UNIVERSITY COLLEGE LONDON
FACULTY OF THE BUILT ENVIRONMENT
BARTLETT SCHOOL OF PLANNING
The moulding of an East London cluster:
Regeneration and foreign investment in Tech City.
Photo (Emma Vandore) of London’s Old Street Roundabout showing an advertisement for the 2012 Olympic Games
Emma Vandore BA PGDip
Being a Dissertation submitted to the faculty of The Built Environment as part of the requirements for
the award of the MSc Spatial Planning at University College London:
I declare that this Dissertation is entirely my own work and that ideas, data and images, as well as
direct quotations, drawn from elsewhere are identified and referenced.
(signature)
(date)
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Acknowledgements:
I would like to thank my tutor Prof. Harry Dimitriou and all interviewees, in particular
Shoreditch Town Centre Manager Duncan Ray for blue-sky brainstorming over coffee on
Great Eastern Street. I would also like to thank Mark Lucas, head of regeneration at
Redbridge council, and Zelkifli Ngoufonja for help with the surveys, and Dr Olga Bridges,
Dr Christopher MacKay, Dr Marco Bianconi and Rowan Mackay (whose reflections on
selling patterns in Indian markets 20 years ago sparked my interest in clusters) for invaluable
advice on academic structure.
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Table of Contents
Abstract 6
1.0 Introduction 7
1.1 Research Questions 9
1.2 Scope of Study 9
1.3 Assumptions 9
1.4 Overall research framework 10
2.0 Literature review: theoretical developments 12
2.1 Historical background 14
2.2 Theories of Michael Porter 15
2.3 The role of FDI and cluster creation 17
2.4 Cluster varieties and local context 17
2.5 Place marketing literature 18
2.6 Issues for Tech City research 19
3.0 Literature review: international experience of cluster developments 20
3.1 U.S.: Silicon Valley and New York 20
3.2 France: Paris and Sofia-Antipolis 21
3.3 Sweden: Medicon Valley 23
3.4 Generic Lessons 24
4.0 Case study: Tech City, East London 25
4.1 Urban grain: spatial realities 29
4.2 Policy intentions/ developments 32
5.0 Case Study Research Methodology 35
5.1 Qualitative study: interviews 36
5.2 Qualitative study: participant observation 36
5.3 Quantitative study: survey of Shoreditch tech companies 37
5.4 Quantitative study : survey of professionals 38
6.0 Case study analysis and findings 40
6.1 What is Tech City? Analysis of meanings 42
6.2 Silicon Roundabout to Tech City 44
6.3 Nature of government intervention 47
6.4 Marketing analysis 48
6.5 Is the policy appropriate? 51
4
6.6 Overall implications 54
7.0 Conclusions 56
8.0 Bibliography 58
9.0 Appendices 64
9.1 Appendix 1: List of persons interviewed 64
9.2 Appendix 2: Interview questions 66
9.3 Appendix 3: Online survey - companies 67
9.4 Appendix 4: Online survey - professionals 84
9.5 Appendix 5: Interview excerpts (institutional setup) 102
9.6 Appendix 6: Interviews excerpts (finance/ immigration) 104
9.7 Appendix 7: Institutional/ organisational Tech City setup 106
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List of Figures
Unless otherwise stated, all photographs and diagrams are by Emma Vandore
Fig.1 Cities Institute map of London digital economy clusters 10
Fig.2 Overall Research Framework 11
Fig.3 A selection of cluster definitions 13
Fig.4 Michael Porter’s Competitive Diamond 16
Fig.5 UKTI Marketing Brochure 18
Fig.6 Silicon Valley Map 20
Fig.7 Map of France’s 71 competitiveness clusters 22
Fig.8 Map of London showing Tech City in purple 25
Fig.9 Map of Tech City from UKTI brochure 25
Fig.10 Silicon Roundabout 2007 26
Fig.11 Silicon Roundabout 2009 27
Fig.12 Tech City 2011 27
Fig.13 Shoreditch in pictures 29
Fig.14 The Olympic Park 30
Fig.15 Map of the Olympic Park 30
Fig.16 Artistic spaces in Hackney Wick and Fish Island 31
Fig.17 Potential Tech City spaces 32
Fig.18 Tube connections 33
Fig.19 Twitter screen shot 37
Fig.20 Wired magazine’s Silicon Roundabout map 38
Fig.21 SWOT Analysis of Tech City 41
Fig.22 TechHub first birthday 42
Fig.23 Shoreditch attraction for Tech companies 43
Fig.24 Tech City spatial boundaries: companies’ view 46
Fig.25 Tech City spatial boundaries: professionals’ view 47
Fig.26 What is Tech City: professionals’ view 52
Fig.27 What is Tech City: companies’ view 52
Fig.28 Diagram of central government agencies involved in Tech City 106
Fig.29 Diagram of regional government involvement in Tech City 107
Fig.30 Diagram of local government involvement in Tech City 107
Fig.31 Newham Tech City Plus plan 108
Fig.32 Diagram of private sector involvement in Tech City 109
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Abstract
For the past three years, internet start-ups have been drawn to a patch of East London dubbed
Silicon Roundabout. In November 2010, Prime Minister David Cameron announced the area
was to become an officially sanctioned cluster. It was rebranded Tech City UK, called the
Digital Capital of Europe and given a new geography that encompasses the Olympic Park,
site of the largest regeneration scheme in Europe. To deliver on these ambitions, a special
team at UKTI was established with a remit of attracting foreign direct investment (FDI).
There are two main objectives of Tech City: the promotion of London as a hub for the digital
economy - a sector the government sees as vital for future growth1 - and the regeneration of a
depressed area.
This paper makes an academic assessment of the regenerative potential of clusters and the
role of FDI therein. Research methods were designed to test this knowledge in Tech City.
Central government’s Tech City strategy is focussed on attracting foreign investment,
however studies suggest that FDI will only contribute positively when the local business is
strong and sizeable (Phelps 2008), which is not the case. Based on the clearly defined
research methodology, the findings of this dissertation lead to the recommendation that a
lower priority is given to inward investment at this young stage of cluster development, in
favour of developing innovative home-grown talent. In addition, for the cluster to thrive after
the Olympics is over, this paper advocates a new public-private partnership structure that is
less dependent on the central government. Finally, it recommends further academic research
about the economic links between cluster centres and secondary locations.
1 The Economist 2011, Aug.6:13
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1.0 Introduction
Tech City, the East London cluster of creative and digital companies, is being designed as a
replacement brand for Silicon Roundabout, an ‘organic’ cluster, so-called as it emerged
without direct government help. Now central government is involved, it hopes to extend the
geographic boundaries from the cluster’s origins in Shoreditch into the Olympic Park whilst
pumping the area full of FDI steroids. The purpose of this paper is to use Tech City as a case
study to examine the regeneration potential of cluster policy, and the role of FDI in cluster
formation.
The paper begins by analysing cluster policies as a tool employed internationally to boost
economic growth. Encouraged by the research of Michael Porter (1990, 1998), policymakers
in the 1990s and 2000s began to see clusters as a panacea for growth and economic
regeneration, hoping that attracting mobile investment could stimulate local development.
However, many clusters failed to ignite (Clancey 2001, Asheim et al 2006).
The genesis of Silicon Roundabout owes something to the attractions of London generally:
wealth, talent and connectivity. In addition, East London offers relatively cheap rents and a
creative vibe. Recent research (Glaeser 2011) points to cities as centrifugal forces attracting
ideas and people. This paper will question whether stimulating innovation in London would
be more effective than attracting FDI whose contribution to local economies has been
questioned (Young 1994). Another concern with the FDI strategy is whether establishing the
right balance in the Olympic Park: on their own large multinationals risk creating a sterile
atmosphere, and literature suggests that it is difficult to recreate the buzz of informal relations
and creativity found in vibrant clusters on an industrial estate (Jacobs 1970).
Another question addressed in this paper concerns the nature of government intervention. At
the launch of Tech City, Prime Minister David Cameron was keen to show he was not taking
a top-down approach, which would contradict his Localism agenda and the right-wing ethos
of small government: “We understand where previous governments have gone wrong,” he
said. “They believed that they could design and create a technology cluster from on-high.”
Yet in seeking to direct the geography of the cluster, the government is trying to shape it,
arguably in a way that serves its own ends. Support for the £9 billion 2012 Games is
premised on the Olympics providing a lasting legacy and the government is likely to be
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judged on whether it makes that happen. It therefore has a vested interest in reversing the
economic decline of the area.
The paper concludes with policy recommendations for Tech City, and avenues for further
study.
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1.1 Research Questions
This main question addressed in this paper is the following:
To answer the above question, the research will address the following points:
1.2 Scope of Study
In Chapter 2, cluster and place-marketing literature relevant to Tech City is reviewed.
Chapter 3 analyses international experiences. Chapter 4 presents the Tech City case study.
Chapter 5 describes the research methods used, including interviews, surveys and participant
observation. Chapter 6 presents the research findings and chapter 7 makes policy
recommendations. Finally, Chapter 8 lays out concluding reflections on what this paper adds
to cluster theory.
1.3 Assumptions
This paper is based on the assumption, drawn from a Cities Institute (2011) report, that
Silicon Roundabout is a cluster. Using cluster analysis (location quotients), the Institute
identifies Shoreditch as a digital sub-cluster linked to a corridor of digital clusters across
London (Fig.1).
Principle Research Question
What is the role of cluster promotion in regeneration, and how does foreign
direct investment help clusters? How does this apply to Tech City?
Supplementary Research Questions
1) What is Tech City?
2) What is the nature of government intervention?
3) Is this policy appropriate for East London?
4) What can be learnt from foreign examples?
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1.4 Overall Research Framework
The paper will be organised as follows (Fig.2).
Fig.1 Cities Institute map of London digital economy clusters
Pink shape
indicates high
location quotient
for Shoreditch
cluster
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Step 1:
Planning
and
Structure
Step 2:
Research
methods
Step 3:
Policy
recommen
dations/
Conclusion
s
Analysis, Synthesis of Findings
Conclusions
What does Tech City analysis add to cluster theory?
Implications
Lessons for Tech City
Study Aims
What is the role of FDI in cluster formation and regeneration?
How does this relate to Tech City?
Literature: Theory
What is a cluster?
