Posts Tagged ‘london’

New article: ethnic diversity, firm performance and cities

August 8, 2016

Paul Klee, Harmony of Northern Fauna, 1927

I’ve got a new paper published in Environment and Planning A. There’s an open access version here.

The research looks at the links between ethnic diversity in firms’ top teams (owners, partners and directors) and the performance of those firms (specifically, how much revenue they make).

I also look at how those linkages  vary across different types of firms, and how different types of urban environment may help or may not.

There’s now a decent diversity literature (see this academic review, or this great Andy Haldane speech). But we know much less about these gnarlier issues.

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I find positive diversity-links – but only for certain kinds of companies. The strongest links are for a group of large,  knowledge-intensive businesses who comprise about 16% of my sample. The role of cities is also complex. For this first group, being in  London amplifies the diversity ‘effects’.

But for a second, smaller group of younger companies, diversity channels seem to be swamped by London’s higher costs and greater competition. These firms perform better when in smaller, cheaper cities like Manchester or Birmingham.  In turn, that suggests policies to promote ethnic diversity in firms need to be quite carefully tailored to industry and local conditions.

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Here’s the abstract:

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

Read the article here. Or here’s the ungated version.

First-Person Flaneur

November 1, 2015

 

(c) 2015 Laurence Lek

 

Bonus Levels is a series of beautifully realised recreations of London locations, re-imagined as Ballardian dreamscapes, elements of an impossible city. In After Us, creator Lawrence Lek describes his work as ‘architecture as site-specific simulation’, in which existing parts of the cityscape and its institutions are ‘reconfigured and subverted’ by some apocalyptic or economic shock. I think this can help us think about real-world urban change too. Let’s look at a couple of examples.

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In ‘Dalston, Mon Amour’, some familiar landmarks of the Kingsland Road – the Rio Cinema, Gillett Square and once on-trend Efes Bar are rendered empty and open to the elements after a biblical weather event. Terraformed by desert and water, Renais’ film plays in the background as the sky darkens.

 

(c) 2015 Laurence Lek

 

You can certainly treat this work as satirical – hipster touchstones crumbled into dust – and Lek is clear that this is part of the point. The use of video game aesthetics is also nice, although as Lek points out, ‘the player begins when the game is already over’: it’s first-person flaneur. The game framing also exacerbates the dreamlike quality of each episode – background sounds pan around, and there are sudden changes in perspective or time of day.

There’s also a deeper, uncanny power to it. Places we knew and hold dear, transformed into dreamspaces. As Adam points out, Vermilion Sands, The Sprawl or De Chirico are never far away. But also – for some viewers – their own memories are reconfigured. As Lek argues, the more time you spend in each episode, the more meaning your own mind layers over it.

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I experienced a real-world retelling of my own world a few months back, in farcical form, as a group of us were taken on a guided tour of ’Silicon Roundabout and Tech City’. The tour had felt like a good idea as part of a new paper we’ve been writing on the East London tech scene: in practice it involved much psychodrama.

As the tour went on, for example, I was alarmed to find that the guide’s spiel included numerous factoids taken from my own research, fed back in slightly distorted form. Even worse, as we left Old St roundabout we were taken to the Foundry, a now-deceased bar and venue my friends and I spent much time in during years gone by, and which was shut down amid much protest. The guide described it as an ‘important cultural institution throughout the 90s and some of the 00s’: opening up a chasm of lost time in the process. The site now houses the Hoxton Pastry Union, an almost comically resonant symbol of the changes the neighbourhood has since gone through.

Sharing this moment with friends afterwards, it became clear what a powerful charge it packed.

 

 

A more formal way to think about Lek’s project is a series of spatial imaginaries, Bob Jessop’s term for the mental maps we all use to get purchase on everyday life. More formally, Jessop means imaginaries to act as mapping systems or ‘fixes’ that allow agents to navigate otherwise impossibly complex late capitalism.

Imaginaries – like Silicon Roundabout / Tech City itself – are necessarily partial, pushing some elements to the fore and ignoring others. They are thus ripe for the kind of reconfiguring and questioning Lek engages in.

Part of the paper I’m working on looks at Here East, the vast Olympic Broadcast and Media Centre which is being rapidly transformed into a new, maker-focused neighbourhood. On a recent visit the site was still under construction, but we got a clear sense of the developers’ vision.

