Top 5 cities that support innovation & entrepreneurship

20 July 2015 4 min. read

New York, London, Helsinki, Barcelona and Amsterdam are top five performing cities when it comes to supporting innovation and entrepreneurship, research by Accenture shows. In its report, the consulting firm considers different ways in which local policy makers can make city environments more open, developed and leading in terms of an innovative ecosystem.

In a recent report, titled ‘Citie: City Initiatives for Technology, Innovation and Entrepreneurship’, Accenture, Nesta and Catapult consider the key roles cities can play in creating an eco-system in which tech-start-ups and entrepreneurs can engage in innovative practices. The report further looks at how far 40 cities are succeeding in creating an internal ecosystem conducive to innovation.

The 40 cities

Cities of the future
As a result of the increased pace automation, foreseen to occur for 47% of US jobs and for up to a third for the UK, the role in technology companies and entrepreneurs in the development of future value and jobs is also expected to grow. The research finds that growth is already disproportionately driven by young, high-growth companies. In the period 2002 – 2008, for instance, just 6% of high-growth companies created 50% of the UK’s employment growth. In New York City, the tech sector directly created 45,000 jobs between 2003 and 2013, which is 6% higher than the employment growth rate in New York City and 14% higher than the national average.

To develop the impulse towards more innovative cities that create an environment in which technology companies and entrepreneurs can flourish, the authors explore a number of key policy initiatives on the local government level.

CITIE framework

Citie framework
The framework constructed by the authors, in consultation with city government leaders, policy experts, venture capitalists and entrepreneurs, seeks to provide a set of resources for policy makers seeking to develop support for innovation and entrepreneurship. The framework has three dimensions.

Policy dimensions: aim at providing answers to overarching questions about how a city supports innovation and entrepreneurship. These include questions on openness: “How open is the city to new ideas and businesses”; on infrastructure: “How does the city optimise its infrastructure for high-growth businesses?”; and on leadership: “How does the city build innovation into its own activities?”

Policy roles: the report found nine roles that city governments can play to support innovation and entrepreneurship. Acting as Regulator, Advocate and Customer, they can increase openness to new ideas and businesses. They can optimise the enabling infrastructure for high growth businesses acting as Host, Investor and Connector. To lead from within, they can take on the role of Strategist, Digital Governor and Datavore.

The CITIE Framework

Policy levers: are the specific policy initiatives used to measure how well cities perform these roles. These levers are chosen to represent best practice from around the world, and include: enforce existing regulations proportionately; provide set-up support for new businesses; use problem-based procurement methods; provide free, public Wi-Fi; and publish a vision of how to support innovation and entrepreneurship.

Top three performers

Top performing cities
New York comes out on top in terms of meeting most of the policy roles, with strong capabilities in leadership and openness. London, which comes in second, performs well in infrastructure (but lacks good connectedness) and openness. Helsinki, which rounds out the top three, performs particularly well in infrastructure and leadership but falls behind on openness. Barcelona, found on fourth place, has a very strong leadership profile, as well as good infrastructure (lacking in investor strength) but lacks in regulatory openness. The number five on the list, Amsterdam, is a mixed bag in each category, with strengths and weaknesses.

Success indicators
The analysis also considers the relative importance of different factors that open up a city to be a good space to develop innovative businesses and engage in entrepreneurial activity. Some factors, like city innovation vision; open data; and smart city analytics, are easier for the city to develop but of less relevance to innovation than other factors, such as access to customers; and cost of workspace for innovative activity. Other factors highly important to innovation, such as networking opportunities; access to talent; access to capital; and digital infrastructure, are less in the hands of cities. The report highlights that certain factors like quality of life; house prices; and cultural activity are not directly in the hands of local government but are highly valuable toward attracting starters.

Success factors