Role of clusters in
economic growth,
regeneration
Impact of FDI,
government
intervention
Local context
Literature:
International
examples
U.S.: Silicon Valley
networks and New
York incentives
France: Dirigisme
Sweden: Marketing
Interviews
Qualitative analysis aimed at
understanding Tech
City, government
intervention, and
aims
Online Surveys
Quantitative analysis
to substantiate the
findings of the
qualitative research
Case Study: Tech
City
Spatial conditions
Regeneration
implications
Role of FDI
Policy analysis
Fig.2 Overall Research Framework
Participant
Observation
Qualitative research to
understand the
Shoreditch cluster
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2.0 Literature review: theoretical developments
There is an avalanche of literature from the fields of economics, geography, and sociology
but cluster definitions differ. Fig.4 shows an inexhaustive selection of academic
classifications, which contrast with the convergence among policymakers, influenced by
economist Michael Porter. His book The Competitive Advantage of Nations (1990) places
clusters within a larger theory of national competitiveness, which in the 1990s became
popular with policymakers (Visser 2009, Simmie & Sennet 1999 etc.). This paper will take
Porter’s work as the reference point and use a simplified version of his definition:
“A cluster is a spatially concentrated group of inter-connected companies.”
The two key elements of a cluster are linkages and geography. Porter classified cluster
linkages as either vertically (from buying and selling) or horizontally (complementary
products or services, technology, labour etc.) (1990:149). The links may be constructed
through economic or social ties and through formal or informal networks. Geography means
firms are located in the same place, although there is fuzziness about scale (Asheim et al
2006:12).
Economists list the key reasons for clustering as shared infrastructure, a pool of skilled
labour, transaction efficiency, and knowledge spillovers (Malmberg & Maskell 2002), all of
which point to cooperation rather than competition. Links to universities or learning networks
are also important (Saxenian 1996). One task of this paper will be to question whether
companies clustered in Shoreditch for the reasons theory might predict, and whether those
reasons can or should be fulfilled in the Olympic Park.
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Fig.3: A selection of cluster definitions
The most cited:
Porter (1998: 197) “Clusters are geographic concentrations of
interconnected companies, specialized suppliers, service
providers, firms in related industries, and associated institutions
(for example, universities, standards agencies, and trade
associations) in particular fields that compete but also
cooperate.”
Academic (adapted from Martin & Sunley 2003:12)
Simmie & Sennet (1999:51) “A large number of interconnected
industrial and/or service companies having a high degree of
collaboration, typically through a supply chain,, and operating
under the same market conditions.”
Feser (1998:26) “Economic clusters are not just related and
supporting industries and institutions, but rather related and
supporting institutions that are more competitive by virtue of
their relationships.”
Rosenfeld (1997:4) “Used to represent concentrations of firms
that are able to produce synergy because of their geographical
proximity and interdependence, even though their scale of
employment may not be pronounced or prominent.”
Oxford Dictionary (1990) “A close group or bunch of similar
things growing together.”
Institutions
European Commission (2008:2) “A cluster can be broadly
defined as a group of firms, related economic actors, and
institutions that are located near each other and have reached a
sufficient scale to develop specialised expertise, services,
resources, suppliers and skills.”
DTI (2004:4) “Clusters are groups of inter-related industries.
They have two key elements. Firstly, firms in the cluster must
be linked. Secondly, groups of inter-linked companies locate in
close proximity to one other.”
OECD (1999:9) “Clusters can be characterised as networks of
production of strongly interdependent firms (including
specialised suppliers) linked to each other in a value-adding
production chain.”
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2.1 Historical background
Cluster theory has evolved from observation of the economic trend of agglomeration.
Economist Alfred Marshall (1890) developed the notion of industrial districts from studies of
different heavy industry groupings in England. Firms group in clusters to realise external
economies from the availability of skilled labour, growth of supportive ancillary trades, and
the information and learning effects from inter-firm division of labour.
In the Fordist era2, more geographically dispersed patterns arose with the dominance of large
integrated firms. As this was replaced by more flexible production methods, cluster
observation became fashionable again. In North America, Scott (1988) noted external
economies of scale from firms in a supply chain working closely together. In Europe, new
industrial or neo-Marshallian districts attracted attention in what came to be known as the
Third Italy: concentrations of artisanal firms specialised in a core activity around which a set
of small and medium sized companies develop, each with their own specialisation (Becattini
1990). Americans Piore and Sabel (1984) labelled this a trend towards flexible specialisation,
however doubts have been raised about the generality of this process (Young 1994). In
addition, the physical interlinkages noted by Marshall and Scott are perhaps less relevant for
hi-tech digital clusters such as Tech City, where individual operators can open their
computers and access the world.
Globalisation would appear to lessen the incentive for companies to invest locally given the
premium given to international competition and fast-changing and flexible business
strategies. However, Amin & Thrift (1992) argue that when a critical mass of know-how,
skills and finance evolves, it can become a socio-cultural and institutional infrastructure
capable of sustaining and encouraging growth. Increasingly, these critical masses are found in
cities whose mass of possible interactions are seen facilitating innovative behaviour. As they
suck in ever greater numbers of people and economic activity, many cities continue to thrive
despite higher land and labour costs. Jacobs (1970) attributed this to the cross-over effect,
saying that dynamic larger cities are so because insights from one industry boost another.
Others have noted the benefit of networking and face to face contact, which is seen as
enabling trust and communication, increasing productivity, innovation and “buzz” (Storper
and Venables 2003).
2 An era in the 1940s-60s when developed economies were characterised by mass consumption and production
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Innovation, seen as a powerful driver of economic growth, has also attracted analysis.
GREMI (French acronym for the European Research Group into Innovative Milieus)
examined how certain forces within clusters can be harnessed to foster an innovative milieu
(Visser 2009:368), such as spin-off companies which transform knowledge in new
combinations. Simmie (2006), however, says that clusters are a feature of innovative systems
and not a cause. This debate is similar to the proverbial chicken and egg, and merits further
research that is not appropriate here.
Global cities such as London are increasingly marketing themselves as centres of innovation,
however they are not necessarily efficient for production, which is often directed to suburbs
and peripheral areas in the urban hierarchy. Of these, theory has little to say. “More analytical
effort ought to be directed at uncovering the economic dynamics of intermediate locations”
(Phelps 2004:972). This consideration is important for Tech City and will be examined in
greater depth (Section 6.2).
2.2 Theories of Michael Porter
Porter’s main theoretical contribution is his diamond theory of competitiveness (Fig.4),
initially intended for companies and nations, and developed for locations and regions
(Asheim et al 2006:9). The diamond theory posits that success depends on a favourable firm
strategy, structure and rivalry; factor input (supply) conditions; demand conditions; and
related and supporting industries. Productivity is increased if the interactions between the
four sets of factors are more intense, which clusters enable. “Once a cluster forms, the whole
group of industries becomes mutually supporting," increasing bargaining power, flexibility,
speeding up information flows, creating new combinations, and attracting resources
(1990:151).
Governments can influence all four points of the diamond by designing the appropriate
competition policy, tax system, intellectual property laws, corporate governance rules,
regulatory process, education policies etc. (1998:245).
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Porter markets his theory as more than just an analytical concept: it has become a policy tool
for promoting growth and regenerating depressed areas with a powerful fan-club. The
Organisation for Economic Cooperation and Development, the European Commission and
the World Bank are backers and a number of cities, states and regions in the U.S. and Europe
have developed cluster policies (Feser & Bergman 2000:2). However, a deeper analysis of
Porter’s work raises concerns.
Critics (Asheim et al 2006 etc.) have questioned Porter’s theoretical robustness, in particular
his spatial awareness (he flip flops between national and local). His geographic
concentrations can range from a city to a region to a country and even neighbouring countries
(1998:199-206). In practice, his results are also often lacking. Porter was hired by authorities
in Scotland and the Basque country to help develop cluster policies, but within ten years both
had launched non-cluster-based initiatives (Asheim et al 2006:21-22).
A study of industry clusters in Ireland concluded that for small, open economies “Porter’s
model does not work very well” (Clancey 1999:11). In Ireland, domestic demand – a key
factor for Porter in spurring clusters – is relatively weak compared with demand overseas, but
Porter largely omits FDI from his analysis
Fig.4: Michael Porter’s Competitive Diamond
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2.3 The role of FDI and cluster creation
In the early 1980s a new belief took hold in regional policy: “that FDI can and does
contribute to cluster formation” (Phelps 2008:458). Regeneration policy hinged on the hope
that foreign investment could be enticed or captured, thereby stimulating local linkages.
However, the economic benefits of FDI are not assured. Studies in the U.K. show investment
from multinationals can have a positive direct impact, but “the spillover effects, especially
with respect to local sourcing, have been very disappointing” (Young 1994). Phelps
(2008:468) suggests that government incentives would be best focussed on indigenous
companies given that most incentives for attracting FDI are absorbed, and FDI is most
effective at boosting the external economy when local companies are “significant.”
Directing funds or industry to specific areas is often problematic. Attempts to create a cluster
from scratch have rarely succeeded. Porter (1990:655) advises against this, and the previous
government agreed: A Practical Guide to Cluster Development “starts from the perspective
that policy intervention cannot create cluster (sic) from scratch but that it can help existing
clusters to develop” (DTI 2004:4). This assumption is difficult to prove or disprove as there is
no sufficient theory about the origins of clusters.
2.4 Cluster varieties and local context
It would be helpful at this point to consider how clusters differ. They can be many levelled -
from the allees and gullis of Indian markets (row upon row of stalls all selling the same thing)
that serve local residential areas, to specialised regions like the City of London, whose
marketplace is the world. They can also be research park-based, urban centred, scattered
across a wide area, deeply concentrated, with tighter or looser networks, and in many
different industries with greater or lesser state influence.
Gordon and McCann (2000) identified three cluster types, each with its own logic and
requiring different policy approaches:
1. Pure agglomeration
2. Industrial complex or science park
3. Social network
To this could be added an additional type identified by Markusen (1996): hub-and-spoke
districts where the economy is dominated by one or several large firms (the three other types
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she identified approximate those of Gordon & McCann). Simmie and Sennett (1999)
introduce a fifth type: multiple clusters of innovative sectors housed in cities at the top of
their urban hierarchies.
However, while useful as a conceptual guide or a starting point for regional development
strategies, cluster theory needs to be carefully tailored to local conditions to be effective
(Lagendijk 1999). Attracting and retaining talent and wealth is a complex business. Markusen
cites various factors making a place “sticky”: corporate strategies, industrial structures, profit
cycles, state priorities, local and national politics (1996:309).To this could be added magnets
for the creative classes: a pleasant environment, leisure activities etc. (Florida 2002).
2.5 Place marketing literature
In practise, cluster promotion is to a large extent about place-marketing. The literature is split
between uncritical “how-to” guides, such as Marketing Places Europe (Asplund et al 2005),
intended as a planning framework for policymakers and full of vague suggestions, to more
critical appraisals.
Ashworth & Voogd (1990:11) define place-marketing as “a process whereby urban activities
are as closely as possible related to the demands of targeted customers.” In many cases, it is a
response to industrial decline (Hall & Hubbard 1998). Cities have switched from producing
things to becoming providers of services such as education, entertainment and culture, and
their perception is an active component of economic success or failure (Ashworth & Voogd
1990:3).
