UNIVERSITY COLLEGE LONDON

FACULTY OF THE BUILT ENVIRONMENT

BARTLETT SCHOOL OF PLANNING

The moulding of an East London cluster:

Regeneration and foreign investment in Tech City.

Photo (Emma Vandore) of London’s Old Street Roundabout showing an advertisement for the 2012 Olympic Games

Emma Vandore BA PGDip

Being a Dissertation submitted to the faculty of The Built Environment as part of the requirements for

the award of the MSc Spatial Planning at University College London:

I declare that this Dissertation is entirely my own work and that ideas, data and images, as well as

direct quotations, drawn from elsewhere are identified and referenced.

(signature)

(date)

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Acknowledgements:

I would like to thank my tutor Prof. Harry Dimitriou and all interviewees, in particular

Shoreditch Town Centre Manager Duncan Ray for blue-sky brainstorming over coffee on

Great Eastern Street. I would also like to thank Mark Lucas, head of regeneration at

Redbridge council, and Zelkifli Ngoufonja for help with the surveys, and Dr Olga Bridges,

Dr Christopher MacKay, Dr Marco Bianconi and Rowan Mackay (whose reflections on

selling patterns in Indian markets 20 years ago sparked my interest in clusters) for invaluable

advice on academic structure.

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Table of Contents

Abstract 6

1.0 Introduction 7

1.1 Research Questions 9

1.2 Scope of Study 9

1.3 Assumptions 9

1.4 Overall research framework 10

2.0 Literature review: theoretical developments 12

2.1 Historical background 14

2.2 Theories of Michael Porter 15

2.3 The role of FDI and cluster creation 17

2.4 Cluster varieties and local context 17

2.5 Place marketing literature 18

2.6 Issues for Tech City research 19

3.0 Literature review: international experience of cluster developments 20

3.1 U.S.: Silicon Valley and New York 20

3.2 France: Paris and Sofia-Antipolis 21

3.3 Sweden: Medicon Valley 23

3.4 Generic Lessons 24

4.0 Case study: Tech City, East London 25

4.1 Urban grain: spatial realities 29

4.2 Policy intentions/ developments 32

5.0 Case Study Research Methodology 35

5.1 Qualitative study: interviews 36

5.2 Qualitative study: participant observation 36

5.3 Quantitative study: survey of Shoreditch tech companies 37

5.4 Quantitative study : survey of professionals 38

6.0 Case study analysis and findings 40

6.1 What is Tech City? Analysis of meanings 42

6.2 Silicon Roundabout to Tech City 44

6.3 Nature of government intervention 47

6.4 Marketing analysis 48

6.5 Is the policy appropriate? 51

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6.6 Overall implications 54

7.0 Conclusions 56

8.0 Bibliography 58

9.0 Appendices 64

9.1 Appendix 1: List of persons interviewed 64

9.2 Appendix 2: Interview questions 66

9.3 Appendix 3: Online survey - companies 67

9.4 Appendix 4: Online survey - professionals 84

9.5 Appendix 5: Interview excerpts (institutional setup) 102

9.6 Appendix 6: Interviews excerpts (finance/ immigration) 104

9.7 Appendix 7: Institutional/ organisational Tech City setup 106

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List of Figures

Unless otherwise stated, all photographs and diagrams are by Emma Vandore

Fig.1 Cities Institute map of London digital economy clusters 10

Fig.2 Overall Research Framework 11

Fig.3 A selection of cluster definitions 13

Fig.4 Michael Porter’s Competitive Diamond 16

Fig.5 UKTI Marketing Brochure 18

Fig.6 Silicon Valley Map 20

Fig.7 Map of France’s 71 competitiveness clusters 22

Fig.8 Map of London showing Tech City in purple 25

Fig.9 Map of Tech City from UKTI brochure 25

Fig.10 Silicon Roundabout 2007 26

Fig.11 Silicon Roundabout 2009 27

Fig.12 Tech City 2011 27

Fig.13 Shoreditch in pictures 29

Fig.14 The Olympic Park 30

Fig.15 Map of the Olympic Park 30

Fig.16 Artistic spaces in Hackney Wick and Fish Island 31

Fig.17 Potential Tech City spaces 32

Fig.18 Tube connections 33

Fig.19 Twitter screen shot 37

Fig.20 Wired magazine’s Silicon Roundabout map 38

Fig.21 SWOT Analysis of Tech City 41

Fig.22 TechHub first birthday 42

Fig.23 Shoreditch attraction for Tech companies 43

Fig.24 Tech City spatial boundaries: companies’ view 46

Fig.25 Tech City spatial boundaries: professionals’ view 47

Fig.26 What is Tech City: professionals’ view 52

Fig.27 What is Tech City: companies’ view 52

Fig.28 Diagram of central government agencies involved in Tech City 106

Fig.29 Diagram of regional government involvement in Tech City 107

Fig.30 Diagram of local government involvement in Tech City 107

Fig.31 Newham Tech City Plus plan 108

Fig.32 Diagram of private sector involvement in Tech City 109

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Abstract

For the past three years, internet start-ups have been drawn to a patch of East London dubbed

Silicon Roundabout. In November 2010, Prime Minister David Cameron announced the area

was to become an officially sanctioned cluster. It was rebranded Tech City UK, called the

Digital Capital of Europe and given a new geography that encompasses the Olympic Park,

site of the largest regeneration scheme in Europe. To deliver on these ambitions, a special

team at UKTI was established with a remit of attracting foreign direct investment (FDI).

There are two main objectives of Tech City: the promotion of London as a hub for the digital

economy - a sector the government sees as vital for future growth1 - and the regeneration of a

depressed area.

This paper makes an academic assessment of the regenerative potential of clusters and the

role of FDI therein. Research methods were designed to test this knowledge in Tech City.

Central government’s Tech City strategy is focussed on attracting foreign investment,

however studies suggest that FDI will only contribute positively when the local business is

strong and sizeable (Phelps 2008), which is not the case. Based on the clearly defined

research methodology, the findings of this dissertation lead to the recommendation that a

lower priority is given to inward investment at this young stage of cluster development, in

favour of developing innovative home-grown talent. In addition, for the cluster to thrive after

the Olympics is over, this paper advocates a new public-private partnership structure that is

less dependent on the central government. Finally, it recommends further academic research

about the economic links between cluster centres and secondary locations.

1 The Economist 2011, Aug.6:13

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1.0 Introduction

Tech City, the East London cluster of creative and digital companies, is being designed as a

replacement brand for Silicon Roundabout, an ‘organic’ cluster, so-called as it emerged

without direct government help. Now central government is involved, it hopes to extend the

geographic boundaries from the cluster’s origins in Shoreditch into the Olympic Park whilst

pumping the area full of FDI steroids. The purpose of this paper is to use Tech City as a case

study to examine the regeneration potential of cluster policy, and the role of FDI in cluster

formation.

The paper begins by analysing cluster policies as a tool employed internationally to boost

economic growth. Encouraged by the research of Michael Porter (1990, 1998), policymakers

in the 1990s and 2000s began to see clusters as a panacea for growth and economic

regeneration, hoping that attracting mobile investment could stimulate local development.

However, many clusters failed to ignite (Clancey 2001, Asheim et al 2006).

The genesis of Silicon Roundabout owes something to the attractions of London generally:

wealth, talent and connectivity. In addition, East London offers relatively cheap rents and a

creative vibe. Recent research (Glaeser 2011) points to cities as centrifugal forces attracting

ideas and people. This paper will question whether stimulating innovation in London would

be more effective than attracting FDI whose contribution to local economies has been

questioned (Young 1994). Another concern with the FDI strategy is whether establishing the

right balance in the Olympic Park: on their own large multinationals risk creating a sterile

atmosphere, and literature suggests that it is difficult to recreate the buzz of informal relations

and creativity found in vibrant clusters on an industrial estate (Jacobs 1970).

