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)

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 1.0 Introduction 1.1 Research Questions 1.2 Scope of Study 1.3 Assumptions 1.4 Overall research framework 2.0 Literature review: theoretical developments 2.1 Historical background 2.2 Theories of Michael Porter 2.3 The role of FDI and cluster creation 2.4 Cluster varieties and local context 2.5 Place marketing literature 2.6 Issues for Tech City research 3.0 Literature review: international experience of cluster developments 3.1 U.S.: Silicon Valley and New York 3.2 France: Paris and Sofia-Antipolis 3.3 Sweden: Medicon Valley 3.4 Generic Lessons 4.0 Case study: Tech City, East London 4.1 Urban grain: spatial realities 4.2 Policy intentions/ developments 5.0 Case Study Research Methodology 5.1 Qualitative study: interviews 5.2 Qualitative study: participant observation 5.3 Quantitative study: survey of Shoreditch tech companies 5.4 Quantitative study : survey of professionals 6.0 Case study analysis and findings 6.1 What is Tech City? Analysis of meanings 6.2 Silicon Roundabout to Tech City 6.3 Nature of government intervention 6.4 Marketing analysis 6.5 Is the policy appropriate?
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6 7 9 9 9 10 12 14 15 17 17 18 19 20 20 21 23 24 25 29 32 35 36 36 37 38 40 42 44 47 48 51

6.6 Overall implications 7.0 Conclusions 8.0 Bibliography 9.0 Appendices 9.1 Appendix 1: List of persons interviewed 9.2 Appendix 2: Interview questions 9.3 Appendix 3: Online survey - companies 9.4 Appendix 4: Online survey - professionals 9.5 Appendix 5: Interview excerpts (institutional setup) 9.6 Appendix 6: Interviews excerpts (finance/ immigration) 9.7 Appendix 7: Institutional/ organisational Tech City setup

54 56 58 64 64 66 67 84 102 104 106

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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 Fig.2 Overall Research Framework Fig.3 A selection of cluster definitions Fig.4 Michael Porter’s Competitive Diamond Fig.5 UKTI Marketing Brochure Fig.6 Silicon Valley Map Fig.7 Map of France’s 71 competitiveness clusters Fig.8 Map of London showing Tech City in purple Fig.9 Map of Tech City from UKTI brochure Fig.10 Silicon Roundabout 2007 Fig.11 Silicon Roundabout 2009 Fig.12 Tech City 2011 Fig.13 Shoreditch in pictures Fig.14 The Olympic Park Fig.15 Map of the Olympic Park Fig.16 Artistic spaces in Hackney Wick and Fish Island Fig.17 Potential Tech City spaces Fig.18 Tube connections Fig.19 Twitter screen shot Fig.20 Wired magazine’s Silicon Roundabout map Fig.21 SWOT Analysis of Tech City Fig.22 TechHub first birthday Fig.23 Shoreditch attraction for Tech companies Fig.24 Tech City spatial boundaries: companies’ view Fig.25 Tech City spatial boundaries: professionals’ view Fig.26 What is Tech City: professionals’ view Fig.27 What is Tech City: companies’ view Fig.28 Diagram of central government agencies involved in Tech City Fig.29 Diagram of regional government involvement in Tech City 107 Fig.30 Diagram of local government involvement in Tech City Fig.31 Newham Tech City Plus plan Fig.32 Diagram of private sector involvement in Tech City
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10 11 13 16 18 20 22 25 25 26 27 27 29 30 30 31 32 33 37 38 41 42 43 46 47 52 52 106

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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.

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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: 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?

To answer the above question, the research will address the following points:

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?

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).

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Fig.1 Cities Institute map of London digital economy clusters

Pink shape indicates high location quotient for Shoreditch cluster

1.4 Overall Research Framework The paper will be organised as follows (Fig.2).

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Fig.2 Overall Research Framework

Study Aims
Step 1: Planning and Structure

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

Case Study: Tech City
Spatial conditions Regeneration implications Role of FDI Policy analysis

Sweden: Marketing

Step 2: Research methods

Interviews
Qualitative analysis aimed at understanding Tech City, government intervention, and aims

Online Surveys
Quantitative analysis to substantiate the findings of the qualitative research

Participant Observation
Qualitative research to understand the Shoreditch cluster

Analysis, Synthesis of Findings

Implications
Step 3: Policy recommen dations/ Conclusion s

Lessons for Tech City

Conclusions
What does Tech City analysis add to cluster theory?