Fig.5 UKTI Marketing brochure
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Kearns & Philo (1993) studied inward investment, a major plank of the Tech City initiative.
They recommend establishing an economic logic (why you would want to locate in a
particular place), and a social logic (encouraging residents to buy into the process). The
attributes of the area – skilled labour, infrastructure, training facilities, transport connections
etc. – are bundled together and turned into a product, which is then marketed. For them, it is
an imaginary city that is being promoted to respond to the perceived demands of the global
market place.
Tech City will also benefit from its association with the 2012 Olympic Games. Nations
compete to host the Olympics because it can be a lucrative place-branding opportunity -
although not without risk. Former Olympic host Greece failed to secure a legacy for many
structures, which are now derelict3. However television rights and corporate sponsorship can
be lucrative, as the 1984 Los Angeles Olympics proved, and the global attention the Games
attract can be leveraged. As Roche (200:7) notes, mega-events are “important for exchange,
transfer and diffusion of information, values and technologies.”
2.6 Issues for Tech City research
The literature review raises several questions for the case study research:
• Does Tech City (whole and in its constituent parts of Silicon Roundabout and the
Olympic Park) correspond to the cluster features identified?
• Which type of cluster does Tech City best conform to, with what policy implications?
• What is the economic rationale for the “intermediate location” of the Olympic Park?
• What is the role of FDI and marketing in Tech City?
These issues were taken into account when designing the research methodology.
3 http://www.dailymail.co.uk/news/article-1036373/Abandoned-derelict-covered-graffiti-rubbish-What-left-
Athens-9billion-Olympic-glory.html
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3.0 Literature review: international experience of cluster developments
3.1 The U.S. - Silicon Valley and New York
Policymakers everywhere dream of emulating Silicon Valley. In his speech4, Cameron
attributed its success to ‘organic’5 growth, albeit with a generous helping hand from
government defence contracts. Firms were attracted by cheap rents, availability of venture
capital, a pool of talent at Stanford University, and the Californian culture.
In the 1970s, Silicon Valley and Route 128 in Boston were both leading centres for
innovation and electronics, but fortunes began to diverge in the 1980s. Silicon Valley
responded to competition from Japan with a new generation of start-ups, whereas Route 128
laid off workers as its market changed. The different responses are not, as Porter would
theorise, because Silicon Valley was more competitive, but because it was more collaborative
(Saxenian 1996). Its dense social networks and open labour markets create an industrial
system that promotes collective learning and flexible adjustment (1996:2). In contrast, Route
128 is dominated by secrecy and corporate loyalty (1996:3).
4 Nov 2010
5 See definition p.9
Fig.6 Silicon Valley Map (source: http://www.californiatraveldreams.com/SiliconValley.htm)
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Located in the southern part of the San Francisco Bay area, California, Silicon Valley
encompasses many communities (Fig.6). For a scale comparable to Tech City, it is worth
looking briefly at Silicon Alley, a corridor in New York’s lower Manhattan. Indergaard
(2004) charted the cluster’s spatial development during the 1995-2000 dot.com bubble, when
speculation inflated the stock market value of internet companies. Manhattan remained the
centre, but the city government tried to encourage new satellites in other boroughs to relieve
pressure on property prices and spread the economic gains. The quasi-public Alliance for
Downtown New York succeeded in filling empty office space in the Financial District by
subsidising wired space (2004:7). The Upper Manhattan Empowerment Zone (UMEZ)
brought business to Harlem by designating an economic development corridor in the
borough’s historic 125th street (HIWay125). Enclaves of low cost wired space were
established in other parts of the city such as South Bronx, Sunset Park in Brooklyn, Long
Island City in Queens, and Staten Island.
3.2 France – Paris and Sofia-Antipolis
A major plank of France’s industrial policy is pôles de compétitivité, or competitiveness
clusters, which the state calls “a motor of growth and jobs6” (my translation). These are
specially chosen clusters in sectors and regions the government wishes to encourage,
organised as public-private partnerships. It is thus a policy that reflects the government’s
vision of how the economy should develop.
In 2004, clusters were invited to apply for official recognition. 71 were selected, of which 17
are deemed to have a global vocation. While undoubtedly inspired by Porter, the policy
would be too interventionist for his liking. The government considers its three-year 1.5
billion euro policy a success, and a second phase was launched through 2012.
Underperforming clusters were struck from the official list, while six new clusters in sectors
the government deems important for future competitiveness (water and eco-technologies)
received the top official grade (CIADT 2010).
6 www.competitivite.gouv.fr
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In Paris, the Cap Digital cluster groups 20 large companies, 530 small and medium sized
companies, and 50 research centres specialised in digital content (video games, media,
computer software and design). Run as a non-profit organisation (‘association’) with a
management committee and a board of directors7, it approves new members according to
specific criteria relating to quality and area of expertise. Membership benefits include
funding, networking, information, support and kudos. Collaborative projects and cooperation
– particularly between large and small companies and with research institutes - are
encouraged. In four years, 1,250 projects have applied for the ‘Cap Digital’ label. Of these
350 were funded.
In a study of the Cap Digital project database for 2006-7, Halbert (2010) concludes that the
state-sponsored cluster appears to have helped a shift in culture away from secrecy and
rivalry to collaboration (2010:24). However Gallie et al (2011) say there is a risk that
7 www.capdigital.com
Fig.7: Map of France’s 71 competitiveness clusters. Source: French government agency DATAR
Cap Digital
Sofia-Antipolis
23
researchers orient their choices to meet the National Research Agency's objectives, which are
based on government priorities and not commercial potential.
The Sophia-Antipolis cluster in Southern France gives heart to fans of dirigisme, although its
unique history would be difficult to replicate. The brainchild of a private individual, Pierre
Laffitte in the 1970s, Sophia-Antipolis quickly became a government initiative when he ran
out of money. Helped by tourist infrastructure (airport, hotels) and a pleasant climate, foreign
multinationals were persuaded to make Sophia-Antipolis their European base. They began to
lose interest in the 1990s, and the cluster appeared in decline. However, when the
multinationals left, their staff remained, perhaps attached to sunny climes. Many then created
their own start-ups (Longhi & Quere 1993). In 2005, the area became a government
designated global cluster now called SCS, specialised in secure communications
(microelectronics, telecommunications, software and multimedia). It has over 260 members,
70 percent of which are SMEs8.
3.3 Sweden: Medicon Valley
Sweden was one of ten countries included in Porter’s initial 1990 study on competitiveness.
His cluster approach became a primary instrument for regional industrial policy in 2000 when
13 projects were set up by NUTEK, the Swedish Business Development Agency under the
aegis of Klustergruppen (The Swedish Cluster Focus Group). One of these is Medicon
Valley, a biotech and pharmaceuticals cluster in the cross-border region between Sweden and
Denmark, now linked by the Oresund Link bridge, which opened in 2000. Building on the
existing industrial strength of the area, authorities in both countries sought to develop a
cluster brand epitomised by the 1997 naming of the cross-border Medicon Valley Academy, a
non-profit, member financed and managed educational and networking organisation
(Lundequist & Power 2010:691).
Both Hallencreutz & Lundequist (2010:543) and Lundequist & Power (2010:699) conclude
that a key factor of success is marketing. The development of a cluster brand is a means to
attract investors and talent, create a shared vision and common purpose and to complement
private sector marketing efforts.
8 www.pole-scs.org
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3.4: Generic Lessons
These studies allow us to address the supplementary research question: “What can be learnt
from the foreign examples.”
The French government’s interventionist stance is unlikely to be officially endorsed by the
current UK conservative-liberal government. However, like the pôles de compétitivité, Tech
City is a regional development policy intended to promote an industry judged by the
government to be strategic. In France, management is devolved to the business community
through a management committee and board for each cluster, whose make-up is mainly
private sector. The Sofia-Antipolis example is interesting because it supports the possibility
that the cluster can be seeded in the Olympic Park, but also because it shows the power of
context.
The American examples show government enticements can help, both in the form of
government contracts (Silicon Valley) and subsidies and tax breaks (New York). Silicon
Valley also points to the importance of a collaborative environment for innovation and the
availability of venture capital.
The Swedish example is instructive as it shows the value of marketing internally for creating
a cluster identity.
25
4.0 Case study: Tech City, East London
“Our ambition is to bring together the creativity and energy of Shoreditch and the incredible
possibilities of the Olympic Park to help make East London one of the world’s great
technology centres,” (Cameron, 4.11.2010).
Fig.8: Map of London with Tech City in purple(source: http://www.flickr.com/photos/philgyford/5547336659/lightbox/)
Fig.9: Map of Tech City from UKTI brochure (2011)
IBC/ media centre
(Olympic Park)
Original Shoreditch cluster
‘Silicon Roundabout’
26
For foreign investors (for whom it is intended), the marketing brochure (Fig.9) makes Tech
City look like a cohesive area. However, in reality, Fig.8 shows a large Shoreditch hub
divided from the Olympic Park by residential housing. Although geographically close (5.6
kilometres), public transport links are poor with no direct trains between the two (there are
two buses: the 388 and the 25).
Cities Institute has studied the nature of the Shoreditch cluster (Figs.10-12).
Fig.10 Silicon Roundabout 2007 (Data source Dopplr, Cities Institute)
27
Fig.12 Tech City 2011 (Data source PlayGen Cities Institute)
Fig.11 Silicon Roundabout 2009 (Data source Wired Magazine, Cities Institute)
28
Silicon Roundabout was created from the interaction of an agglomeration of advertising firms
with a cluster of data and software services firms (Cities Institute 2011:6). Both feed each
other, creating new networks and crossovers, as Jacobs (1970) might have predicted. The
cluster comprises mostly micro or small companies. Workers come together in bars, cafes
and at a multitude of events, displaying the hallmarks of an innovative cluster (Simmie 2006).
It “is both part of and distinct within the London regional digital economy” (Cities Institute
2011:5), which enables it to draw on the benefits of urban agglomeration (Glaeser 2011). The
Shoreditch cluster best conforms to the type described by Simmie and Sennett (1999): one of
several innovative clusters in a city that dominates its surrounding area.
29
4.1 Urban grain: spatial realities
Sandwiched between the riches of The City and the poverty of Tower Hamlets and Hackney,
Shoreditch is recovering from the decline of its traditional industry. In the 1990s, cheap rents
and warehouse spaces attracted artists and creative types, who colonised the area with
studios, clubs and bars. Regeneration professionals soon followed, and the area was held up
as a model for the revival of inner cities (Pratt 2009).