Another question addressed in this paper concerns the nature of government intervention. At

the launch of Tech City, Prime Minister David Cameron was keen to show he was not taking

a top-down approach, which would contradict his Localism agenda and the right-wing ethos

of small government: “We understand where previous governments have gone wrong,” he

said. “They believed that they could design and create a technology cluster from on-high.”

Yet in seeking to direct the geography of the cluster, the government is trying to shape it,

arguably in a way that serves its own ends. Support for the £9 billion 2012 Games is

premised on the Olympics providing a lasting legacy and the government is likely to be

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judged on whether it makes that happen. It therefore has a vested interest in reversing the

economic decline of the area.

The paper concludes with policy recommendations for Tech City, and avenues for further

study.

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1.1 Research Questions

This main question addressed in this paper is the following:

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

1.2 Scope of Study

In Chapter 2, cluster and place-marketing literature relevant to Tech City is reviewed.

Chapter 3 analyses international experiences. Chapter 4 presents the Tech City case study.

Chapter 5 describes the research methods used, including interviews, surveys and participant

observation. Chapter 6 presents the research findings and chapter 7 makes policy

recommendations. Finally, Chapter 8 lays out concluding reflections on what this paper adds

to cluster theory.

1.3 Assumptions

This paper is based on the assumption, drawn from a Cities Institute (2011) report, that

Silicon Roundabout is a cluster. Using cluster analysis (location quotients), the Institute

identifies Shoreditch as a digital sub-cluster linked to a corridor of digital clusters across

London (Fig.1).

Principle Research Question

What is the role of cluster promotion in regeneration, and how does foreign

direct investment help clusters? How does this apply to Tech City?

Supplementary Research Questions

1) What is Tech City?

2) What is the nature of government intervention?

3) Is this policy appropriate for East London?

4) What can be learnt from foreign examples?

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1.4 Overall Research Framework

The paper will be organised as follows (Fig.2).

Fig.1 Cities Institute map of London digital economy clusters

Pink shape

indicates high

location quotient

for Shoreditch

cluster

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Step 1:

Planning

and

Structure

Step 2:

Research

methods

Step 3:

Policy

recommen

dations/

Conclusion

s

Analysis, Synthesis of Findings

Conclusions

What does Tech City analysis add to cluster theory?

Implications

Lessons for Tech City

Study Aims

What is the role of FDI in cluster formation and regeneration?

How does this relate to Tech City?

Literature: Theory

What is a cluster?

Role of clusters in

economic growth,

regeneration

Impact of FDI,

government

intervention

Local context

Literature:

International

examples

U.S.: Silicon Valley

networks and New

York incentives

France: Dirigisme

Sweden: Marketing

Interviews

Qualitative analysis aimed at

understanding Tech

City, government

intervention, and

aims

Online Surveys

Quantitative analysis

to substantiate the

findings of the

qualitative research

Case Study: Tech

City

Spatial conditions

Regeneration

implications

Role of FDI

Policy analysis

Fig.2 Overall Research Framework

Participant

Observation

Qualitative research to

understand the

Shoreditch cluster

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2.0 Literature review: theoretical developments

There is an avalanche of literature from the fields of economics, geography, and sociology

but cluster definitions differ. Fig.4 shows an inexhaustive selection of academic

classifications, which contrast with the convergence among policymakers, influenced by

economist Michael Porter. His book The Competitive Advantage of Nations (1990) places

clusters within a larger theory of national competitiveness, which in the 1990s became

popular with policymakers (Visser 2009, Simmie & Sennet 1999 etc.). This paper will take

Porter’s work as the reference point and use a simplified version of his definition:

“A cluster is a spatially concentrated group of inter-connected companies.”

The two key elements of a cluster are linkages and geography. Porter classified cluster

linkages as either vertically (from buying and selling) or horizontally (complementary

products or services, technology, labour etc.) (1990:149). The links may be constructed

through economic or social ties and through formal or informal networks. Geography means

firms are located in the same place, although there is fuzziness about scale (Asheim et al

2006:12).

Economists list the key reasons for clustering as shared infrastructure, a pool of skilled

labour, transaction efficiency, and knowledge spillovers (Malmberg & Maskell 2002), all of

which point to cooperation rather than competition. Links to universities or learning networks

are also important (Saxenian 1996). One task of this paper will be to question whether

companies clustered in Shoreditch for the reasons theory might predict, and whether those

reasons can or should be fulfilled in the Olympic Park.

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Fig.3: A selection of cluster definitions

The most cited:

Porter (1998: 197) “Clusters are geographic concentrations of

interconnected companies, specialized suppliers, service

providers, firms in related industries, and associated institutions

(for example, universities, standards agencies, and trade

associations) in particular fields that compete but also

cooperate.”

Academic (adapted from Martin & Sunley 2003:12)

Simmie & Sennet (1999:51) “A large number of interconnected

industrial and/or service companies having a high degree of

collaboration, typically through a supply chain,, and operating

under the same market conditions.”

Feser (1998:26) “Economic clusters are not just related and

supporting industries and institutions, but rather related and

supporting institutions that are more competitive by virtue of

their relationships.”

Rosenfeld (1997:4) “Used to represent concentrations of firms

that are able to produce synergy because of their geographical

proximity and interdependence, even though their scale of

employment may not be pronounced or prominent.”

Oxford Dictionary (1990) “A close group or bunch of similar

things growing together.”

Institutions

European Commission (2008:2) “A cluster can be broadly

defined as a group of firms, related economic actors, and

institutions that are located near each other and have reached a

sufficient scale to develop specialised expertise, services,

resources, suppliers and skills.”

DTI (2004:4) “Clusters are groups of inter-related industries.

They have two key elements. Firstly, firms in the cluster must

be linked. Secondly, groups of inter-linked companies locate in

close proximity to one other.”

OECD (1999:9) “Clusters can be characterised as networks of

production of strongly interdependent firms (including

specialised suppliers) linked to each other in a value-adding

production chain.”

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2.1 Historical background

Cluster theory has evolved from observation of the economic trend of agglomeration.

Economist Alfred Marshall (1890) developed the notion of industrial districts from studies of

different heavy industry groupings in England. Firms group in clusters to realise external

economies from the availability of skilled labour, growth of supportive ancillary trades, and

the information and learning effects from inter-firm division of labour.

In the Fordist era2, more geographically dispersed patterns arose with the dominance of large

integrated firms. As this was replaced by more flexible production methods, cluster

observation became fashionable again. In North America, Scott (1988) noted external

economies of scale from firms in a supply chain working closely together. In Europe, new

industrial or neo-Marshallian districts attracted attention in what came to be known as the

Third Italy: concentrations of artisanal firms specialised in a core activity around which a set

of small and medium sized companies develop, each with their own specialisation (Becattini

1990). Americans Piore and Sabel (1984) labelled this a trend towards flexible specialisation,

however doubts have been raised about the generality of this process (Young 1994). In

addition, the physical interlinkages noted by Marshall and Scott are perhaps less relevant for

hi-tech digital clusters such as Tech City, where individual operators can open their

computers and access the world.

Globalisation would appear to lessen the incentive for companies to invest locally given the

premium given to international competition and fast-changing and flexible business

strategies. However, Amin & Thrift (1992) argue that when a critical mass of know-how,

skills and finance evolves, it can become a socio-cultural and institutional infrastructure

capable of sustaining and encouraging growth. Increasingly, these critical masses are found in

cities whose mass of possible interactions are seen facilitating innovative behaviour. As they

suck in ever greater numbers of people and economic activity, many cities continue to thrive

despite higher land and labour costs. Jacobs (1970) attributed this to the cross-over effect,

saying that dynamic larger cities are so because insights from one industry boost another.

Others have noted the benefit of networking and face to face contact, which is seen as

enabling trust and communication, increasing productivity, innovation and “buzz” (Storper

and Venables 2003).

