President

Real Estate

Research Triangle ParkGary Shope,Vice PresidentJames Robertson, PresidentElizabeth Rooks,Vice President

Government

North Carolina Department of CommerceDallas Hardenbrook, International DevelopmentRepresentative

Institute for Educational Leadership and PolicyJames Hunt Jr., Chairman

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