The Olympic Park is a different story. The ex-industrial area has been cleared and is being
completely re-modelled in preparation for the Olympic Games. The Olympic Park Legacy
Company is in charge of planning the area’s future post 2012. This involves finding buyers
for the International Broadcast Centre and media centre, which will provide office and studio
space for 20,000 journalists and broadcasters during the 2012 Olympic Games. The two
buildings will offer 91,000 square metres of business space, served by an adjacent multi-
storey car park with access to the A12. The area borders Hackney Wick, which is largely
physically unchanged from recent developments.
Fig.13: Shoreditch in pictures. Clockwise from top left: Old Street Roundabout (source:
http://ciscolondon2012.ciscoeos.com/photo/e2087a-silicon-roundabout/); Office space in Shoreditch;
café on Paul Street; TechHub
30
Fig. 14: The Olympic Park. Source:
http://www.legacycompany.co.uk/
IBC
and
media
centre Fig. 15: Map of the Olympic Park. Source
http://en.wikipedia.org/wiki/File:Queen_Elizabeth_Olympic
_Park_map.png.
Hackney Wick
31
Fig.16: Artistic spaces in Hackney Wick and Fish Island
32
Other areas of East London are campaigning to be included in Tech City, including the Royal
Docks (with an enterprise zone offering reduced business rates), and Greenwich, where the
digital media and design school Ravensbourne is located. Neither area has the urban grain
and vibe of Shoreditch, although proponents would argue they could serve as back office
space for large companies.
4.2 Policy intentions/ developments
When he announced East London Tech City (as it was called before rebranding), Cameron’s
justifications were manifold:
1. Momentum: “something is stirring in East London” (Cameron, 4.11.2010). The
number of technology start-ups has grown from just fifteen three years ago to over
300 today (UKTI estimate).
Fig.17: Potential Tech City spaces. Clockwise from top left: The Royal Docks (first two
photos);The Millennium Dome (Greenwich), Greenwich Peninsula
33
2. Land and cheap office space: Cameron said the Olympic Park offers nearly one
million square feet of flexible office and research spaces
3. Proximity: Cameron said the Olympic Park is only “a few tube stops away” from
Shoreditch
4. Popularity among the “creative classes” of Florida (named by Cameron in his speech)
5. Transport connections: Cameron flagged quick access to City Airport and St Pancras
International railway station.
6. Talent and ideas: Cameron noted that London “has more outstanding universities than
any other city in the world.”
The reality is not so clear-cut.
Concerning 1) and 2): Shoreditch companies are small and there is limited space for them to
expand, hence the argument for move-on space in the Olympic Park. However, there is no
reason why this could not happen elsewhere.
Concerning 3) and 5): Hackney Wick is the media centre’s nearest station, but the connection
to Old Street (Silicon Roundabout) is complicated (Fig.21). From Stratford (which has
excellent transport connections), the media centre is a 20 minute walk.
.
Concerning 4): Shoreditch, with its bars and cafes, fits Florida’s (2002) criteria, but Cameron
highlighted the future “green spaces, cafes and sports facilities” of the Olympic Park, which
are still under construction. Creating the gritty urban vibe in an area of new-build mainly
residential housing could be challenging. However, nearby Hackney Wick has an urban,
artistic character that could be channelled.
Fig.18 Tube connections
IBC/ media centre
(Olympic Park)
Silicon Roundabout
34
Concerning 6): While London is clearly a knowledge centre, its universities feed companies
across the city and further afield. Establishing links between the cluster and the universities
will be key for future growth (Saxenian1994).
Putting the Olympic Park together with Shoreditch is therefore plausible, but not inevitable,
and will require intervention.
35
5.0 Case Study Research Methodology
To answer the research questions outlined earlier, qualitative research in the form of semi-
structured interviews and participant observation, and quantitative research in the form of two
online surveys were conducted.
Qualitative research is “pragmatic, interpretative, and grounded in the lived experience of
people” (Marshall 2010:2). It allows the researcher to question the why and the how of
decision-making, although there is a risk of subjectivity in analysing the data. A total of 16
interviews were conducted. To minimise the influence of the researcher, participants were
asked non-leading questions such as ‘What do you understand as Tech City?’ Participant-
observation research was conducted through site visits and interaction on Twitter, an
important source of networking and information sharing. This enhanced the understanding of
the mechanics and motivations of the cluster (Marshall 2010:23), although immersion was
limited due to the timescale involved.
To substantiate the findings of the qualitative research and provide a “more concrete
interpretation” (Sharp 2002:128), two quantitative surveys in the form of online
questionnaires were conducted: one a sample of regeneration and economic development
professionals in London; and another a sample of creative technology businesses in
Shoreditch. Ideally, the interviews would have been conducted before the survey questions
were designed, but this was not possible given the short timescale. The questions were thus
devised to test the expected findings of the qualitative analysis, based on the literature
analysis. To minimise structural bias in the question design and allow a degree of
interactivity (Groves 2009), where possible respondents were given the option to comment
beyond the pre-set options. Online questionnaires allow a wide range of responses to be
gathered in a short timeframe, and the Survey Monkey system that was used provides data in
an easy to access format. For demographics wary of the internet, such as older people, online
surveys can result in low response rates (Groves 2009:165), but this is not the case for Tech
City respondents, one of whom wrote to say he completed the survey on his mobile phone.
For both qualitative and quantitative research, requests were sent out in early July, with a cut-
off date of August 12.
36
5.1 Qualitative study: interviews
Participants were selected to represent decision makers at various public and private sector
bodies including central government, the Greater London Authority, the boroughs, the
Olympic Park Legacy Company, the universities, private sector, and financial institutions.
The number of people agreeing to be interviewed (listed in Appendix 1) exceeded
expectations. Interviewees supplied written agreement to be named as contributors, but some
preferred to speak anonymously. The findings will therefore be attributed to Interviewees A-
P. Sometimes, it was difficult to make a point about an interviewee’s organisation without
revealing their identity, and in these cases written permission for attribution was obtained.
To understand the government’s thinking, the aim was to interview as senior an official as
possible. No.10 officials did not reply to email requests, but the head of the government-
appointed agency in charge of Tech City, Eric Van der Kleij, did agree to be interviewed. For
a balanced perspective, care was taken to speak to some people with little or no contact with
government. All interviews were conducted face-to-face, except with one respondent who
preferred to reply by email and one phone interview. Questions were context specific, but a
general outline of common questions can be seen in Appendix 2.
5.2 Qualitative study: participant observation
Participant observation is “both an overall approach to inquiry and a data gathering method”
(Marshall 2010:140). A key principle is that the researcher not only observes but also
engages with the subjects in order to better understand their thinking. A range of methods can
be used, in this case informal interviews, participation in cluster life, and online engagement.
37
A series of site visits were conducted, starting with the first birthday party of TechHub, an
incubator space for tech start-ups. The event was listed on the UKTI website and in the open
style of the digital era, there was an attendee list. The party was held in a space normally set
up for hot-desking, filled with streamers and balloons.
Before this project, this researcher had never Tweeted. At the party, it was explained that
many in Silicon Roundabout use Twitter as a means of communication in preference to
email. It is also where much information is shared. Twitter was therefore monitored as part of
the research and utilised as a way of contacting potential interviewees or survey respondents.
5.3 Quantitative study: survey of Shoreditch tech companies
An online survey of hi-tech, digital and creative companies in Shoreditch was designed to test
motivations for setting up in the area and the perceived benefits. Respondents were also
asked for their views on government policy. A usable response rate (50 percent) was
achieved. A list was compiled on the basis of companies identified by Wired, a monthly
technology magazine that was the first to map Silicon Roundabout (Fig.20)9. It was
9 http://www.wired.co.uk/magazine/archive/2010/02/start/silicon-roundabout
Fig,19 Twitter screen shot showing search feeds for Silicon Roundabout and East London Tech City
(taken 11.8.2011)
38
supplemented by companies listed in The Evening Standard10 - London’s daily newspaper -
as well as personal recommendations and contacts, and companies identified via Twitter.
To maximise response rates, emails were personally addressed, where possible. The
companies vary from UK branches of multinational companies, to tiny start-ups in everything
from creative marketing to software design to financial analytics and consumer websites.
The survey was opened on July 7. It was tested through peer review and by piloting with
Tech contacts outside Shoreditch, then refined. Of the 120 emails sent, 60 responses were
obtained. Appendix3 lists Survey1 questions and responses.
5.4 Quantitative study: survey of professionals
Survey2 is a similar online questionnaire, designed to gauge the assessment of professionals
(in regeneration and economic development positions) of Tech City. It was sent to local
authorities, central government, the GLA, OPLC, public-private bodies, quangos, think-tanks
and pressure groups. The list of borough officials was compiled from the Municipal Year
book, www.LocalGov.co.uk, and internet research yielded the appropriate GLA, UKTI and
No.10 officials. Regeneration bodies such as London First, London & Partners, North
London Strategic Alliance, North London Business Ltd, and Gateway to London were
approached at CEO or heads of economic development level. The survey was also sent to
lobby groups the Town and Country Planning Association and UK Regeneration. The Royal
Town Planning Institute agreed to send it to its network of regeneration officials.
10
http://www.thisislondon.co.uk/lifestyle/article-23931050-the-magic-roundabout---londons-answer-to-silicon-valley.do
Fig.20: Wired Magazine’s list of Silicon Roundabout companies
39
As for the previous survey, questions were tested via peer review and by planning
consultants. Once modified, it was emailed to the above targets. On July 15, 43 direct emails
were sent and the RTPI invited members of its regeneration network to participate. It is
difficult to gauge the exact response rate given the RTPI involvement, but a usable number of
47 responses was achieved. The questions and responses are included in Appendix 4.
40
6.0 Case study analysis and findings
Using the research findings, the strengths, weaknesses, opportunities and threats (SWOT) of
Tech City were listed as a basis for analysis (Fig.21). This breakdown shows that the main
strengths and opportunities are the potential of the creative digital industry and the growing
pool of expertise. There are some opportunities offered by the Olympic Park, namely £9
billion of infrastructure investment and promotional activities linked to the 2012 Games.
However, the park is also the riskiest part of the strategy. The OPLC is responsible for
choosing a buyer for the IBC and media centre. How these venues are developed and settled
will be crucial for the relationship with Shoreditch. If the area fails to attract appropriate
companies, this will affect the reputation of Tech City, which in turn could impact the
Shoreditch cluster.
Building up to the main research question, which is addressed in Section 6.6, the
supplementary research questions will first be tackled. Research methods were designed
firstly to assess why companies choose to locate in Shoreditch to see if this tallies with the
academic assessment. Secondly, they examine what the Olympic Park would change.
Thirdly, they study the motivations driving the policy and how this has been understood by
cluster participants. Then they consider whether the policy is appropriate.