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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.” 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.”

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.”

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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).

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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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Fig.4: Michael Porter’s Competitive Diamond

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

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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.

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http://www.dailymail.co.uk/news/article-1036373/Abandoned-derelict-covered-graffiti-rubbish-What-leftAthens-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).

Fig.6 Silicon Valley Map (source: http://www.californiatraveldreams.com/SiliconValley.htm)

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Nov 2010 See definition p.9

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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).

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www.competitivite.gouv.fr

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Fig.7: Map of France’s 71 competitiveness clusters. Source: French government agency DATAR

Cap Digital

Sofia-Antipolis

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
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www.capdigital.com
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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.

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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.

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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/)

IBC/ media centre (Olympic Park)

Original Shoreditch cluster ‘Silicon Roundabout’

Fig.9: Map of Tech City from UKTI brochure (2011)

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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)

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Fig.11 Silicon Roundabout 2009 (Data source Wired Magazine, Cities Institute)

Fig.12 Tech City 2011 (Data source PlayGen Cities Institute)

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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.

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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).

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

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 multistorey car park with access to the A12. The area borders Hackney Wick, which is largely physically unchanged from recent developments.
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Fig. 14: The Olympic Park. Source: http://www.legacycompany.co.uk/

Fig. 15: Map of the Olympic Park. Source http://en.wikipedia.org/wiki/File:Queen_Elizabeth_Olympic _Park_map.png.

IBC and media centre

Hackney Wick

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Fig.16: Artistic spaces in Hackney Wick and Fish Island

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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.
Fig.17: Potential Tech City spaces. Clockwise from top left: The Royal Docks (first two photos);The Millennium Dome (Greenwich), Greenwich Peninsula

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).

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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.
Fig.18 Tube connections

IBC/ media centre (Olympic Park)

Silicon Roundabout

. 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.

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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.

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5.0 Case Study Research Methodology To answer the research questions outlined earlier, qualitative research in the form of semistructured 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?’ Participantobservation 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 cutoff date of August 12.

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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 AP. 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 governmentappointed 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.

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Fig,19 Twitter screen shot showing search feeds for Silicon Roundabout and East London Tech City (taken 11.8.2011)

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

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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.

Fig.20: Wired Magazine’s list of Silicon Roundabout companies

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

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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.

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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.

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Fig.21 SWOT Analysis of Tech City. Strongest elements are shown in red.

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) THREATS

OPPORTUNITIES

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 startups elsewhere Global debt crisis threatens availability of finance Competition from Silicon Valley, Berlin, China, India

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)

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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.
Fig.22 TechHub first birthday

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 likeminded 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

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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).
Fig.23 Shoreditch attraction for Tech companies

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

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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 17

The Economist Aug.6 2011 http://m.bdonline.co.uk/news/2012-media-centre-would-blight-olympic-legacy-says-cabe/3139228.article

18

http://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

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rejected19. Neither would have fulfilled the Tech City vision. Bids by broadcaster ITV20 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
http://www.building.co.uk/news/breaking-news/plans-to-turn-olympic-media-centre-into-snowdome-wonthappen/5014751.article ; http://www.ft.com/cms/s/0/1ca575fe-bdf7-11e0-ab9f00144feabdc0.html#axzz1W3MRBasu 20 http://www.thisislondon.co.uk/standard/article-23972834-the-eyes-of-the-world-will-be-on-us-during2012.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-creativebusiness-hub/ 23 IntervieweesD,L,N 24 Appendix3, Questions 8,9
25

19

Interviewee J

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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

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Fig.25 Tech City spatial boundaries: professionals’ view

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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 directly28 by inward investment agency UKTI. Eric Van

26 27

http://www.innovateuk.org/content/news/digital-businesses-in-east-london-to-benefit-from-.ashx. Government website www.techcityuk.com 28 Van Der Kleij interview

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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 30
31

A new function for UKTI as it doesn’t qualify as inward investment Source: Van der Kleij Interviewees J,M,I

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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 33

Interviewees D,H,J Appendix3, Question1. The support

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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 forums37 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 35

Interviewees A, C,D,J,L Interviewees J, M Interviewees A,C,J,K,M Interviewees A,B,C,E,H,J,K,M

37 38

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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).