2 An era in the 1940s-60s when developed economies were characterised by mass consumption and production

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Innovation, seen as a powerful driver of economic growth, has also attracted analysis.

GREMI (French acronym for the European Research Group into Innovative Milieus)

examined how certain forces within clusters can be harnessed to foster an innovative milieu

(Visser 2009:368), such as spin-off companies which transform knowledge in new

combinations. Simmie (2006), however, says that clusters are a feature of innovative systems

and not a cause. This debate is similar to the proverbial chicken and egg, and merits further

research that is not appropriate here.

Global cities such as London are increasingly marketing themselves as centres of innovation,

however they are not necessarily efficient for production, which is often directed to suburbs

and peripheral areas in the urban hierarchy. Of these, theory has little to say. “More analytical

effort ought to be directed at uncovering the economic dynamics of intermediate locations”

(Phelps 2004:972). This consideration is important for Tech City and will be examined in

greater depth (Section 6.2).

2.2 Theories of Michael Porter

Porter’s main theoretical contribution is his diamond theory of competitiveness (Fig.4),

initially intended for companies and nations, and developed for locations and regions

(Asheim et al 2006:9). The diamond theory posits that success depends on a favourable firm

strategy, structure and rivalry; factor input (supply) conditions; demand conditions; and

related and supporting industries. Productivity is increased if the interactions between the

four sets of factors are more intense, which clusters enable. “Once a cluster forms, the whole

group of industries becomes mutually supporting," increasing bargaining power, flexibility,

speeding up information flows, creating new combinations, and attracting resources

(1990:151).

Governments can influence all four points of the diamond by designing the appropriate

competition policy, tax system, intellectual property laws, corporate governance rules,

regulatory process, education policies etc. (1998:245).

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Porter markets his theory as more than just an analytical concept: it has become a policy tool

for promoting growth and regenerating depressed areas with a powerful fan-club. The

Organisation for Economic Cooperation and Development, the European Commission and

the World Bank are backers and a number of cities, states and regions in the U.S. and Europe

have developed cluster policies (Feser & Bergman 2000:2). However, a deeper analysis of

Porter’s work raises concerns.

Critics (Asheim et al 2006 etc.) have questioned Porter’s theoretical robustness, in particular

his spatial awareness (he flip flops between national and local). His geographic

concentrations can range from a city to a region to a country and even neighbouring countries

(1998:199-206). In practice, his results are also often lacking. Porter was hired by authorities

in Scotland and the Basque country to help develop cluster policies, but within ten years both

had launched non-cluster-based initiatives (Asheim et al 2006:21-22).

A study of industry clusters in Ireland concluded that for small, open economies “Porter’s

model does not work very well” (Clancey 1999:11). In Ireland, domestic demand – a key

factor for Porter in spurring clusters – is relatively weak compared with demand overseas, but

Porter largely omits FDI from his analysis

Fig.4: Michael Porter’s Competitive Diamond

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2.3 The role of FDI and cluster creation

In the early 1980s a new belief took hold in regional policy: “that FDI can and does

contribute to cluster formation” (Phelps 2008:458). Regeneration policy hinged on the hope

that foreign investment could be enticed or captured, thereby stimulating local linkages.

However, the economic benefits of FDI are not assured. Studies in the U.K. show investment

from multinationals can have a positive direct impact, but “the spillover effects, especially

with respect to local sourcing, have been very disappointing” (Young 1994). Phelps

(2008:468) suggests that government incentives would be best focussed on indigenous

companies given that most incentives for attracting FDI are absorbed, and FDI is most

effective at boosting the external economy when local companies are “significant.”

Directing funds or industry to specific areas is often problematic. Attempts to create a cluster

from scratch have rarely succeeded. Porter (1990:655) advises against this, and the previous

government agreed: A Practical Guide to Cluster Development “starts from the perspective

that policy intervention cannot create cluster (sic) from scratch but that it can help existing

clusters to develop” (DTI 2004:4). This assumption is difficult to prove or disprove as there is

no sufficient theory about the origins of clusters.

2.4 Cluster varieties and local context

It would be helpful at this point to consider how clusters differ. They can be many levelled -

from the allees and gullis of Indian markets (row upon row of stalls all selling the same thing)

that serve local residential areas, to specialised regions like the City of London, whose

marketplace is the world. They can also be research park-based, urban centred, scattered

across a wide area, deeply concentrated, with tighter or looser networks, and in many

different industries with greater or lesser state influence.

Gordon and McCann (2000) identified three cluster types, each with its own logic and

requiring different policy approaches:

1. Pure agglomeration

2. Industrial complex or science park

3. Social network

To this could be added an additional type identified by Markusen (1996): hub-and-spoke

districts where the economy is dominated by one or several large firms (the three other types

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she identified approximate those of Gordon & McCann). Simmie and Sennett (1999)

introduce a fifth type: multiple clusters of innovative sectors housed in cities at the top of

their urban hierarchies.

However, while useful as a conceptual guide or a starting point for regional development

strategies, cluster theory needs to be carefully tailored to local conditions to be effective

(Lagendijk 1999). Attracting and retaining talent and wealth is a complex business. Markusen

cites various factors making a place “sticky”: corporate strategies, industrial structures, profit

cycles, state priorities, local and national politics (1996:309).To this could be added magnets

for the creative classes: a pleasant environment, leisure activities etc. (Florida 2002).

2.5 Place marketing literature

In practise, cluster promotion is to a large extent about place-marketing. The literature is split

between uncritical “how-to” guides, such as Marketing Places Europe (Asplund et al 2005),

intended as a planning framework for policymakers and full of vague suggestions, to more

critical appraisals.

Ashworth & Voogd (1990:11) define place-marketing as “a process whereby urban activities

are as closely as possible related to the demands of targeted customers.” In many cases, it is a

response to industrial decline (Hall & Hubbard 1998). Cities have switched from producing

things to becoming providers of services such as education, entertainment and culture, and

their perception is an active component of economic success or failure (Ashworth & Voogd

1990:3).

Fig.5 UKTI Marketing brochure

19

Kearns & Philo (1993) studied inward investment, a major plank of the Tech City initiative.

They recommend establishing an economic logic (why you would want to locate in a

particular place), and a social logic (encouraging residents to buy into the process). The

attributes of the area – skilled labour, infrastructure, training facilities, transport connections

etc. – are bundled together and turned into a product, which is then marketed. For them, it is

an imaginary city that is being promoted to respond to the perceived demands of the global

market place.

Tech City will also benefit from its association with the 2012 Olympic Games. Nations

compete to host the Olympics because it can be a lucrative place-branding opportunity -

although not without risk. Former Olympic host Greece failed to secure a legacy for many

structures, which are now derelict3. However television rights and corporate sponsorship can

be lucrative, as the 1984 Los Angeles Olympics proved, and the global attention the Games

attract can be leveraged. As Roche (200:7) notes, mega-events are “important for exchange,

transfer and diffusion of information, values and technologies.”

2.6 Issues for Tech City research

The literature review raises several questions for the case study research:

• Does Tech City (whole and in its constituent parts of Silicon Roundabout and the

Olympic Park) correspond to the cluster features identified?

• Which type of cluster does Tech City best conform to, with what policy implications?

• What is the economic rationale for the “intermediate location” of the Olympic Park?

• What is the role of FDI and marketing in Tech City?

These issues were taken into account when designing the research methodology.

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

Athens-9billion-Olympic-glory.html

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3.0 Literature review: international experience of cluster developments

3.1 The U.S. - Silicon Valley and New York

Policymakers everywhere dream of emulating Silicon Valley. In his speech4, Cameron

attributed its success to ‘organic’5 growth, albeit with a generous helping hand from

government defence contracts. Firms were attracted by cheap rents, availability of venture

capital, a pool of talent at Stanford University, and the Californian culture.