41
11
Boston Consulting Group says Britain spends more online per head of population than any other country
(Economist Aug.6 2011) 12
The Economist (Aug.6 2011)
STRENGTHS WEAKNESSESES
� Desirable location � Benefits of metropolis: centre of
cultural and economic activity � Thriving digital economy11 � Creative hub � Cross-fertilising industries � Talent � Proximity to central London
(Shoreditch) � The City (financing) � Central government support � Buzz (press coverage including in
foreign media) � Momentum
� TCIO focused on FDI and has no independent budget: dependent on UKTI
� Lack of interest from existing businesses in the Olympic Park
� Olympic Park lacks identity, vibe � Poor transport connections between
Silicon Roundabout and Olympic Park � Higher taxes than competing locations? � Immigration rules limit talent pool � Lack of venture capital. City investors wary
of risky technology ventures � Smaller domestic market than U.S., China,
or India � Lack of commercial ambitions compared to
U.S.? � Few world-class technology firms and few
platform firms (which yield spin-offs)
OPPORTUNITIES THREATS
� Industry favoured by government as alternative to finance12
� Success of Silicon Roundabout companies (eg Last.fm, Tweetdeck etc sold in £multi-million deals to CBS and Twitter) attracts attention and fresh funds
� Tech City global brand � Virtual networks connect to the
world (Silicon Valley presence no longer so important)
� Links to Cambridge (Silicon Fen)? � £9 billion Olympic Park
Infrastructure � Olympics marketing opportunities
� Fail to get mix right in the Olympic Park. � Shoreditch companies spurn Olympic Park
in favour of other venues (Dalston, Hackney Central, Greenwich)
� Culture of foreign multinationals doesn’t gel with indigenous companies
� Promising firms get bought by foreign outfits, talent shipped abroad
� Government loses interest � Risk of a tech bubble, market change � Property bubble, rent increases drive start-
ups elsewhere � Global debt crisis threatens availability of
finance � Competition from Silicon Valley, Berlin,
China, India
Fig.21 SWOT Analysis of Tech City. Strongest elements are shown in red.
42
6.1 What is Tech City? Analysis of meanings
Survey1 shows most companies in the cluster are young, with 60 percent present less than
three years13. Crucial to the success of the area is the provision of cheap workspaces. The
youngest flock to TechHub, which caters to the smallest of companies in a pizza and beer
atmosphere (Fig.22). Sponsorship from by large corporates helps keep prices low: permanent
desk space costs £275 + VAT per month. Interviewee E speculated sponsors Pearson and
Google are fishing for cheap talent. Partygoers at the venue’s first birthday were mostly men
in their twenties. Business cards included websites, email addresses, mobile phone numbers,
Twitter names, but no postal addresses (one said he worked from his bedroom in his parent’s
house). When titles were used, they read CEO, founder, partner, or director: they were often
the only staff. Similar spaces cater to different tastes, for example more upmarket facilities
are provided by The Trampery.
The obvious question to ask is what is attracting these entrepreneurs? Fig.23 shows many of
the reasons cluster theory (eg. Malmberg & Maskell 2002) would predict: presence of like-
minded companies, good transport connections, cheap rent - with creative vibe the most
popular explanation. Nearly every respondent claimed to socialise or network, citing mainly
13
Appendix3, Question2
Fig.22 TechHub first birthday
43
business reasons for doing so (knowledge, opportunities) as well as fun14. That bodes well for
the future: networking in Silicon Valley powered innovation and cluster development
(Saxenian 1996) and vibe encourages “highly productive” behaviour (Storper & Venables
2003:24).
Networking happens 24/7 and the distinction between work and play is blurred as in Silicon
Valley. A plethora of networking events abound – from frisbee sessions and Silicon
Drinkabout socialising to more serious events, such as the monthly Minibar, where
developers talk about the latest technologies. Events are often free to attend and open to all
who sign up.
“The way we are successful is because we know the right people in the industry and these
events are where you meet the right people.” (Interviewee G).
A daytime visit revealed fashionable and geeky people working at laptops in cafes and bars.
This researcher was able to type undisturbed for hours in a cafe, where a lunch of chicken
ciabatta sandwich, and homemade lemonade cost around £5 – cheaper than a similar meal in
14
Appendix3, Questions13-14
Fig.23 Shoreditch attraction for Tech companies
44
central London, where lingering is not encouraged. In the late afternoon, business discussions
were heard taking place over drinks on bar terraces.
From a planning perspective, officials say these conditions arose almost by chance.
Interviewee K says Hackney’s policy could be termed one of “almost benign neglect.” In
retrospect, their most important contribution may have been allowing the area to become a
leisure destination (Florida 2002). “Today it’s in the cafes where people share ideas and
collaborate, form partnerships and so on. Having that is just as important as the physical
spaces for business.” (Interviewee K)
However, the attention created by – and towards – the newly branded Tech City risks
upsetting the balance. Rising home prices in Shoreditch also means developers are turning
commercial space into residences, thereby pushing up rents.15 Cheaper alternatives will need
to be found if start-ups are to remain in the area. Interviewee H said Hackney is talking to
neighbouring boroughs about freeing up suitable office space.
6.2 Silicon Roundabout to Tech City
The digital industry is expected to be one of the fastest growing sectors in coming years and
offers the kind of high-skilled jobs favoured by policymakers.16 It is therefore not hard to see
what the cluster offers the Olympic Park. It is less clear whether the Olympic Park will
develop in a way that can benefit the existing cluster. As established in Section2,
understanding of the economic relation between different parts of a cluster is limited (Phelps
2004).
The media and broadcast centres initially looked like they’d be the toughest venues to sell in
the Olympic Park. Design quango CABE called the site layout “awkward and unresolved”
and criticised the “extraordinary banality” of the building.17 The Liberal Democrats called for
ambitions to be scaled down18. However, a number of offers have now been received. A plan
to turn the media centre into a snowdome, and the Wellcome Trust’s bid for the entire park
(including provisions to turn the media centre into a research centre) have both been
15
http://www.bloomberg.com/news/2011-08-10/cameron-s-high-tech-vision-clouded-by-lack-of-cheap-london-space.html 16
The Economist Aug.6 2011 17
http://m.bdonline.co.uk/news/2012-media-centre-would-blight-olympic-legacy-says-cabe/3139228.article
18http://www.libdems.org.uk/press_releases_detail.aspx?title=Olympic_media_centre_will_be_huge_white_el
ephant_-_Brake_&pPK=d63a2f43-3342-47dc-95f4-70d9e85f0984
45
rejected19. Neither would have fulfilled the Tech City vision. Bids by broadcaster ITV
20 and a
Resolution Property-backed fashion consortium21 might be regarded more favourably.
Meanwhile, the London Thames Gateway Development Corporation, a regeneration body,
has submitted plans for a mixed use creative hub in Hackney Wick22, which already boasts a
vibrant artistic community.
At present, Shoreditch companies are mostly uninterested in the Olympic Park. Although
Tech City proponents would argue that could change if they expand and need more space,23
Survey1 shows few would consider moving there now. These findings were backed up by
Interviewee I (who has little direct contact with government officials):
“Nobody in their right mind is going to move a technology company out to Stratford. There is
nobody out there.”
To convince them of the attraction of the Olympic Park, government should pay attention to
the public realm and rent levels, which respondents who would consider moving rated as the
most important criteria24.
Government logic for linking the Olympic Park and Shoreditch is the need for move-on space
as the cluster develops – a not unreasonable argument. With only 5,000 square foot of free
business-space currently available in Shoreditch,25 space will need to be found elsewhere to
house larger companies. However, move-on space does not have to be in the Olympic Park.
There are different perceptions of what Tech City is and should be. Shoreditch companies
think they are the cluster (Fig.24) while regeneration and economic development
professionals, unsurprisingly perhaps, see the cluster as stretching to the Olympic Park and
beyond (Fig.25).
The infrastructure and attention of the 2012 Games may help attract investment, but the link
between potential incomers and the existing cluster has still to be made. Indergaard’s study of
19
http://www.building.co.uk/news/breaking-news/plans-to-turn-olympic-media-centre-into-snowdome-wont-
happen/5014751.article ; http://www.ft.com/cms/s/0/1ca575fe-bdf7-11e0-ab9f-
00144feabdc0.html#axzz1W3MRBasu 20
http://www.thisislondon.co.uk/standard/article-23972834-the-eyes-of-the-world-will-be-on-us-during-
2012.do 21
http://www.egi.co.uk/articles/2011/07/15/736931/Model-plan-for-Olympic-legacy.htm?cp=ILC-EGI-RSS 22
http://www.regen.net/Physical_Regeneration/article/1083682/london-regeneration-body-plans-creative-
business-hub/ 23
IntervieweesD,L,N 24
Appendix3, Questions 8,9 25
Interviewee J
46
New York’s Silicon Alley (2004) shows simple enticements such as cheap wired space can
help divert business, but this was to areas with a similar urban feel. This suggests that
Hackney Wick, whose artist-filled warehouses could appeal to digital creatives, could play a
crucial role if policymakers establish a link with Shoreditch business.
Fig.24 Tech City spatial boundaries: companies’ view
47
.
6.3 Nature of government intervention
The Tech City policy includes a number of measures which could crudely be split into those
designed to encourage innovation and those designed to woo foreign corporates.
Innovation measures include £200 million of equity finance, £200 million for new
Technology and Innovation Centres, and £15 million of tech support. The government is also
changing procurement rules and regulation - opening up government contracts to small and
medium-sized firms, establishing an Entrepreneur Visa, and reviewing its intellectual
property laws. The Technology Strategy Board (TSB), a government agency, announced a £1
million Tech City Launchpad competition, then doubled the funding after it was inundated
with entries26. The policy shares some similarities with the French example, with competition
for funding designed to encourage collaboration.
The government’s main focus appears to be FDI, given that the body charged with
developing Tech City27 is funded directly
28 by inward investment agency UKTI. Eric Van
26
http://www.innovateuk.org/content/news/digital-businesses-in-east-london-to-benefit-from-.ashx. 27
Government website www.techcityuk.com 28
Van Der Kleij interview
Fig.25 Tech City spatial boundaries: professionals’ view
48
Der Kleij, CEO of the 14-person Tech City Investment Organisation (TCIO), outlines a very
specific remit:
“Our role, bearing in mind that we come from UKTI which is the principal inward investment
and trade function of the UK government, is to help identify the gaps that are missing and
plug those where they fit within the remits of what UKTI does. Everything else that we don’t
do is the responsibility of the other constituents.”
TCIO’s role is to help corporates such as Cisco Systems, Facebook, Google, Intel,
Vodaphone, and Qualcomm (all name-checked in Cameron’s Nov. 2010 speech) follow
through on their promised investment. It also looks for new investors, venture capital29 and
anchor tenants for the Olympic Park30. Related to these functions are promotional activities.
