Max Nathan

Knowledge workers, cultural diversity and innovation: evidence from London

London is one of the worlds major cities and one of its most culturally diverse. A number of studies link diverse workforces and populations to levels of urban innovation, especially in global cities. While widely explored as a social phenomenon, there has been little work on the importance of Londons diversity for the citys businesses. This paper uses the 2007 London Annual Business Survey to investigate, exploiting the surveys unique coverage of both workforce composition and innovation outcomes. From a cross-section of over 2300 firms, we find significant positive relationships between workforce and ownership diversity, and product and process innovation. These provide some support for claims that Londons cultural diversity is a source of economic strength.

Urban Economics and Urban Policy

In this bold, exciting and readable volume, Paul Cheshire, Max Nathan and Henry Overman illustrate the insights that recent economic research brings to our understanding of cities, and the lessons for urban policy-making. The authors present new evidence on the fundamental importance of cities to economic wellbeing and to the enrichment of our lives. They also argue that many policies have been trying to push water uphill and have done little to achieve their stated aims; or, worse, have had unintended and counterproductive consequences.

After Florida: Towards an economics of diversity:

In recent years, most European countries have experienced substantial demographic changes and rising cultural diversity. Understanding the social and economic impacts of these shifts is a major challenge for policymakers. Richard Florida’s ideas have provided a popular – and pervasive – framework for doing so. This paper assess Florida’s legacy and sets out a ‘post-Florida’ framework for ‘technology, talent and tolerance’ research. The paper first traces the development of Florida’s ideas. ‘Florida 1.0’, encapsulated by the Three Ts framework, has performed badly in practice. There are problems in bringing causality to the fundamental relationships, and in consistently replicating the results in other countries. ‘Florida 2.0’, though suggests that Creative Class metrics have value as alternative measures of human capital. This create space for a post-Florida agenda based on economic micro-foundations. I argue that the growing body of ‘economics of diversity’ research meets these conditions, and review theory and empirics. Urban ‘diversity shocks’ shift the size and composition of populations and workforces, with impacts operating via labour markets, and through wider production and consumption networks. While short-term labour market effects are small, over time low-value industrial sectors may become migrant-dependent. Diversity may help raise productivity and wages through innovation, entrepreneurship, market access and trade channels. Bigger, more diverse cities help generate hybridised goods and services, but may also raise local costs through crowding. All of this presents new challenges for policymakers, who need to manage diversity’s net effects, and address both economic costs and benefits.

Innovation and the city

Abstract Innovation is an increasingly globalised phenomenon but the highest rates of visible innovation are found in and around cities. This paper explores the ‘urban factors’ that support innovative activity, focusing on English cities. Agglomeration economies can help explain both cities’ resilience and the characteristics of urban markets, assets, networks and institutions that help innovation to take place. A high-level explanatory framework is set out, using the concepts of ‘urban hubs’ and ‘local links’ to draw together these ideas. The framework is then explored using five case studies from the UK and abroad. The findings suggest a number of different ‘innovation trajectories’ for different city types. Innovation policymakers should pay more attention to improving urban infrastructure, skills and critical mass, and should devolve strategy-making towards pan-regional and sub-regional actors.

Here be startups: exploring London’s ‘Tech City’ digital cluster

The digital industries cluster known as Silicon Roundabout has been quietly growing in East London since the 1990s. Rebranded Tech City, it is the focus of huge public and government attention. National and local policy makers wish to accelerate the local areas development: such cluster policies are back in vogue as part of a reawakened interest in industrial policy. Surprisingly little is known about Tech Citys firms or the wider ecosystem, however, and cluster programmes have a high failure rate. We perform a detailed mixed-methods analysis, combining rich enterprise-level data with semistructured interviews. We track firm and employment growth from 1997 to 2010 and identify several distinctive features: branching from creative to digital content industries; street-level sorting of firms; the importance of local amenities and a lack of conventional cluster actors such as universities or anchor businesses. We also argue that the existing policy mix embodies a number of tensions, and suggest areas for improvement.

East London Tech City: Ideas without a strategy?

This article examines the Coalition Government’s ‘Tech City’ proposals for East London. The Government wants to support the nascent tech cluster in East London, encourage inward investment, and develop the post-2012 Olympic Park into a high-tech hub. After examining the initiative in more detail, the article moves on to discuss why, and how, policy should support the development of high-tech industries in East London. It draws on location and cluster theory, the experience of initiatives to support high-tech clusters in other countries, and an examination of London’s existing strengths in order to suggest a realistic and evidence-based way forward.

Ethnic diversity and business performance: Which firms? Which cities?

A growing literature examines how ethnic diversity influences economic outcomes in cities and inside firms. However, firm–city interactions remain more or less unexplored. Ethnic diversity may help firm performance by introducing a wider range of ideas, improving scrutiny or improving international market access. Urban locations may amplify in-firm processes via agglomeration economies, externalities from urban demography or both. These firm–city effects may be more beneficial for knowledge-intensive firms, and for young firms with a greater dependence on their environment. However, firm–city interactions could be negative for cost and competition-sensitive younger firms, or for firms operating in poorer, segregated urban markets. I deploy English cross-sectional data to explore these issues within firms’ ‘top teams’, using latent class analysis to tackle firm-level heterogeneity. I find positive diversity–performance links for larger, knowledge-intensive firms, and positive firm–city interactions both for larger, knowledge-intensive firms in London and for younger, smaller firms in second-tier metros.