 

(c) 2015 Max Nathan

 

Notice how the rebrand involves both a new name, a new industrial niche, and a spatial repositioning of the site, away from Stratford and into Hackney, specifically the artist-centric milieu of Hackney Wick which sits just over the canal.

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I was happy to see that Bonus Levels has also engaged with this territory. ‘Delirious New Wick’ is a hysterical rebuild of E9 and the Olympic Park, in which the Games’ iconic structures float above the park and are accessed through teleporters. A gorgeous Burial soundtrack runs in the background as we float high above the city, before descending onto the ruins of the Westfield mall, now partially submerged in an Arthurian Lake. It is heady, brilliant stuff.

Mapping London tech

October 22, 2015

 

 

Science and tech employment counts, 2013, IDBR

 

The Tech Map London is out, and so is the research that underpins it. It’s an extremely impressive piece of work, and anyone remotely interested in urban tech ecosystems should take a look. Kudos to the GLA for commissioning it, and to Trampoline Systems and SQW who put the thing together. Other city-regions should try and do something similar.

Here’s some notes I made. It gets a bit geeky in places.

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1/ Patterns – one widely-reported headline is that London has a whole bunch of technology hotspots, not just one. That makes sense, and chimes with other recent analysis. And as some colleagues and I explore in a forthcoming paper, even pre-2010 Silicon Roundabout was linked into a much larger system.

Another is that the tech sector is ‘shunning’ the Old St area. That’s harder to see, as there’s no time dimension in the data, but it’s clear that as that neighbourhood’s technology scene grows, and the area gets pricier, things will tend to spread out. This is what I found recently in some work for Centre for London.

2/ Definitions – The definition of ‘tech’ is important, and this NESTA piece makes clear, there’s a bunch of competing definitions in play. The project team base their work on the recent ONS science and technology categories, though they tell me they tweaked these a bit. This feels sensible, and has the advantage of allowing them to consider (say) medicine and life sciences alongside ICT.

3/ Data – the report uses high quality IDBR data for some of the analysis, but relies on Companies House data for the actual mapping, which identifies tech firms using self-reported industry codes. This isn’t great, as the authors acknowledge: a non-trivial share of firms don’t report anything, others put down non-informative codes (say, ‘other business services’), and SIC codes often don’t tell us much about products/services. Companies House data on employment and revenues is also quite gappy, and comes off of a selected subsample. Use those numbers with caution.

Anna Rosso  and I have used a big data-driven approach [unlocked version] to try and get around some of these issues, though this isn’t perfect either. We’re now testing a combination of administrative and modelled info which should plug a lot more of the holes.

4/ Location – I’m still scratching my head a bit on this. Companies House data gives the address of a registered office, not the trading address. The two could be quite different, and in extremis, not even in the same city. The project team did a survey to explore these issues, finding that for most SMEs, the two addresses are the same, so developed the map on that basis. It’s obviously critical that the survey is robust for us to believe the map.

I couldn’t find that much detail in the report, but assuming the survey is sound, this is a pretty helpful finding for me and others working with company data. Meanwhile, we can get a rough sense of the correspondence by comparing the map at the top of the page with this one.

 

Digital technologies employment counts, 2013, Companies House

 

The first uses IDBR employment data from actual plant locations, the second uses Companies House registered addresses. For some reason, the first map covers the whole of science and tech, while the second only looks at digital technologies (around 18% of all science and tech jobs in 2013) and is in logs, not raw counts. The two line up *fairly* well, but really we need to see a like-for-like comparison using plants/enterprises, not jobs. Note: I’d be very happy to update this material if the team can furnish me with more detail.

 

New essay on London’s digital industries

June 27, 2015

I’ve written a piece for the new issue of London Essays, the beautifully-designed journal published by Centre for London.

Having covered soft power, the latest issue looks at technology. It launches on 1 July, but you can read my article early here: I take a look at London’s digital industries and their contribution to the city’s economic future, crunch some new numbers and try not to make too many jokes about artisanal products.

Hope you enjoy reading it!

Writing it has been good preparation for the LSE lecture I’m chairing on 7 July, where Gerard Grech, CEO of Tech City UK will be setting out his thoughts on London’s digital future, and the prospects for the tech sector across the country. If you can make it, please come say hello.