The FDI strategy is not popular among entrepreneurs.
“They don’t want big corporates to come in and take ownership and do it badly. People feel
that this is our space, the little guys.” (Interviewee M).
Multinationals’ interests risk clashing with the mostly small or micro-companies of Tech
City. Academic analysis of manufacturing industry clusters indicates that FDI is most
effective when indigenous companies are big and strong enough to be taken seriously by the
multinationals (Phelps 2008:468). A critical appraisal of the benefits from FDI is therefore
warranted. Some interviewees spoke of fears that talent will be snapped up and shipped to
Silicon Valley, and others question whether FDI will make a real contribution (meaning the
relocation of engineers and investment in talent), or take the form of a less meaningful sales
and marketing operation.31
6.4 Marketing Analysis
As shown in Section3, a cluster brand can to be useful for creating a shared vision and
common purpose, as well as attracting investment (Hallencreutz, Lundequist, Power 2010).
This section focuses on Tech City marketing efforts to create internal cohesion (the external
element has largely been covered in previous sections).
29
A new function for UKTI as it doesn’t qualify as inward investment 30
Source: Van der Kleij 31
Interviewees J,M,I
49
Initially, the policy was hurriedly put together32 resulting in a plethora of different brands.
First called ‘East London Tech City,’ for a while it became ‘Tech City East.’ Official
branding is now ‘Tech City UK,’ although almost everyone interviewed said they use ‘Tech
City.’
“The first thing I did when I joined was to say ‘tell me about all the different branding’
because there’s so many. I’m consolidating everything down to a single brand which will be
Tech City UK.” (Van der Kleij interview).
Van der Kleij said his rationale for ‘UK’ is to locate Tech City in the international arena, and
because it should be inclusive of outside London. This may also be reflective of the fact that
UKTI is a national body.
The Silicon Roundabout term is attributed to Matt Biddulph, then chief technology officer of
the travel site dopplr.com. A joke inspired by the ugly traffic circle at Old Street in a 2008
Tweet, the name stuck. International marketeers hated it:
“The only thing worse than Silicon Roundabout would have been Silicon cul-de-sac.”
(Interviewee C).
The Tech City campaign has attracted international attention and entrepreneurs appreciate the
kudos. Survey1 shows initially sceptical companies are now appreciative of government
support, and would like more of it33. Silicon Roundabout has the attention of government,
and entrepreneurs are using this to lobby for their advantage (Appendix6 details some of their
demands).
However, although the surveys show ambivalence towards the Olympic Park, interviews with
influential voices in the cluster (event organisers, galvanisers of opinion – all regularly in
contact with government officials) show some are buying into the Olympic Park logic.
“I was initially a bit suspicious of it because it seemed like it might be a fig leaf to provide a
semblance of a legacy plan for the Olympics which is obviously politically sensitive. But I’ve
gradually come to think it’s actually a pretty smart move. “(Interviewee A.)
Community leaders (including A) are invited regularly to No.10 where Olympic plans are
discussed as well as other measures to help the cluster. One explanation for their change of
32
Interviewees D,H,J 33
Appendix3, Question1. The support
50
heart could be that government has managed to win them around in an atmosphere where
goodwill is generated by measures such as sorting out faster broadband. If true, this
hypothesis would have interesting implications for regeneration strategies in terms of the
importance of winning local support and how to go about it.
Monthly breakfast meetings at No.10 group around 50-60 participants34, whose makeup
varies but includes local businesses, universities, officials from government, GLA, OPLC,
boroughs, as well as property owners, and service providers. Meetings are chaired alternately
by Cameron’s policy advisor Rohan Silva, credited as instigating the initiative35, and Van Der
Kleij36. The No.10 meeting and TCIO are regarded as the most effective forums
37 for getting
things done.
“We can sit here frustrated that we’re getting nowhere with BT, but if No.10 get BT in the
room and says ‘so what are you doing BT’ it actually makes them do something.”
(Interviewee J).
Many interviewees question how long government interest will continue.38 Interviewee N
said normally policy originating in No.10 is “handed out to departments” so the Prime
Minister’s advisors can focus on other things. Interviewee J welcomed central government’s
continued commitment, which he said is unusual given so many other considerations (riots,
Libya, euro crisis etc.).
“In the past there is an announcement and you can’t see the minister’s heels for dust. They
never revisit it again. But these guys are constantly back on it and trying to make it happen,
being accessible, being available and wanting to know what we’re actually doing.”
One reason for No.10’s continued interest could be a determination for the Olympic Park to
succeed, for which the political stakes are high. This is a hypothesis which this research has
been unable to prove conclusively.
34
Interviewees A, C,D,J,L 35
Interviewees J, M
37
Interviewees A,C,J,K,M 38
Interviewees A,B,C,E,H,J,K,M
51
6.5 Is the policy appropriate?
To answer the question requires analysing whose interests are being served.
“The emerging battle of Tech City is Silicon Roundabout saying it’s about us, it’s only about
Hackney, then you’ve got Newham saying ‘hang on a minute, it’s about the Olympic Park
and legacy,’ and then you’ve got Greenwich quite rightly saying ‘ hang on a minute it’s
about the Greenwich peninsula’. And the truth is they’re all right. It is about the geography
of East London and it is about all those things.” (Interviewee E)
Surveys 1&2 suggest the Olympic Park has the most to gain, although Shoreditch benefits
from the attention of government39. However, there is a great divergence of opinion about what the
policy is for. Professionals were divided between seeing Tech City as an industrial policy, about FDI
or place-marketing (Fig.25). Companies are more sceptical: they said government’s biggest
motivation is to gain credit from a successful cluster, although innovation, jobs and cluster
development scored almost as highly (Fig.26).
39
Appendix3 Question7; Appendix4 Question4
52
This confusion is perhaps a reflection of the different agendas of the various agencies
involved (detailed in Appendix7). No.10’s involvement means other levels of government
Fig.27 Motivations behind Tech City: Survey of companies
Fig.26 What is Tech City? Professionals’ view
53
are “all desperately keen to be a part of it,” so the set-up “is more disorganised than
normal40” Some of this may be wasted or duplicative effort: the Department of Communities
and Local Government (CLG) holds meetings but has “no contact” with No.1041, and several
interviewees said they don’t have time to attend both42. All of this in East London, location of
“the biggest mess of governance I’ve ever seen both in this country and internationally.43”
The GLA could be the natural body to carry the policy forward, but it doesn’t want to be seen
favouring one group and is formulating a Digital London strategy for the whole city. It also
has limited resources to devote to Tech City44. The boroughs have specific priorities for their
patch and visions don’t stretch much beyond borough boundaries45. The already established
entrepreneurs want to advance their interests, and are wary of foreign competition.
From the research, it has been shown that the policy is both a result of and a reflection of the
competing interests involved. It is not possible at this stage to say whether it is appropriate
for East London: only time will tell. However questions about the focus on FDI and its
suitability for this stage of a cluster growth have been raised.
In terms of marketing, the government has concocted a plausible economic logic for Tech
City as discussed in Section6.1. Kearns & Philo (1993) also recommend establishing a social
logic. This would require giving the Olympic Park an identity: traditions, arts, and lifestyles
which can be promoted. Efforts are being made in this direction with the naming of five
neighbourhoods in the park,46 but it will be an on-going process. Care should be taken not to
over-manage the process as too sterile an environment would not be conducive to attracting
creative talent. That will require attention to detail and local support.
40
Interviewee O 41
Interviewee N 42
Interviewee B, K say No.10 is more useful 43
Interviewee O 44
Interviewees D,K,O 45
Interviewees E,O,H,K 46
http://www.bbc.co.uk/news/uk-england-london-14364485
54
6.6 Overall Implications:
“There is still the possibility that they massively stuff up the Olympic park. There’s a lot that
could go wrong there, what happens to everything from the transport to the network to the
infrastructure to the companies they bring in.” (Glenn Shoosmith, founder and CEO of
BookingBug)
One of the people best placed to judge the potential success of Tech City is Shoosmith. His
business is located in Silicon Roundabout, but he lives near the Olympic Park. Shoosmith
spoke at the launch of Tech City, suggesting to Cameron ways he could help the cluster. His
advice has been influential: it led directly to the TSB’s Launchpad competition47. He attends
meetings at No.10.
His comments show how tough the regeneration effort could be and help answer the main
research question. The digital industry could be an interesting replacement for the heavy
industry of East London, but the cluster will only seed if has the right nutrients.
FDI could bring new ideas and funding – or it could snap up subsidised infrastructure, fish
for talent and ship it abroad, and disrupt the vibe so appreciated in Shoreditch. The
government is keen to leverage the maximum out of the “once in a lifetime48” opportunity
afforded by the Olympic Games. However, the cluster may be too young to benefit from FDI
and could be vulnerable (Phelps 2008, Young 1994). Academic research suggests more
emphasis could be placed on encouraging local talent and supporting innovation. To succeed
in attracting indigenous companies to the Olympic Park as they expand will require a
different strategy than for FDI. This research suggests policymakers should focus on public
realm and rents levels (Section6.2), as well as continuing to involve influential cluster
members (Section6.4).
“The thing that worries me most about governments is they change their minds all the time.
These things work because you consistently apply them. If the government gets bored with
Tech City next year and stops the Tech City Investment Organisation, then the thing will
disintegrate slowly over time.” (Interviewee C)
47
Bott interview 48
A google search of ‘2012 Olympics’ and ‘once in a lifetime’ reveals how over-tired this expression has
become.
55
This paper concludes that there is a risk that No.10’s interest fades after the Olympics,
leaving Tech City vulnerable. TCIO has no independent funding and could be shut down on a
whim. For a sustainable, long-lasting organisation, a different institutional or organisational
set-up is required, and this paper recommends inspiration from France.
Informed by a range of views on how the management of Tech City could be improved
(Appendix5), this paper recommends setting up an over-arching public-private authority,
chaired by the private sector, with a board comprised of representatives from the various
delivery bodies: CLG, TCIO, London & Partners (or the GLA directly), the boroughs,
universities, and business leaders. The chairman (or woman) could referee between the
competing interests, and avoid overlap. Interviewee M suggested giving such an organisation
a role beyond generally promoting Tech City, such as organising a yearly event like the
British Fashion Council, who besides promoting British designers runs London Fashion
week. This would enable a salaried staff, with funding coming from leading businesses,
membership fees, and UKTI49.
From a regeneration perspective, this body, which could be called Tech City Council, could
take a step back from the short term pressures of politics to plan for long-term cluster
development.
49
Similar to the Fashion Council http://www.britishfashioncouncil.com/
56
7.0 Conclusions
The variety of clusters and the confusion of theories and studies means that constructing a
critique is no simple task. This paper has highlighted some important gaps in the wall of
cluster knowledge.