In the 1970s, Silicon Valley and Route 128 in Boston were both leading centres for

innovation and electronics, but fortunes began to diverge in the 1980s. Silicon Valley

responded to competition from Japan with a new generation of start-ups, whereas Route 128

laid off workers as its market changed. The different responses are not, as Porter would

theorise, because Silicon Valley was more competitive, but because it was more collaborative

(Saxenian 1996). Its dense social networks and open labour markets create an industrial

system that promotes collective learning and flexible adjustment (1996:2). In contrast, Route

128 is dominated by secrecy and corporate loyalty (1996:3).

4 Nov 2010

5 See definition p.9

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

21

Located in the southern part of the San Francisco Bay area, California, Silicon Valley

encompasses many communities (Fig.6). For a scale comparable to Tech City, it is worth

looking briefly at Silicon Alley, a corridor in New York’s lower Manhattan. Indergaard

(2004) charted the cluster’s spatial development during the 1995-2000 dot.com bubble, when

speculation inflated the stock market value of internet companies. Manhattan remained the

centre, but the city government tried to encourage new satellites in other boroughs to relieve

pressure on property prices and spread the economic gains. The quasi-public Alliance for

Downtown New York succeeded in filling empty office space in the Financial District by

subsidising wired space (2004:7). The Upper Manhattan Empowerment Zone (UMEZ)

brought business to Harlem by designating an economic development corridor in the

borough’s historic 125th street (HIWay125). Enclaves of low cost wired space were

established in other parts of the city such as South Bronx, Sunset Park in Brooklyn, Long

Island City in Queens, and Staten Island.

3.2 France – Paris and Sofia-Antipolis

A major plank of France’s industrial policy is pôles de compétitivité, or competitiveness

clusters, which the state calls “a motor of growth and jobs6” (my translation). These are

specially chosen clusters in sectors and regions the government wishes to encourage,

organised as public-private partnerships. It is thus a policy that reflects the government’s

vision of how the economy should develop.

In 2004, clusters were invited to apply for official recognition. 71 were selected, of which 17

are deemed to have a global vocation. While undoubtedly inspired by Porter, the policy

would be too interventionist for his liking. The government considers its three-year 1.5

billion euro policy a success, and a second phase was launched through 2012.

Underperforming clusters were struck from the official list, while six new clusters in sectors

the government deems important for future competitiveness (water and eco-technologies)

received the top official grade (CIADT 2010).

6 www.competitivite.gouv.fr

22

In Paris, the Cap Digital cluster groups 20 large companies, 530 small and medium sized

companies, and 50 research centres specialised in digital content (video games, media,

computer software and design). Run as a non-profit organisation (‘association’) with a

management committee and a board of directors7, it approves new members according to

specific criteria relating to quality and area of expertise. Membership benefits include

funding, networking, information, support and kudos. Collaborative projects and cooperation

– particularly between large and small companies and with research institutes - are

encouraged. In four years, 1,250 projects have applied for the ‘Cap Digital’ label. Of these

350 were funded.

In a study of the Cap Digital project database for 2006-7, Halbert (2010) concludes that the

state-sponsored cluster appears to have helped a shift in culture away from secrecy and

rivalry to collaboration (2010:24). However Gallie et al (2011) say there is a risk that

7 www.capdigital.com

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

Cap Digital

Sofia-Antipolis

23

researchers orient their choices to meet the National Research Agency's objectives, which are

based on government priorities and not commercial potential.

The Sophia-Antipolis cluster in Southern France gives heart to fans of dirigisme, although its

unique history would be difficult to replicate. The brainchild of a private individual, Pierre

Laffitte in the 1970s, Sophia-Antipolis quickly became a government initiative when he ran

out of money. Helped by tourist infrastructure (airport, hotels) and a pleasant climate, foreign

multinationals were persuaded to make Sophia-Antipolis their European base. They began to

lose interest in the 1990s, and the cluster appeared in decline. However, when the

multinationals left, their staff remained, perhaps attached to sunny climes. Many then created

their own start-ups (Longhi & Quere 1993). In 2005, the area became a government

designated global cluster now called SCS, specialised in secure communications

(microelectronics, telecommunications, software and multimedia). It has over 260 members,

70 percent of which are SMEs8.

3.3 Sweden: Medicon Valley

Sweden was one of ten countries included in Porter’s initial 1990 study on competitiveness.

His cluster approach became a primary instrument for regional industrial policy in 2000 when

13 projects were set up by NUTEK, the Swedish Business Development Agency under the

aegis of Klustergruppen (The Swedish Cluster Focus Group). One of these is Medicon

Valley, a biotech and pharmaceuticals cluster in the cross-border region between Sweden and

Denmark, now linked by the Oresund Link bridge, which opened in 2000. Building on the

existing industrial strength of the area, authorities in both countries sought to develop a

cluster brand epitomised by the 1997 naming of the cross-border Medicon Valley Academy, a

non-profit, member financed and managed educational and networking organisation

(Lundequist & Power 2010:691).

Both Hallencreutz & Lundequist (2010:543) and Lundequist & Power (2010:699) conclude

that a key factor of success is marketing. The development of a cluster brand is a means to

attract investors and talent, create a shared vision and common purpose and to complement

private sector marketing efforts.

8 www.pole-scs.org

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3.4: Generic Lessons

These studies allow us to address the supplementary research question: “What can be learnt

from the foreign examples.”

The French government’s interventionist stance is unlikely to be officially endorsed by the

current UK conservative-liberal government. However, like the pôles de compétitivité, Tech

City is a regional development policy intended to promote an industry judged by the

government to be strategic. In France, management is devolved to the business community

through a management committee and board for each cluster, whose make-up is mainly

private sector. The Sofia-Antipolis example is interesting because it supports the possibility

that the cluster can be seeded in the Olympic Park, but also because it shows the power of

context.

The American examples show government enticements can help, both in the form of

government contracts (Silicon Valley) and subsidies and tax breaks (New York). Silicon

Valley also points to the importance of a collaborative environment for innovation and the

availability of venture capital.

The Swedish example is instructive as it shows the value of marketing internally for creating

a cluster identity.

25

4.0 Case study: Tech City, East London

“Our ambition is to bring together the creativity and energy of Shoreditch and the incredible

possibilities of the Olympic Park to help make East London one of the world’s great

technology centres,” (Cameron, 4.11.2010).

Fig.8: Map of London with Tech City in purple(source: http://www.flickr.com/photos/philgyford/5547336659/lightbox/)

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

IBC/ media centre

(Olympic Park)

Original Shoreditch cluster

‘Silicon Roundabout’

26

For foreign investors (for whom it is intended), the marketing brochure (Fig.9) makes Tech

City look like a cohesive area. However, in reality, Fig.8 shows a large Shoreditch hub

divided from the Olympic Park by residential housing. Although geographically close (5.6

kilometres), public transport links are poor with no direct trains between the two (there are

two buses: the 388 and the 25).

Cities Institute has studied the nature of the Shoreditch cluster (Figs.10-12).

Fig.10 Silicon Roundabout 2007 (Data source Dopplr, Cities Institute)

27

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

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

28

Silicon Roundabout was created from the interaction of an agglomeration of advertising firms

with a cluster of data and software services firms (Cities Institute 2011:6). Both feed each

other, creating new networks and crossovers, as Jacobs (1970) might have predicted. The

cluster comprises mostly micro or small companies. Workers come together in bars, cafes

and at a multitude of events, displaying the hallmarks of an innovative cluster (Simmie 2006).

It “is both part of and distinct within the London regional digital economy” (Cities Institute

2011:5), which enables it to draw on the benefits of urban agglomeration (Glaeser 2011). The

Shoreditch cluster best conforms to the type described by Simmie and Sennett (1999): one of

several innovative clusters in a city that dominates its surrounding area.

29

4.1 Urban grain: spatial realities

Sandwiched between the riches of The City and the poverty of Tower Hamlets and Hackney,

Shoreditch is recovering from the decline of its traditional industry. In the 1990s, cheap rents

and warehouse spaces attracted artists and creative types, who colonised the area with

studios, clubs and bars. Regeneration professionals soon followed, and the area was held up

as a model for the revival of inner cities (Pratt 2009).