 

 

Future chat

May 20, 2015

(c) 2015 Max Nathan

I’ve been busy working on a bunch of projects recently, but will be escaping the office to do a couple of talks over the summer. Each very different …

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On 7 July I’m chairing an LSE lecture by Gerard Grech, CEO of Tech City UK. We’ll be talking about the extraordinary growth of London’s digital economy, and where these sectors could take us next.

I’ve just completed a long piece on London’s digital evolutions for the Centre for London think tank’s new London Essays imprint, so I’m looking forward to this one. Emma and I met Gerard recently and were impressed by his openness. It should be a great session. Details are here.

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On 23 July I’m in New Zealand at the ‘Pathways, Circuits and Crossroads’ conference on the economics of immigration and diversity, which is organised by the University of Waikato, Massey University and Motu. I’m very grateful to Jacques Poot and Dave Maré for inviting me over. They’re just beginning a major programme of work on immigration and diversity in NZ, and I’m hoping we can kick off some interesting collaborations when I’m in town. More details of that event when I have them.

If you’re around for either of these, come and say hello!

New articles published in Economic Geography, European Urban and Regional Studies

April 29, 2014

(c) Max Nathan 2011

Since last summer I’ve been pretty focused on helping get the What Works Centre off the ground, so I’m posting these two articles rather late in the day.

The first is online at European Urban and Regional Studies. It’s my over-ambitious attempt to build a framework for thinking about the economic impacts of diversity in cities, drawing on my own work as well as the growing international literature. Specifically, I critique and try to move beyond Richard Florida’s thinking on these issues.

Here’s the abstract:

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

The full piece is here. There’s no pre-print available, but you can access this paper in the IZA Journal of Migration which covers some of the same ground.

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The second piece is out in Economic Geography, and is co-authored with Neil Lee. This is an empirical study testing links between firm-level demographics, innovation and entrepreneurship. We use a recent sample of London businesses, and uncover some small but robust diversity effects.

Here’s the abstract:

A growing body of research is making links between diversity and the economic performance of cities and regions. Most of the underlying mechanisms take place within firms, but only a handful of organization-level studies have been conducted. We contribute to this underexplored literature by using a unique sample of 7,600 firms to investigate links among cultural diversity, innovation, entrepreneurship, and sales strategies in London businesses between 2005 and 2007. London is one of the world’s major cities, with a rich cultural diversity that is widely seen as a social and economic asset. Our data allowed us to distinguish owner/partner and wider workforce characteristics, identify migrant/minority-headed firms, and differentiate firms along multiple dimensions. The results, which are robust to most challenges, suggest a small but significant “diversity bonus” for all types of London firms. First, companies with diverse management are more likely to introduce new product innovations than are those with homogeneous “top teams.” Second, diversity is particularly important for reaching international markets and serving London’s cosmopolitan population. Third, migrant status has positive links to entrepreneurship. Overall, the results provide some support for claims that diversity is an economic asset, as well as a social benefit.

The full piece is here, and a pre-print version is here.

This is not a Gateway

May 13, 2013

(c) Terry Farrell and Partners

I was in the Economist last week talking about the Thames Gateway. As New Labour’s flagship regeneration programme, the Gateway has not surprisingly been dropped by the Coalition. It hasn’t vanished completely though. Later this year, the Centre for London is publishing a collection of pieces on prospects for the area (for a flavour see this post and discussion). What we might call ‘Gateway Thinking’ also periodically reappears, for example in legacy planning for the Olympics, and in the proposed  Thames Estuary Airport.  And the place retains a strong hold over a certain kind of urbanist, especially in the dystopian excursioneering pioneered by Iain Sinclair and Laura Oldfield Ford.

I spent some time working on Gateway policy while in DCLG, and all of this got me looking back through old notes and papers. Some rough thoughts follow.

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First, the Gateway concept now feels madly ambitious – especially compared to today’s minimalist development environment. Remember that the 70km Gateway was one of four ‘growth areas’ set out in the 2003 Sustainable Communities Plan.  The Plan proposed around  550,000 new homes in these zones by 2016 (42,000 a year, when current annual housing starts for the whole country are now around 98,000), and envisaged ‘delivery’ of  430,000 additional jobs.

In practice, the other three growth areas – Milton Keynes, Ashford, and the ‘Peterborough-Stansted-Cambridge’ corridor – involve building in popular areas where developers are happy to operate. The Gateway was always going to be a much more challenging environment.