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Appendix3 Question7; Appendix4 Question4

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Fig.26 What is Tech City? Professionals’ view

Fig.27 Motivations behind Tech City: Survey of companies

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
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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 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
41

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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 48

Bott interview A google search of ‘2012 Olympics’ and ‘once in a lifetime’ reveals how over-tired this expression has become.

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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.

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Similar to the Fashion Council http://www.britishfashioncouncil.com/

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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

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requires continued monitoring (Phelps 2008). Thus this paper recommends establishing a private partnership to take care of the long-term interests of the cluster.

.

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8.0 Bibliography

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30. Martin R & Sunley P (2003), « Deconstructing clusters: chaotic concept or policy panacea? », Journal of Economic Geography 3(1) 31. OECD (1999) Proceedings Boosting Innovation: the Cluster Approach. 32. Phelps, N.A. (2008) ‘Cluster or capture? Manufacturing foreign direct investment, external economies and agglomeration’, Regional Studies 42 33. Phelps, N.A. (2004) ‘Clusters, dispersion and the spaces in between: for an economic geography of the banal’, Urban Studies 41 (5/6) 34. Piore M & Sabel C (1984), The Second Industrial Divide: Possibilities for Prosperity (Basic Books). 35. Porter M (1990), Competitive Advantage of Nations (Free Press). 36. Porter M (1998), On Competition, (Harvard Business School Press). 37. Pratt A (2009), « Urban Regeneration: From the Arts `Feel Good’ Factor to the Cultural Economy: A Case Study of Hoxton, London », Urban Studies 46. 38. Roche M (2000), Mega-events and modernity: Olympics and expos in the growth of global culture (Routledge). 39. Saxenian A (1996), Regional Advantage: Culture and Competition in Silicon Valley and Route 128, New edition. (Harvard University Press). 40. Scott A J (1988), New Industrial Spaces - Flexible Production Organisation and Regional Development in North-America and Western Europe. Pion Limited (London) 41. Sharp J, Peters J & Howard K (2002), The Management of a Student Research Project, (Gower Publishing Ltd). 42. Simmie J (2006) Do clusters or innovation systems drive competitiveness? In Asheim B et al (2006), Clusters and Regional Development: critical reflections and explorations, (Routledge). 43. Simmie J and Sennett J (1999), « Innovative clusters: global or local linkages? », National Institute Economic Review 170(1) 44. Storper M and Venables A (2003), « Buzz: face-to-face contact and the urban economy », Journal of Economic Geography 4(4) 45. Visser, Evert-Jan(2009) 'The Complementary Dynamic Effects of Clusters and Networks', Industry & Innovation, 16(2) 46. Young, N. Hood, S. and Peters, E. (1994) ‘Multinational enterprises and regional economic development’, Regional Studies 28

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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 http://m.bdonline.co.uk/news/2012-media-centre-would-blight-olympic-legacy-sayscabe/3139228.article [Consulted Aug 21 2011] 3. Bloomberg (2011) « Cameron’s High tech Vision Clouded by Lack of Cheap London Space»,, http://www.bloomberg.com/news/2011-08-10/cameron-s-high-tech-vision-cloudedby-lack-of-cheap-london-space.html [Retrieved Aug12 2011] 4. British Fashion Council http://www.britishfashioncouncil.com/ [Retrieved Aug 13 2011] 5. Building (2011) « Plans to turn Olympic media centre into Snowdome won’t happen»,, http://www.building.co.uk/news/breaking-news/plans-to-turn-olympic-media-centre-intosnowdome-wont-happen/5014751.article [Retrieved Aug 12 2011] 6. Cap Digital www.capdigital.com [Retrieved July 19 2011] 7. CIADT (2010) Press pack http://www.gouvernement.fr/sites/default/files/fichiers_joints/05.11_Dossier_de_presse__CIADT.pdf [Consulted July 14 2011] 8. Daily Mail (2008) Abandoned, derelict, covered in graffiti and rubbish: What is left of Athens' £9billion Olympic 'glory' : http://www.dailymail.co.uk/news/article1036373/Abandoned-derelict-covered-graffiti-rubbish-What-left-Athens-9billion-Olympicglory.html#ixzz1WR18Zc5h [Consulted Aug 21 2011] 9. Digital Shoreditch website, http://digitalshoreditch.com/. . [Retrieved July 12 2011]. 10. Estates Gazette (2011) « Model Plan for Olympic Legacy»,, http://www.egi.co.uk/articles/2011/07/15/736931/Model-plan-for-Olympiclegacy.htm?cp=ILC-EGI-RSS [Retrieved Aug 12 2011] 11. Evening Standard 2010 « The magic roundabout - London’s answer to Silicon Valley»,, http://www.thisislondon.co.uk/lifestyle/article-23931050-the-magic-roundabout---londonsanswer-to-silicon-valley.do. [Retrieved July 12 2011]. 12. Evening Standard (2011) « The eyes of the world will be on us during 2012»,, http://www.thisislondon.co.uk/standard/article-23972834-the-eyes-of-the-world-will-be-onus-during-2012.do [Retrieved Aug 12 2011] 13. French Finance Ministry competitiveness portal: www.competitivite.gouv.fr [Retrieved July 19 2011]