The Olympic Park is a different story. The ex-industrial area has been cleared and is being

completely re-modelled in preparation for the Olympic Games. The Olympic Park Legacy

Company is in charge of planning the area’s future post 2012. This involves finding buyers

for the International Broadcast Centre and media centre, which will provide office and studio

space for 20,000 journalists and broadcasters during the 2012 Olympic Games. The two

buildings will offer 91,000 square metres of business space, served by an adjacent multi-

storey car park with access to the A12. The area borders Hackney Wick, which is largely

physically unchanged from recent developments.

Fig.13: Shoreditch in pictures. Clockwise from top left: Old Street Roundabout (source:

http://ciscolondon2012.ciscoeos.com/photo/e2087a-silicon-roundabout/); Office space in Shoreditch;

café on Paul Street; TechHub

30

Fig. 14: The Olympic Park. Source:

http://www.legacycompany.co.uk/

IBC

and

media

centre Fig. 15: Map of the Olympic Park. Source

http://en.wikipedia.org/wiki/File:Queen_Elizabeth_Olympic

_Park_map.png.

Hackney Wick

31

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

32

Other areas of East London are campaigning to be included in Tech City, including the Royal

Docks (with an enterprise zone offering reduced business rates), and Greenwich, where the

digital media and design school Ravensbourne is located. Neither area has the urban grain

and vibe of Shoreditch, although proponents would argue they could serve as back office

space for large companies.

4.2 Policy intentions/ developments

When he announced East London Tech City (as it was called before rebranding), Cameron’s

justifications were manifold:

1. Momentum: “something is stirring in East London” (Cameron, 4.11.2010). The

number of technology start-ups has grown from just fifteen three years ago to over

300 today (UKTI estimate).

Fig.17: Potential Tech City spaces. Clockwise from top left: The Royal Docks (first two

photos);The Millennium Dome (Greenwich), Greenwich Peninsula

33

2. Land and cheap office space: Cameron said the Olympic Park offers nearly one

million square feet of flexible office and research spaces

3. Proximity: Cameron said the Olympic Park is only “a few tube stops away” from

Shoreditch

4. Popularity among the “creative classes” of Florida (named by Cameron in his speech)

5. Transport connections: Cameron flagged quick access to City Airport and St Pancras

International railway station.

6. Talent and ideas: Cameron noted that London “has more outstanding universities than

any other city in the world.”

The reality is not so clear-cut.

Concerning 1) and 2): Shoreditch companies are small and there is limited space for them to

expand, hence the argument for move-on space in the Olympic Park. However, there is no

reason why this could not happen elsewhere.

Concerning 3) and 5): Hackney Wick is the media centre’s nearest station, but the connection

to Old Street (Silicon Roundabout) is complicated (Fig.21). From Stratford (which has

excellent transport connections), the media centre is a 20 minute walk.

.

Concerning 4): Shoreditch, with its bars and cafes, fits Florida’s (2002) criteria, but Cameron

highlighted the future “green spaces, cafes and sports facilities” of the Olympic Park, which

are still under construction. Creating the gritty urban vibe in an area of new-build mainly

residential housing could be challenging. However, nearby Hackney Wick has an urban,

artistic character that could be channelled.

Fig.18 Tube connections

IBC/ media centre

(Olympic Park)

Silicon Roundabout

34

Concerning 6): While London is clearly a knowledge centre, its universities feed companies

across the city and further afield. Establishing links between the cluster and the universities

will be key for future growth (Saxenian1994).

Putting the Olympic Park together with Shoreditch is therefore plausible, but not inevitable,

and will require intervention.

35

5.0 Case Study Research Methodology

To answer the research questions outlined earlier, qualitative research in the form of semi-

structured interviews and participant observation, and quantitative research in the form of two

online surveys were conducted.

Qualitative research is “pragmatic, interpretative, and grounded in the lived experience of

people” (Marshall 2010:2). It allows the researcher to question the why and the how of

decision-making, although there is a risk of subjectivity in analysing the data. A total of 16

interviews were conducted. To minimise the influence of the researcher, participants were

asked non-leading questions such as ‘What do you understand as Tech City?’ Participant-

observation research was conducted through site visits and interaction on Twitter, an

important source of networking and information sharing. This enhanced the understanding of

the mechanics and motivations of the cluster (Marshall 2010:23), although immersion was

limited due to the timescale involved.

To substantiate the findings of the qualitative research and provide a “more concrete

interpretation” (Sharp 2002:128), two quantitative surveys in the form of online

questionnaires were conducted: one a sample of regeneration and economic development

professionals in London; and another a sample of creative technology businesses in

Shoreditch. Ideally, the interviews would have been conducted before the survey questions

were designed, but this was not possible given the short timescale. The questions were thus

devised to test the expected findings of the qualitative analysis, based on the literature

analysis. To minimise structural bias in the question design and allow a degree of

interactivity (Groves 2009), where possible respondents were given the option to comment

beyond the pre-set options. Online questionnaires allow a wide range of responses to be

gathered in a short timeframe, and the Survey Monkey system that was used provides data in

an easy to access format. For demographics wary of the internet, such as older people, online

surveys can result in low response rates (Groves 2009:165), but this is not the case for Tech

City respondents, one of whom wrote to say he completed the survey on his mobile phone.

For both qualitative and quantitative research, requests were sent out in early July, with a cut-

off date of August 12.

36

5.1 Qualitative study: interviews

Participants were selected to represent decision makers at various public and private sector

bodies including central government, the Greater London Authority, the boroughs, the

Olympic Park Legacy Company, the universities, private sector, and financial institutions.

The number of people agreeing to be interviewed (listed in Appendix 1) exceeded

expectations. Interviewees supplied written agreement to be named as contributors, but some

preferred to speak anonymously. The findings will therefore be attributed to Interviewees A-

P. Sometimes, it was difficult to make a point about an interviewee’s organisation without

revealing their identity, and in these cases written permission for attribution was obtained.

To understand the government’s thinking, the aim was to interview as senior an official as

possible. No.10 officials did not reply to email requests, but the head of the government-

appointed agency in charge of Tech City, Eric Van der Kleij, did agree to be interviewed. For

a balanced perspective, care was taken to speak to some people with little or no contact with

government. All interviews were conducted face-to-face, except with one respondent who

preferred to reply by email and one phone interview. Questions were context specific, but a

general outline of common questions can be seen in Appendix 2.

5.2 Qualitative study: participant observation

Participant observation is “both an overall approach to inquiry and a data gathering method”

(Marshall 2010:140). A key principle is that the researcher not only observes but also

engages with the subjects in order to better understand their thinking. A range of methods can

be used, in this case informal interviews, participation in cluster life, and online engagement.

37

A series of site visits were conducted, starting with the first birthday party of TechHub, an

incubator space for tech start-ups. The event was listed on the UKTI website and in the open

style of the digital era, there was an attendee list. The party was held in a space normally set

up for hot-desking, filled with streamers and balloons.

Before this project, this researcher had never Tweeted. At the party, it was explained that

many in Silicon Roundabout use Twitter as a means of communication in preference to

email. It is also where much information is shared. Twitter was therefore monitored as part of

the research and utilised as a way of contacting potential interviewees or survey respondents.

5.3 Quantitative study: survey of Shoreditch tech companies

An online survey of hi-tech, digital and creative companies in Shoreditch was designed to test

motivations for setting up in the area and the perceived benefits. Respondents were also

asked for their views on government policy. A usable response rate (50 percent) was

achieved. A list was compiled on the basis of companies identified by Wired, a monthly

technology magazine that was the first to map Silicon Roundabout (Fig.20)9. It was

9 http://www.wired.co.uk/magazine/archive/2010/02/start/silicon-roundabout

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

(taken 11.8.2011)

38

supplemented by companies listed in The Evening Standard10 - London’s daily newspaper -

as well as personal recommendations and contacts, and companies identified via Twitter.