Firstly, Porter’s (1990) initial cluster theory lacked reference to the territorial scale over
which agglomerations exist and conceptual fuzziness persists. Efforts to make sense of the
confusion have concentrated on defining clusters functionally, and exploring processes of
innovation and learning. There have been few serious attempts to define clusters spatially or
explore the geographical links between various parts of a cluster and what happens to cluster
relationships at different scales (Phelps 2004).
Urban economic development weaves a complex web of locations stretching over vast
distances. For large global cities like London, those relations encompass networked groups of
intermediate locations and even physically separate cities and towns (what Sir Peter Hall
termed the ‘mega-city region’ (2006)). The interaction between these different locations in
clusters offers potential for further study, and monitoring Tech City as it evolves will be
insightful.
Secondly, this paper highlights the need for reflection over the role of FDI in cluster
formation. Tech City is being marketed to foreign multinationals without proper
understanding of what they will bring. The cluster has evolved as an agglomeration of young
companies, many of whom are still tiny, with a risk that the best ideas and talent will be
exported or stifled. Concerns were also raised in this paper about the type of FDI being
wooed. Economic geographers have raised questions about the extent to which knowledge is
transmitted internationally through networks of multinational companies (Phelps 2008), and
care should be taken to assess their contribution to the local economy.
Finally, this paper has highlighted the need for sustained intervention of a type that the
current government may be reluctant to provide. Both regeneration and cluster development
are processes that take years or even decades to take hold, and require attention to detail.
Central government has proved keen to play a role nurturing the infant Tech City, but unlike
a human baby, its needs are likely to grow as it gets older. This is particularly the case with
the involvement of foreign multinationals, whose structural power in relation to governments
57
requires continued monitoring (Phelps 2008). Thus this paper recommends establishing a
private partnership to take care of the long-term interests of the cluster.
.
58
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Internet sources:
1. BBC (2011) « London 2012 Olympic Park neighbourhood names revealed »
http://www.bbc.co.uk/news/uk-england-london-14364485 [Retrieved Aug 12 2011]
2. BDOnline (2012) 2012 media centre 'would blight Olympic legacy', says Cabe
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cabe/3139228.article [Consulted Aug 21 2011]
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62
14. FT (2011) Ministers reject Wellcome £1 billion Olympic Bid
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27. Wired UK (2011): « Silicon comes to Stratford: Developing London’s “Tech City” ».,
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63
28. Wired UK (2010): « Help us map London’s Silicon Roundabout»,
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[Retrieved July 12 2011].
Word count:
Dissertation: 9,549
Including the title page, tables of contents and figures, acknowledgements, abstracts,
diagrams, figures, tables, references, headings, sub-headings, footnotes, endnotes and
bibliography: 12,484
Appendices: 3,896
64
9.0 Appendices
9.1 Appendix 1: List of persons interviewed
The following people were interviewed (listed in chronological order with date of interview).
1. Dr David Bott, Director of Innovation Programmes, Technology Strategy Board
(12.7.2011)
2. Catherine Glossop, Senior Policy Officer (Higher Education and the Knowledge Economy)
at Greater London Authority (12.7.2011)
3. Bob Harris, Regional Adviser Regeneration, Olympics Project Officer, Ravensbourne
University (14.7.2011)
4. Andrew Sissons, Interim Head of Regeneration Delivery, Hackney (15.7.2011)
5. Ralph Ward, Regeneration and Planning Advisor, Thames Gateway and Olympics, CLG
(16.7.2011)
6. John Williams, Chief Executive Gateway to London (25.7.2011)
7. Glenn Shoosmith, founder and CEO of BookingBug (www.bookingbug.com) an online
booking and reservation system for services businesses (26.7.2011)
8. Eric Van der Kleij, CEO of Tech City Investment Organisation, UKTI (26.7.2011)
9. Duncan Ray, City Centre manager Shoreditch, Hackney Council (28.7.2011)
10. Elisabeth Varley, co-Founder & CEO at co-working and events space TechHub
(28.7.2011)
11. Philipp Moehring, associate at internet technology fund Seedcamp (28.7.2011)
12 Tim Barnes, Executive Director of UCL Advances (1.8.2011)
13 Charles Armstrong, CEO and Founder of Trampoline Systems, Director of co-working
space The Trampery (2.8.2011)
14 Alexis Richardson, founder of RabbitMQ (now owned by VMware) (3.8.2011)
15. John McGill, Director, North London Strategic Alliance (4.8.2011)
16. OPLC official who declined to be named. Emailed questions and answers (received
10.8.2011)
All interviewees except John McGill are involved with Tech City. McGill was interviewed
because of his experience instigating a quasi-Local Enterprise Partnership (The North
London Strategic Alliance is developing something which “will look and feel like a LEP but
won’t be called a Local Enterprise Partnership” because the mayor of London, who has veto
65
power, has said there will only be one LEP for London - until next year’s elections at least).
This paper was considering a LEP-style set-up for Tech City, but decided against it after the
interview. The conclusion was that Tech City is too focussed (both in industry terms and
spatially) for an LEP to be appropriate.
66
9.2 Appendix 2: Interview questions
The following set of questions were used as a basis for interview, however additional or
follow-up questions were used where relevant.
1. What is the role of your organisation in Tech City?
2. When did you get involved, and how?
3. What do you understand as Tech City?
a) What are the geographic boundaries?
b) Is this a regeneration strategy, place-marketing or industrial policy of cluster promotion?
c) How do plans for the Olympic park fit with the strategy, in your understanding?
4. East London Tech City, Tech City, Tech City East…. The name keeps changing. Does
this reflect confusion, or an evolving concept? Is the evolution a result of fluid geography
and political negotiations?
5. What is your understanding of cluster promotion, and how does this relate to Tech City?
6. In your understanding, who is coordinating the various initiatives, and could this be done
better?
7. Should the private sector have a greater role?
8. How does Tech City fit with Digital Britain, Digital London, Digital Peninsula, and
Newham’s various Tech City initiatives?
9. How does it fit in with the rest of London?
10. How important is the digital economy to London’s future?
11. Could Tech City ever be a rival to Silicon Valley?
12. Is there anything else I should have asked or that you would like to add?
67
9.3 Appendix 3: Online survey - companies
1. Please choose the response which you agree with most (tick one answer only)
a) Silicon Roundabout is a successful cluster of hi-tech and digital companies who will
do best without government interference
b) Silicon Roundabout is a successful cluster of hi-tech and digital companies who could
do better with government help
c) The hi-tech and digital companies clustered at Silicon Roundabout are not doing
particularly well, but there is not much the government can do to help
d) The hi-tech and digital companies clustered at Silicon Roundabout are not doing
particularly well, but the government could help
e) None of the above
68
2. How long has your company been located in the Shoreditch area?
a) Less than 1 year
b) 1-3 years
c) 3 years or more
69
3. What drew you to the area? (please tick all that apply)
a) Cheap rents
b) Like-minded companies
c) Suppliers/ customers
d) Talent
e) Vibe
f) Proximity to central London
Other (please specify)
70
4. Please choose the response which you agree with most:
a) I am aware of East London Tech City and what the government is doing to help (go to
question 5)
b) I am aware of East London Tech City but not the details (go to question 5)
c) I am not aware of East London Tech City (go to question 8)
71
5. What do you think are the government’s motivations behind East London Tech City?
(please tick all that apply)
a) To help a successful business cluster
b) To gain credit from an already successful business cluster
c) To create jobs in a growing industry
d) To win foreign investment
e) To encourage innovation in British firms
f) To find a use for the media centre in the Olympic park
g) To regenerate a depressed area
h) Tax revenue
Other (please specify)
72
6. In your opinion, what is the geographic boundary of East London Tech City? (please
tick one answer only)
a) Shoreditch
b) Shoreditch, Hoxton
c) Shoreditch, Hoxton, The City
d) Shoreditch, Hoxton, The City, Olympic park
e) Could stretch as far as The Royal Docks
f) Anything East London
g) Thames Gateway
h) Government left deliberately vague
i) Don’t know
Other (please specify)
73
74
7. Which area is likely to benefit most from the government’s East London Tech City
plans? (please tick one answer only)
a) Shoreditch
b) The City
c) The Olympic park and surrounding area
d) East London
e) London
f) None of the above
Other (please specify)
75
8. Would you consider moving further East? (please tick which most applies)
a) Yes, I am thinking about it at the moment (go to question 9)
b) Yes, if the conditions were right (go to question 9)
c) No (go to question 10)
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9. What is/ would make you consider moving further East? (please tick all that apply)
a) Cheaper rents
b) A safer environment
c) A fun atmosphere – cafes, bars, creative people
d) Subsidies
e) An Olympic park address
Other (please specify)
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10. What are the main setbacks to your business at the moment? (please tick all that
apply)
a) Difficulty raising finance
b) The economic climate
c) Getting customers to pay their bills
d) Too much competition
e) Finding talent
f) Recruiting abroad due to immigration controls
g) Taxes
h) Rising rents
i) None of the above
Other (please specify)
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11. The government recently announced several measures to help East London Tech
City, which are listed below. Which of the following help your business? (please tick all
that apply)
a) Investment from corporate giants such as Facebook, Google
b) Cooperation from research institutions
c) £200 million of equity finance for businesses with high growth potential
d) £200 million for new Technology and Innovation Centres – one of which could be in
the Olympic Park – to attract early stage venture capital,
e) £15 million of tech support.
f) Opening up government contracts to small and medium-sized firms
g) Establishing an Entrepreneur Visa
h) Reviewing its intellectual property laws
i) None of the above
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12. Could government do more?
a) Yes (please specify in box below)
b) No
c) Not sure
Yes (please specify)
82
13. Do you socialise or network with people in similar or complementary businesses?
a) Yes (please go to question 14)
b) Not if I can help it (please skip the last question)
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14. Socialising with people in similar or complementary businesses is (please tick all that
apply):
a) Fun
b) Interesting – it helps me keep an ear to the ground
c) Useful – for new career options
d) Inspiring – one day I could start a business with these people
e) Obligation – part of my duties
Other (please specify)
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9.4 Appendix 4: Online survey - professionals
1. East London Tech City was launched by the Prime Minister, David Cameron last
November. The initiative, sometimes referred to as Tech City and Tech City East, is
aimed at stimulating east London’s high-tech industry with backing from government
and major global technology companies including Cisco, Intel and Google. Please
choose the response which you agree with most:
I am aware of East London Tech City and what the government is doing (go to question
2)
I am aware of East London Tech City but not what the government is doing (go to
question 2)
I am not aware of East London Tech City (go to question 6)
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2. What is the geographic boundary of East London Tech City in your opinion?