Second, there was (and is) a strong social argument for public investment along the Thames Estuary. Some communities along the river are deeply deprived , with residents held back by low incomes, low skills and thin local labour markets.  However, the economic case is rather weaker. It was never clear whether the Gateway programme was intended  as a response to economic pressures in the Greater South East (in particular, high house prices and low building), or a much bolder attempt to restructure the deeper regional economy. Neither was it clear why these communities merited public spending ahead of (say) those in Manchester, Liverpool or Leeds.

The Greater South East economic ‘system’ is heavily weighted towards the North and West of London, where there is a polycentric system of smaller cities (Milton Keynes, Oxford, Cambridge, Reading) around the capital. East of London, towns and cities tend to be smaller and local economies are heavily commuter-powered.

As the Economist notes, parts of London’s economy have been moving Eastwards for years. But the Gateway attempts to shift the entire urban system  towards the East – and to shift activity away from commuting towards self-contained communities. The evidence tells us that urban economies are highly path-dependent (e.g. here, here and here), and  that this kind of rebalancing takes decades if it happens at all. By contrast, the Gateway strategy promised 160,000 net new homes and 180,000 net new jobs over 15 years.

Third, this terraforming aspect is integral to the Gateway’s staying power. As a classic grand projet, the programme was highly appealing to a certain kind of politician (Michael Heseltine, John Prescott, Gordon Brown) and urban planner (Richard Rogers, Terry Farrell). Brown actually raised the jobs target to 225,000 in 2007, just as the credit crunch was kicking in.

Such visioning also gets in the way of getting things done. An obvious but important example: the Gateway isn’t a single zone, but a collection of very disparate communities. This matters. Treating the Gateway as a kind of continuous policy space made for convenient shorthand in speeches, but obscures the huge differences between key economic sites like Canary Wharf and Shellhaven, versus smaller towns like Thurrock, and struggling former resorts like Southend.  Arguably, it also made it harder to think about economic development, since policy had to be retrofitted into a high-level planning concept rather than based on local circumstances.

Fourth, Gateway delivery systems were pretty badly designed. Governance somehow managed to be both too top-down, as explained above, and not dirigiste enough at a local level. Notably, detailed policy development was generally left to Urban Development Corporations, who lacked a democratic mandate, had no statutory powers and held no assets. By contrast, New Town Development Corporations could set long term planning goals, and leverage a substantial public land portfolio. The trade-off was the lack of accountability, but land holdings eventually transferred to local authorities.

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None of this is to call time on the policy or the area. As I said earlier, the kind of deep structure change envisaged by Heseltine and others take decades to take shape. Developments like the London Gateway Port are potentially transformational, and London’s eastern boroughs will continue to evolve. By starting with economic fundamentals rather than grand planning, and placing help for individuals alongside physical regeneration,  a simpler, more effective approach might begin to emerge.

[apologies to TINAG for stealing the title.]

Top team diversity

April 9, 2013

(c) 2012 Suzi Hall

Like many Western countries, the UK has become substantially more ethnically and culturally diverse. The 2011 Census makes this crystal clear. Since 2001, the foreign-born population in England and Wales has jumped from 4.6 to 7.5m. At the same time, the ‘white British’ ethnic group shrank from 87.5-80% of the population.

What are the economic impacts of these deep demographic shifts, and what do they mean for cities? Certainly, population change has been most striking in urban areas: notably, London is now a ‘majority minority’ city for the first time in its history.

Urban factors may also affect how ‘diversity effects’ play out at firm level. Although the public debate is still focused on migrants, jobs and public services, a number of academic researchers are turning their attention to the wider impacts of immigration, minority communities and population diversity. Globally, there are now studies exploring effects on firms’ productivity, innovation, entrepreneurship, or trade patterns; and channels that may influence house prices, or the mix of local goods and services.

There’s been little parallel UK research to date – but in a new SERC Discussion Paper (supported by LLAKES) I explore the links between the composition of 6,000 English firms’ ‘top teams’ and company performance. Unusually, my data allows me to look at both ethnicity and gender mix.

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What might we expect to see? Owners, partners and directors set firms strategic direction. So the make-up of a ‘top team’ might generate production externalities through diversity (a wider range of ideas/ experiences, helping problem solving) and/or ‘sameness’ (via specialist knowledge or better access to international markets). These channels may be balanced by internal downsides  (lower trust) and external barriers (discrimination), so that overall effects on business performance are unclear.