To maximise response rates, emails were personally addressed, where possible. The

companies vary from UK branches of multinational companies, to tiny start-ups in everything

from creative marketing to software design to financial analytics and consumer websites.

The survey was opened on July 7. It was tested through peer review and by piloting with

Tech contacts outside Shoreditch, then refined. Of the 120 emails sent, 60 responses were

obtained. Appendix3 lists Survey1 questions and responses.

5.4 Quantitative study: survey of professionals

Survey2 is a similar online questionnaire, designed to gauge the assessment of professionals

(in regeneration and economic development positions) of Tech City. It was sent to local

authorities, central government, the GLA, OPLC, public-private bodies, quangos, think-tanks

and pressure groups. The list of borough officials was compiled from the Municipal Year

book, www.LocalGov.co.uk, and internet research yielded the appropriate GLA, UKTI and

No.10 officials. Regeneration bodies such as London First, London & Partners, North

London Strategic Alliance, North London Business Ltd, and Gateway to London were

approached at CEO or heads of economic development level. The survey was also sent to

lobby groups the Town and Country Planning Association and UK Regeneration. The Royal

Town Planning Institute agreed to send it to its network of regeneration officials.

10

http://www.thisislondon.co.uk/lifestyle/article-23931050-the-magic-roundabout---londons-answer-to-silicon-valley.do

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

39

As for the previous survey, questions were tested via peer review and by planning

consultants. Once modified, it was emailed to the above targets. On July 15, 43 direct emails

were sent and the RTPI invited members of its regeneration network to participate. It is

difficult to gauge the exact response rate given the RTPI involvement, but a usable number of

47 responses was achieved. The questions and responses are included in Appendix 4.

40

6.0 Case study analysis and findings

Using the research findings, the strengths, weaknesses, opportunities and threats (SWOT) of

Tech City were listed as a basis for analysis (Fig.21). This breakdown shows that the main

strengths and opportunities are the potential of the creative digital industry and the growing

pool of expertise. There are some opportunities offered by the Olympic Park, namely £9

billion of infrastructure investment and promotional activities linked to the 2012 Games.

However, the park is also the riskiest part of the strategy. The OPLC is responsible for

choosing a buyer for the IBC and media centre. How these venues are developed and settled

will be crucial for the relationship with Shoreditch. If the area fails to attract appropriate

companies, this will affect the reputation of Tech City, which in turn could impact the

Shoreditch cluster.

Building up to the main research question, which is addressed in Section 6.6, the

supplementary research questions will first be tackled. Research methods were designed

firstly to assess why companies choose to locate in Shoreditch to see if this tallies with the

academic assessment. Secondly, they examine what the Olympic Park would change.

Thirdly, they study the motivations driving the policy and how this has been understood by

cluster participants. Then they consider whether the policy is appropriate.

41

11

Boston Consulting Group says Britain spends more online per head of population than any other country

(Economist Aug.6 2011) 12

The Economist (Aug.6 2011)

STRENGTHS WEAKNESSESES

� Desirable location � Benefits of metropolis: centre of

cultural and economic activity � Thriving digital economy11 � Creative hub � Cross-fertilising industries � Talent � Proximity to central London

(Shoreditch) � The City (financing) � Central government support � Buzz (press coverage including in

foreign media) � Momentum

� TCIO focused on FDI and has no independent budget: dependent on UKTI

� Lack of interest from existing businesses in the Olympic Park

� Olympic Park lacks identity, vibe � Poor transport connections between

Silicon Roundabout and Olympic Park � Higher taxes than competing locations? � Immigration rules limit talent pool � Lack of venture capital. City investors wary

of risky technology ventures � Smaller domestic market than U.S., China,

or India � Lack of commercial ambitions compared to

U.S.? � Few world-class technology firms and few

platform firms (which yield spin-offs)

OPPORTUNITIES THREATS

� Industry favoured by government as alternative to finance12

� Success of Silicon Roundabout companies (eg Last.fm, Tweetdeck etc sold in £multi-million deals to CBS and Twitter) attracts attention and fresh funds

� Tech City global brand � Virtual networks connect to the

world (Silicon Valley presence no longer so important)

� Links to Cambridge (Silicon Fen)? � £9 billion Olympic Park

Infrastructure � Olympics marketing opportunities

� Fail to get mix right in the Olympic Park. � Shoreditch companies spurn Olympic Park

in favour of other venues (Dalston, Hackney Central, Greenwich)

� Culture of foreign multinationals doesn’t gel with indigenous companies

� Promising firms get bought by foreign outfits, talent shipped abroad

� Government loses interest � Risk of a tech bubble, market change � Property bubble, rent increases drive start-

ups elsewhere � Global debt crisis threatens availability of

finance � Competition from Silicon Valley, Berlin,

China, India

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

42

6.1 What is Tech City? Analysis of meanings

Survey1 shows most companies in the cluster are young, with 60 percent present less than

three years13. Crucial to the success of the area is the provision of cheap workspaces. The

youngest flock to TechHub, which caters to the smallest of companies in a pizza and beer

atmosphere (Fig.22). Sponsorship from by large corporates helps keep prices low: permanent

desk space costs £275 + VAT per month. Interviewee E speculated sponsors Pearson and

Google are fishing for cheap talent. Partygoers at the venue’s first birthday were mostly men

in their twenties. Business cards included websites, email addresses, mobile phone numbers,

Twitter names, but no postal addresses (one said he worked from his bedroom in his parent’s

house). When titles were used, they read CEO, founder, partner, or director: they were often

the only staff. Similar spaces cater to different tastes, for example more upmarket facilities

are provided by The Trampery.

The obvious question to ask is what is attracting these entrepreneurs? Fig.23 shows many of

the reasons cluster theory (eg. Malmberg & Maskell 2002) would predict: presence of like-

minded companies, good transport connections, cheap rent - with creative vibe the most

popular explanation. Nearly every respondent claimed to socialise or network, citing mainly

13

Appendix3, Question2

Fig.22 TechHub first birthday

43

business reasons for doing so (knowledge, opportunities) as well as fun14. That bodes well for

the future: networking in Silicon Valley powered innovation and cluster development

(Saxenian 1996) and vibe encourages “highly productive” behaviour (Storper & Venables

2003:24).

Networking happens 24/7 and the distinction between work and play is blurred as in Silicon

Valley. A plethora of networking events abound – from frisbee sessions and Silicon

Drinkabout socialising to more serious events, such as the monthly Minibar, where

developers talk about the latest technologies. Events are often free to attend and open to all

who sign up.

“The way we are successful is because we know the right people in the industry and these

events are where you meet the right people.” (Interviewee G).

A daytime visit revealed fashionable and geeky people working at laptops in cafes and bars.

This researcher was able to type undisturbed for hours in a cafe, where a lunch of chicken

ciabatta sandwich, and homemade lemonade cost around £5 – cheaper than a similar meal in

14

Appendix3, Questions13-14

Fig.23 Shoreditch attraction for Tech companies

44

central London, where lingering is not encouraged. In the late afternoon, business discussions

were heard taking place over drinks on bar terraces.

From a planning perspective, officials say these conditions arose almost by chance.

Interviewee K says Hackney’s policy could be termed one of “almost benign neglect.” In

retrospect, their most important contribution may have been allowing the area to become a

leisure destination (Florida 2002). “Today it’s in the cafes where people share ideas and

collaborate, form partnerships and so on. Having that is just as important as the physical

spaces for business.” (Interviewee K)

However, the attention created by – and towards – the newly branded Tech City risks

upsetting the balance. Rising home prices in Shoreditch also means developers are turning

commercial space into residences, thereby pushing up rents.15 Cheaper alternatives will need

to be found if start-ups are to remain in the area. Interviewee H said Hackney is talking to

neighbouring boroughs about freeing up suitable office space.