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14. FT (2011) Ministers reject Wellcome £1 billion Olympic Bid http://www.ft.com/cms/s/0/1ca575fe-bdf7-11e0-ab9f-00144feabdc0.html#axzz1W3MRBasu 15. London 24 (2011) « Hackney’s Olympic Media Centre could become research centre»,, http://www.london24.com/news/hackney_s_olympic_media_centre_could_become_research _centre_in_wellcome_s_bid_for_entire_2012_park_1_952352 [Retrieved Aug 12 2011] 16. LibDems (2009) Olympic media centre will be huge white elephant – Brake http://www.libdems.org.uk/press_releases_detail.aspx?title=Olympic_media_centre_will_be_ huge_white_elephant_-_Brake_&pPK=d63a2f43-3342-47dc-95f4-70d9e85f0984 [Conuslted Aug 21 2011] 17. Municipal Yearbook portal: www.LocalGov.co.uk [Retrieved July 12 2011] 18. No. 10 (speech), Nov 4, 2010, http://www.number10.gov.uk/news/speeches-andtranscripts/2010/11/east-end-tech-city-speech-56602 [Retrieved June 12 2011]. 19. No.10 (press release) 2010: PM announces East London ‘tech city’ http://www.number10.gov.uk/news/topstorynews/2010/11/pm-announces-east-london-techcity-56606. . [Retrieved July 12 2011]. 20. OPLC http://www.legacycompany.co.uk/ [Retrieved July 21] 2011 21. Regen.net (2011) « London Regeneration body plans creative business hub»,, http://www.regen.net/Physical_Regeneration/article/1083682/london-regeneration-bodyplans-creative-business-hub/ [Retrieved Aug 10 2011] 22. Sophia Antipolis cluster: www.pole-scs.org [Retrieved July 19 2011] 23. Tech City UK www.techcityuk.com [Retrieved Aug 12 2011] 24. Technology Strategy Board (2011) £1 million funding competition », http://www.innovateuk.org/content/news/1-million-funding-competition-to-support-creative.ashx. [Retrieved Aug 9 2011] 25. The Economist 2010 Nov.25 « London’s high-tech start-ups: Silicon Roundabout http://www.economist.com/node/17581635. [Retrieved July 12 2011]. 26. The Economist (2011) Aug.6 Where’s Britain’s Bill Gates? (leader) http://www.economist.com/node/21525406 and Start Me Up http://www.economist.com/node/21525430 (sidebar) [Retrieved Aug 12 2011]. 27. Wired UK (2011): « Silicon comes to Stratford: Developing London’s “Tech City” »., http://www.wired.co.uk/magazine/archive/2011/02/start/silicon-roundabout. [Retrieved July 12 2011].

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28. Wired UK (2010): « Help us map London’s Silicon Roundabout», http://www.wired.co.uk/news/archive/2009-10/22/help-us-map-londons-silicon-roundabout. [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

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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

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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.

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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?

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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

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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

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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)

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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)

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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)

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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)

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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)

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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)

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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.”

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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.
Fig.31 Newham Tech City Plus plan (Source Newham)

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

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Interviewees DKH

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Fig 32. Diagram of private sector involvement in Tech City

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