Big cities might then amplify or dampen these channels. Agglomeration economies might help productivity, and firms may benefit from large, cosmopolitan customer markets. Alternatively, firms in cities might face more competition, or minority-headed businesses might face discrimination.

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My results suggest a non-linear link between top team diversity and business performance, which is net positive for process innovation and net negative for turnover. Further tests on diverse and minority/female-headed firms find positive links for diverse top teams, negative for minority and female-only top teams.

Looking at the influence of urban areas, I find some evidence of complex amplifying and dampening effects. In London, for example, diverse firms are less likely to engage in process innovation; but overall, firms in bigger cities are more likely to.

My data make it hard to identify causal effects, so I interpret these results as pure correlations. The implication is that while diversity has internal and external benefits, penalties from being ‘too diverse’ probably result from external constraints. In turn, that suggests policymakers need to encourage corporate diversity, while taking discrimination more seriously.

In a companion paper on London firms, Neil Lee and I found strong links between firm-level diversity and innovation. This paper suggests diversity-innovation links for firms outside the capital too. Core city leaders should pay attention.

That’s not my name

January 30, 2013

(c) wired / architecture 00

Last week I was at LSE for a seminar on place and neighbourhood branding, ably organised by CityDiplo. Also on the panel were Suzi Hall (LSE Cities) and Ian Stephens (Saffron). It was a great evening, with a sharp and highly engaged audience.

I ran through some new work on the politics of naming in East London’s digital economy, and how the competing brands of Silicon Roundabout and Tech City are playing out on the ground (which I’m writing with Emma Vandore and Georgina Voss).

Suzi gave a great run-down of her work on ordinary streets and vernacular spaces in South London, and Ian delivered a nice overview of official branding strategies for Nine Elms.

The CityDiplo team have now put up a podcast of the session. Presentations should follow shortly.

High Speed Two, cities and the North-South divide

January 28, 2013

(c) The Guardian 2013

The Government has just unveiled the route map for the UK’s high speed rail network. So will HS2 help the cities on the line? Will it narrow the North-South divide, as some Ministers claim? And what about places left out?

Here’s what I wrote back in 2010, when the detailed modelling was done, and drawing on the international evidence. The punchlines are:

So what does HS2 mean for cities? Urban firms and travellers are the big winners, which is good news for cities if more productive businesses raise wages or employment. Some cities get the kudos of being on the line, and may get a regeneration boost from new stations – although that could turn into a windfall gain for developers. But fairly few firms will relocate, and agglomeration impacts will be pretty small.

On this basis, HS2 isn’t likely to fundamentally change the UK’s economic geography. Rather, it will speed up the economic geography we already have.

… Those who gain from HS2 (business, core cities, those in ‘the North’) are strongly in favour; those who lose (communities and homeowners along the line) are vehemently against. Local opponents of HS2 are hardly irrational – quite the opposite. So rather than handing a windfall gain to business by pegging HS2 fares to conventional fares, HS2 tickets should be pricier – at least in first class.  That provides another way for taxpayers to recoup some of the initial outlay. … The agglomeration benefits for Phase 2 (Manchester and Leeds) seem much larger than Phase 1 (London to Birmingham). Why? Rather than connecting two relatively distant cities, Phase 2 links a lot of nearby places (e.g. Sheffield/Meadowhall to Leeds in 20 mins), and provides indirect access to big cities not on the line (e.g. from Manchester to Liverpool). The fact of HS2 thus strengthens the case for complementary investments like the Northern Hub, which will bring Liverpool, Manchester, Sheffield and Leeds closer together.

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Two other points. First, as John Tomaney argued on radio 4 this morning, the evidence suggests HS2’s economic impacts are pretty complex, and the net effect isn’t clear. Like him and others, I’m basically an agnostic.

Second,  to repeat – it’s crucial to spend money on better links between Northern cities and more London-centric high speed lines. As Richard Leese suggested in the same piece, for policymakers this is not an either/or. Thankfully Ministers agree, and are feeding cash into boring but important investments like the Northern Hub, as well as the bigger and shinier HS2.

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Update, May 2013: The National Audit Office has published its own report, which echoes many of these points.

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