6.2 Silicon Roundabout to Tech City

The digital industry is expected to be one of the fastest growing sectors in coming years and

offers the kind of high-skilled jobs favoured by policymakers.16 It is therefore not hard to see

what the cluster offers the Olympic Park. It is less clear whether the Olympic Park will

develop in a way that can benefit the existing cluster. As established in Section2,

understanding of the economic relation between different parts of a cluster is limited (Phelps

2004).

The media and broadcast centres initially looked like they’d be the toughest venues to sell in

the Olympic Park. Design quango CABE called the site layout “awkward and unresolved”

and criticised the “extraordinary banality” of the building.17 The Liberal Democrats called for

ambitions to be scaled down18. However, a number of offers have now been received. A plan

to turn the media centre into a snowdome, and the Wellcome Trust’s bid for the entire park

(including provisions to turn the media centre into a research centre) have both been

15

http://www.bloomberg.com/news/2011-08-10/cameron-s-high-tech-vision-clouded-by-lack-of-cheap-london-space.html 16

The Economist Aug.6 2011 17

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

18http://www.libdems.org.uk/press_releases_detail.aspx?title=Olympic_media_centre_will_be_huge_white_el

ephant_-_Brake_&pPK=d63a2f43-3342-47dc-95f4-70d9e85f0984

45

rejected19. Neither would have fulfilled the Tech City vision. Bids by broadcaster ITV

20 and a

Resolution Property-backed fashion consortium21 might be regarded more favourably.

Meanwhile, the London Thames Gateway Development Corporation, a regeneration body,

has submitted plans for a mixed use creative hub in Hackney Wick22, which already boasts a

vibrant artistic community.

At present, Shoreditch companies are mostly uninterested in the Olympic Park. Although

Tech City proponents would argue that could change if they expand and need more space,23

Survey1 shows few would consider moving there now. These findings were backed up by

Interviewee I (who has little direct contact with government officials):

“Nobody in their right mind is going to move a technology company out to Stratford. There is

nobody out there.”

To convince them of the attraction of the Olympic Park, government should pay attention to

the public realm and rent levels, which respondents who would consider moving rated as the

most important criteria24.

Government logic for linking the Olympic Park and Shoreditch is the need for move-on space

as the cluster develops – a not unreasonable argument. With only 5,000 square foot of free

business-space currently available in Shoreditch,25 space will need to be found elsewhere to

house larger companies. However, move-on space does not have to be in the Olympic Park.

There are different perceptions of what Tech City is and should be. Shoreditch companies

think they are the cluster (Fig.24) while regeneration and economic development

professionals, unsurprisingly perhaps, see the cluster as stretching to the Olympic Park and

beyond (Fig.25).

The infrastructure and attention of the 2012 Games may help attract investment, but the link

between potential incomers and the existing cluster has still to be made. Indergaard’s study of

19

http://www.building.co.uk/news/breaking-news/plans-to-turn-olympic-media-centre-into-snowdome-wont-

happen/5014751.article ; http://www.ft.com/cms/s/0/1ca575fe-bdf7-11e0-ab9f-

00144feabdc0.html#axzz1W3MRBasu 20

http://www.thisislondon.co.uk/standard/article-23972834-the-eyes-of-the-world-will-be-on-us-during-

2012.do 21

http://www.egi.co.uk/articles/2011/07/15/736931/Model-plan-for-Olympic-legacy.htm?cp=ILC-EGI-RSS 22

http://www.regen.net/Physical_Regeneration/article/1083682/london-regeneration-body-plans-creative-

business-hub/ 23

IntervieweesD,L,N 24

Appendix3, Questions 8,9 25

Interviewee J

46

New York’s Silicon Alley (2004) shows simple enticements such as cheap wired space can

help divert business, but this was to areas with a similar urban feel. This suggests that

Hackney Wick, whose artist-filled warehouses could appeal to digital creatives, could play a

crucial role if policymakers establish a link with Shoreditch business.

Fig.24 Tech City spatial boundaries: companies’ view

47

.

6.3 Nature of government intervention

The Tech City policy includes a number of measures which could crudely be split into those

designed to encourage innovation and those designed to woo foreign corporates.

Innovation measures include £200 million of equity finance, £200 million for new

Technology and Innovation Centres, and £15 million of tech support. The government is also

changing procurement rules and regulation - opening up government contracts to small and

medium-sized firms, establishing an Entrepreneur Visa, and reviewing its intellectual

property laws. The Technology Strategy Board (TSB), a government agency, announced a £1

million Tech City Launchpad competition, then doubled the funding after it was inundated

with entries26. The policy shares some similarities with the French example, with competition

for funding designed to encourage collaboration.

The government’s main focus appears to be FDI, given that the body charged with

developing Tech City27 is funded directly

28 by inward investment agency UKTI. Eric Van

26

http://www.innovateuk.org/content/news/digital-businesses-in-east-london-to-benefit-from-.ashx. 27

Government website www.techcityuk.com 28

Van Der Kleij interview

Fig.25 Tech City spatial boundaries: professionals’ view

48

Der Kleij, CEO of the 14-person Tech City Investment Organisation (TCIO), outlines a very

specific remit:

“Our role, bearing in mind that we come from UKTI which is the principal inward investment

and trade function of the UK government, is to help identify the gaps that are missing and

plug those where they fit within the remits of what UKTI does. Everything else that we don’t

do is the responsibility of the other constituents.”

TCIO’s role is to help corporates such as Cisco Systems, Facebook, Google, Intel,

Vodaphone, and Qualcomm (all name-checked in Cameron’s Nov. 2010 speech) follow

through on their promised investment. It also looks for new investors, venture capital29 and

anchor tenants for the Olympic Park30. Related to these functions are promotional activities.

The FDI strategy is not popular among entrepreneurs.

“They don’t want big corporates to come in and take ownership and do it badly. People feel

that this is our space, the little guys.” (Interviewee M).

Multinationals’ interests risk clashing with the mostly small or micro-companies of Tech

City. Academic analysis of manufacturing industry clusters indicates that FDI is most

effective when indigenous companies are big and strong enough to be taken seriously by the

multinationals (Phelps 2008:468). A critical appraisal of the benefits from FDI is therefore

warranted. Some interviewees spoke of fears that talent will be snapped up and shipped to

Silicon Valley, and others question whether FDI will make a real contribution (meaning the

relocation of engineers and investment in talent), or take the form of a less meaningful sales

and marketing operation.31

6.4 Marketing Analysis

As shown in Section3, a cluster brand can to be useful for creating a shared vision and

common purpose, as well as attracting investment (Hallencreutz, Lundequist, Power 2010).

This section focuses on Tech City marketing efforts to create internal cohesion (the external

element has largely been covered in previous sections).

29

A new function for UKTI as it doesn’t qualify as inward investment 30

Source: Van der Kleij 31

Interviewees J,M,I

49

Initially, the policy was hurriedly put together32 resulting in a plethora of different brands.

First called ‘East London Tech City,’ for a while it became ‘Tech City East.’ Official

branding is now ‘Tech City UK,’ although almost everyone interviewed said they use ‘Tech

City.’

“The first thing I did when I joined was to say ‘tell me about all the different branding’

because there’s so many. I’m consolidating everything down to a single brand which will be

Tech City UK.” (Van der Kleij interview).

Van der Kleij said his rationale for ‘UK’ is to locate Tech City in the international arena, and

because it should be inclusive of outside London. This may also be reflective of the fact that

UKTI is a national body.

The Silicon Roundabout term is attributed to Matt Biddulph, then chief technology officer of

the travel site dopplr.com. A joke inspired by the ugly traffic circle at Old Street in a 2008

Tweet, the name stuck. International marketeers hated it:

“The only thing worse than Silicon Roundabout would have been Silicon cul-de-sac.”

(Interviewee C).