Shoreditch
Shoreditch, Hoxton
Shoreditch, Hoxton, The City
Shoreditch, Hoxton, The City, Olympic park
Royal Docks
Anything East London
Thames Gateway
Government left deliberately vague
Don’t know
Other (please specify)
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3. Please tick the question which you agree with most: East London Tech City is
an industrial policy to encourage cluster growth
an industrial policy designed to win foreign investment
a regeneration strategy for East London
a place-marketing strategy for East London
a gimmick
not sure
Other (please specify)
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4. Which area is East London Tech City designed to serve?
The so-called ‘Silicon Roundabout’ cluster at Shoreditch
The Olympic Park
Silicon Roundabout and the Olympic park
Silicon Roundabout, the Olympic park, Greenwich and the Royal Docks
Anything East London
London
Don’t know
Other (please specify)
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5. For the rest of London, is East London Tech City (please tick the answer which most
applies)
A good idea
Of negligible importance
Unhelpful
Harmful
Other (please specify)
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6. Please tick the question which you agree with most:
The promotion of a hi-tech digital cluster in the East of London through policies
including opening up government contracts to small and medium sized companies,
using government persuasion to lure big corporate investors such as Facebook, and the
provision of equity finance is
Good for all of London
Good for East London, neutral for the rest of London
Good for East London, but bad for the rest of London : it will displace activity
Good for the Olympic park and the Royal Docks. Bad for everyone else (including
Shoreditch)
Bad for Shoreditch – why mess with something that works?
Bad for East London
A Bad idea
A gimmick
Don’t have enough information to judge
Other (please specify)
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7. East London Tech City (or the promotion of a hi-tech digital cluster in the East of
London) is the name used by Prime Minister David Cameron when the initiative was
first announced. The UKTI now refers to the policy variously as Tech City, Tech City
UK, and Tech City East. Which do you think is the most appropriate name?
East London Tech City
Tech City
Tech City UK
Tech City East
None of the above
Other (please specify)
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8. Central government (UKTI) has taken the lead on East London Tech City, listing the
Olympic Park Legacy Company, the GLA, Think London and Tech Hub as its main
partners. Are the right partners involved (please tick all that apply)?
The policy is good as it stands
The GLA should take the lead
There should be a greater role for the boroughs
The private sector should be more involved
There should be a greater role for universities and research institutes
The idea is misguided in the first place
Other (please specify)
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9. There are a number of similar initiatives designed to boost the digital industry that
affect London, such as Digital Britain, Digital London, Digital Peninsula (Greenwich),
Newham’s Tech City One and Tech City Plus, and East London Tech City (or Tech
City, Tech City East). Please tick the statement which you agreed with most:
All these initiatives just means healthy competition. Nothing wrong with that. It’s
localism in action.
There should be simplification, but there is nothing wrong with having a few different
initiatives.
It is crazy to have so many competing initiatives. Someone should knock heads together
It is crazy to have so many competing initiatives, but under localism it is inevitable
Other (please specify)
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10. If these initiatives were to be simplified, who should take the lead?
I don't agree on the need for intervention. Let each authority do as they see fit for their
area of responsibility
The boroughs should work together under an over-arching London policy led by the
GLA. East London Tech City should fit in with that.
All policies should fit in with Digital Britain led by central government. That should be
the reference point
The private sector should take the lead
The private sector should take the lead but may need prompting from government, for
example with the appointment of a Digital Tzar
Other (please specify)
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11. Do you know of other initiatives to encourage the digital industry in the Greater
London or surrounding area?
No
Yes (please specify)
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12. Are there other things that local authorities can do/ are doing to help encourage
innovative companies and entrepreneurs in the hi-tech and digital industries?
No
Don't know
Yes (please specify)
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13. The digital economy is one of the few sectors expected to grow in the next five years.
Do you think the government is putting the right amount of stress on encouraging its
development, or are other sectors being overlooked? Please chose the answer which best
fits your opinion
Don’t know
Right emphasis
Right emphasis, but wrong way of going about it
Too much emphasis. Neglecting other sectors
Too much government interference
Other (please specify)
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14. What do you think the main benefits of the digital economy are for London (please
tick all that apply)
Jobs
Competitive edge
Tax revenue
Image
Attract talent from abroad
Opportunities for small businesses
Encourage entrepreneurialism
Drives growth in other industries
Other (please specify)
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15. In your opinion, how well placed is London to rival hi-tech industries elsewhere in
the world?
A rival to Silicon Valley and the best in the industry globally
A niche player globally
The top destination in Europe
A niche player in Europe
Risks losing business to cheaper centres like Berlin or Eastern Europe
Don’t know
Other (please specify)
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9.5 Appendix 5: Interview excerpts (institutional setup)
On balance, interviewees favour a private-sector set-up for coordinating the various Tech
City efforts. However, particularly start-ups would have limited time to donate. Several
interviewees said the GLA would be the natural body to run the initiative, but it has limited
resources and has not quite resolved the competing tensions from its responsibilities for
North versus South, and East versus West London50.
“What we don’t want is a layer of bureaucracy, something that is being funded simply to
exist. It’s better to have something that’s project led rather than organisation led.”
“I would like to see the UKTI, and the government generally, promoting and nurturing the
innovation that grows from here rather than just trying to import a load of companies from
the U.S.”
(Interviewee M)
“UKTI’s primary role in all of this ought to be identifying those organisations who actually
do the delivery for this.”
(Interviewee O)
“I think they’re all absolutely convinced that it’s all going to be led by the private sector. Our
experience of the private sector is they don’t necessarily want to do a coordination job.
They’re in competition with each other. The mayor should referee it. “
(Interviewee E)
“Too much planning would have killed it. If you spent two years finding out what we were all
doing, it would have all gone somewhere else by then. It’s a fast moving industry. You have to
make a decision and get on with it.”
(Interviewee J)
“The answer is actually there needs to be confidence from everybody’s point of view, but
particularly from the private sector’s point of view, that this is a managed process.” The
ideal structure is “probably somewhere below the GLA and somewhere above the individual
boroughs.”
(Interviewee N)
“The last thing we need is a Tsar for tech city. That cluster emerged without any central
direction. Why do we think we need to be interfering in that in order to improve it? I’d rather
have lot of people thinking about that in more or less the same direction than somebody who
thought that they could centrally plan it.”
50
Interviewees D,N
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(Interviewee B)
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9.6 Appendix 6: Interview excerpts (finance and immigration)
Survey2 (Question10) showed companies say their biggest setback is finding talent. Although
the government’s immigration policy is to cut down on numbers, interviews suggest it is
taking steps to help companies bypass the legislation such as with the entrepreneur visa –
although even officials admit more could be done:
“We do need to open up our borders a little more, just a little more. Because, ok, the chief
executive and the founders of the business are fine. They need 50,000 pounds to set their
business up. But then there is the chief technology officer, we don’t have a visa for that. Then
there’s the top five or six skilled employees…. That’s the next area where talent led visa work
is being done.”
(Interviewee L)
Although not the most crucial setback cited by companies, interviews suggested one avenue
the government could show real leadership is in helping easing access to finance. The risk
model for investing in tech companies is very different than traditional investments, and
funding is unlikely to come from the City unless this is understood. In the U.S., technology
companies on the West Coast are located far from investors on the East Coast. In London,
this is not the case, meaning there is a real opportunity here that merits further study.
The following citations illustrate these points:
“Investors need to understand what tech investment is all about. It’s not about technology
investment necessarily, its more early stage investment, equity investment, VC investment
with high risk, very improbable returns.”
In Europe “there are just far fewer investors which in return results in far fewer investments
which in turn results in far fewer success which in return results in far fewer investors. It’s a
vicious or virtuous cycle.” In London “in the last years because there were more successful
exits there were more successful companies being built and because entrepreneurship is
being viewed as more aspirational or something to aspire to, more companies are being built
and more people get interested in investment.”
“Obviously in the US the venture capital industry is about 50 years-old, here it’s about 15
years-old.”
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“Be it the bubble in the 90s, be it in 2005, be it now, when there is a boom in internet activity
there will be more money flowing to it. But then when it dies down you will also see those
moving away pretty quickly. It’s hard.”
Philipp Moehring, associate at internet technology fund Seedcamp.
In the following citation, the name of the High Street bank was removed in the interests of
fairness, as the researcher did not verify the claim with the bank concerned.
“A lot of companies have struggled with banking. I’ve been to a number of Silicon Valley
Bank events and they are the only financial institution that knows how to engage with
entrepreneurs. And it’s amazing. [Name of High Street bank] are, bless them, completely
useless by comparison. [Name of High Street bank] say there’s no difference between you
and a small corner shop. They wouldn’t bother entertaining you any more than any other
small business, unless you grow to a massive size they don’t care. Our needs are slightly
more complicated than the average small corner shop. Nothing against the small corner shop
but you know hi-tech, high growth business on the internet also have clients in 87 countries
and I need to take 15 different currencies and I’m not taking an awful lot of money yet but
I’m doing it internationally. As a very small business you have a lot of the financial
difficulties of a much, much bigger business. I struggled, and most other business I know of
have really struggled with banks because they just don’t understand your industry. They are
just like, my God you look horrifically risky, I’m not going to even let you open a bank
account, let alone lend you any money, whereas obviously Silicon Valley Bank have a
much, much better understanding of this kind of industry: the risks, rewards, the growth.
And obviously they want to stay with you as the business grows. They take a view that they
deal with an awful lot of hi-tech businesses of which many will go bust and some will become
massive. But they know how to deal with you from end to end. The difference is amazing. You
get invited to events, they have things and you get to meet the right people, whereas you go to
[Name of High Street bank] and they’re not even interested to give you the time of day.”
(Interviewee J)
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9.7 Appendix 7: Institutional and organisational Tech City setup
The following diagrams show the various organisations involved in Tech City. They were all
compiled on the basis of interviews and research.
Fig.28 Diagram of central government agencies involved in Tech City and their different roles. Most influential
are shown in red.
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Fig.29. Diagram of regional government involvement in Tech City, and roles
Fig.30. Diagram of local government involvement in Tech City
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Hackney recognises that Tech City is bigger than Shoreditch, but focuses on Dalston,
Hackney Wick and Hackney Central as growth zones. Greenwich is touting for business with
its Digital Peninsula policy. And Newham has its own Tech City Plus vision for the Royal
Docks (Fig.30). Hackney claims to be working with neighbouring boroughs specifically on
freeing up property to relieve pricing pressures, but collaboration is patchy and dependent on
the personalities involved51.
Islington council, which borders Hackney and
has its own cluster of tech companies in the Camden area, could also be added to the list,
although it is not considered East London
51
Interviewees DKH
Fig.31 Newham Tech City Plus plan (Source Newham)
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Fig 32. Diagram of private sector involvement in Tech City