The Tech City campaign has attracted international attention and entrepreneurs appreciate the

kudos. Survey1 shows initially sceptical companies are now appreciative of government

support, and would like more of it33. Silicon Roundabout has the attention of government,

and entrepreneurs are using this to lobby for their advantage (Appendix6 details some of their

demands).

However, although the surveys show ambivalence towards the Olympic Park, interviews with

influential voices in the cluster (event organisers, galvanisers of opinion – all regularly in

contact with government officials) show some are buying into the Olympic Park logic.

“I was initially a bit suspicious of it because it seemed like it might be a fig leaf to provide a

semblance of a legacy plan for the Olympics which is obviously politically sensitive. But I’ve

gradually come to think it’s actually a pretty smart move. “(Interviewee A.)

Community leaders (including A) are invited regularly to No.10 where Olympic plans are

discussed as well as other measures to help the cluster. One explanation for their change of

32

Interviewees D,H,J 33

Appendix3, Question1. The support

50

heart could be that government has managed to win them around in an atmosphere where

goodwill is generated by measures such as sorting out faster broadband. If true, this

hypothesis would have interesting implications for regeneration strategies in terms of the

importance of winning local support and how to go about it.

Monthly breakfast meetings at No.10 group around 50-60 participants34, whose makeup

varies but includes local businesses, universities, officials from government, GLA, OPLC,

boroughs, as well as property owners, and service providers. Meetings are chaired alternately

by Cameron’s policy advisor Rohan Silva, credited as instigating the initiative35, and Van Der

Kleij36. The No.10 meeting and TCIO are regarded as the most effective forums

37 for getting

things done.

“We can sit here frustrated that we’re getting nowhere with BT, but if No.10 get BT in the

room and says ‘so what are you doing BT’ it actually makes them do something.”

(Interviewee J).

Many interviewees question how long government interest will continue.38 Interviewee N

said normally policy originating in No.10 is “handed out to departments” so the Prime

Minister’s advisors can focus on other things. Interviewee J welcomed central government’s

continued commitment, which he said is unusual given so many other considerations (riots,

Libya, euro crisis etc.).

“In the past there is an announcement and you can’t see the minister’s heels for dust. They

never revisit it again. But these guys are constantly back on it and trying to make it happen,

being accessible, being available and wanting to know what we’re actually doing.”

One reason for No.10’s continued interest could be a determination for the Olympic Park to

succeed, for which the political stakes are high. This is a hypothesis which this research has

been unable to prove conclusively.

34

Interviewees A, C,D,J,L 35

Interviewees J, M

37

Interviewees A,C,J,K,M 38

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

51

6.5 Is the policy appropriate?

To answer the question requires analysing whose interests are being served.

“The emerging battle of Tech City is Silicon Roundabout saying it’s about us, it’s only about

Hackney, then you’ve got Newham saying ‘hang on a minute, it’s about the Olympic Park

and legacy,’ and then you’ve got Greenwich quite rightly saying ‘ hang on a minute it’s

about the Greenwich peninsula’. And the truth is they’re all right. It is about the geography

of East London and it is about all those things.” (Interviewee E)

Surveys 1&2 suggest the Olympic Park has the most to gain, although Shoreditch benefits

from the attention of government39. However, there is a great divergence of opinion about what the

policy is for. Professionals were divided between seeing Tech City as an industrial policy, about FDI

or place-marketing (Fig.25). Companies are more sceptical: they said government’s biggest

motivation is to gain credit from a successful cluster, although innovation, jobs and cluster

development scored almost as highly (Fig.26).

39

Appendix3 Question7; Appendix4 Question4

52

This confusion is perhaps a reflection of the different agendas of the various agencies

involved (detailed in Appendix7). No.10’s involvement means other levels of government

Fig.27 Motivations behind Tech City: Survey of companies

Fig.26 What is Tech City? Professionals’ view

53

are “all desperately keen to be a part of it,” so the set-up “is more disorganised than

normal40” Some of this may be wasted or duplicative effort: the Department of Communities

and Local Government (CLG) holds meetings but has “no contact” with No.1041, and several

interviewees said they don’t have time to attend both42. All of this in East London, location of

“the biggest mess of governance I’ve ever seen both in this country and internationally.43”

The GLA could be the natural body to carry the policy forward, but it doesn’t want to be seen

favouring one group and is formulating a Digital London strategy for the whole city. It also

has limited resources to devote to Tech City44. The boroughs have specific priorities for their

patch and visions don’t stretch much beyond borough boundaries45. The already established

entrepreneurs want to advance their interests, and are wary of foreign competition.

From the research, it has been shown that the policy is both a result of and a reflection of the

competing interests involved. It is not possible at this stage to say whether it is appropriate

for East London: only time will tell. However questions about the focus on FDI and its

suitability for this stage of a cluster growth have been raised.

In terms of marketing, the government has concocted a plausible economic logic for Tech

City as discussed in Section6.1. Kearns & Philo (1993) also recommend establishing a social

logic. This would require giving the Olympic Park an identity: traditions, arts, and lifestyles

which can be promoted. Efforts are being made in this direction with the naming of five

neighbourhoods in the park,46 but it will be an on-going process. Care should be taken not to

over-manage the process as too sterile an environment would not be conducive to attracting

creative talent. That will require attention to detail and local support.

40

Interviewee O 41

Interviewee N 42

Interviewee B, K say No.10 is more useful 43

Interviewee O 44

Interviewees D,K,O 45

Interviewees E,O,H,K 46

http://www.bbc.co.uk/news/uk-england-london-14364485

54

6.6 Overall Implications:

“There is still the possibility that they massively stuff up the Olympic park. There’s a lot that

could go wrong there, what happens to everything from the transport to the network to the

infrastructure to the companies they bring in.” (Glenn Shoosmith, founder and CEO of

BookingBug)

One of the people best placed to judge the potential success of Tech City is Shoosmith. His

business is located in Silicon Roundabout, but he lives near the Olympic Park. Shoosmith

spoke at the launch of Tech City, suggesting to Cameron ways he could help the cluster. His

advice has been influential: it led directly to the TSB’s Launchpad competition47. He attends

meetings at No.10.

His comments show how tough the regeneration effort could be and help answer the main

research question. The digital industry could be an interesting replacement for the heavy

industry of East London, but the cluster will only seed if has the right nutrients.

FDI could bring new ideas and funding – or it could snap up subsidised infrastructure, fish

for talent and ship it abroad, and disrupt the vibe so appreciated in Shoreditch. The

government is keen to leverage the maximum out of the “once in a lifetime48” opportunity

afforded by the Olympic Games. However, the cluster may be too young to benefit from FDI

and could be vulnerable (Phelps 2008, Young 1994). Academic research suggests more

emphasis could be placed on encouraging local talent and supporting innovation. To succeed

in attracting indigenous companies to the Olympic Park as they expand will require a

different strategy than for FDI. This research suggests policymakers should focus on public

realm and rents levels (Section6.2), as well as continuing to involve influential cluster

members (Section6.4).

“The thing that worries me most about governments is they change their minds all the time.

These things work because you consistently apply them. If the government gets bored with

Tech City next year and stops the Tech City Investment Organisation, then the thing will

disintegrate slowly over time.” (Interviewee C)

47

Bott interview 48

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

become.

55

This paper concludes that there is a risk that No.10’s interest fades after the Olympics,

leaving Tech City vulnerable. TCIO has no independent funding and could be shut down on a

whim. For a sustainable, long-lasting organisation, a different institutional or organisational

set-up is required, and this paper recommends inspiration from France.

Informed by a range of views on how the management of Tech City could be improved

(Appendix5), this paper recommends setting up an over-arching public-private authority,

chaired by the private sector, with a board comprised of representatives from the various

delivery bodies: CLG, TCIO, London & Partners (or the GLA directly), the boroughs,

universities, and business leaders. The chairman (or woman) could referee between the

competing interests, and avoid overlap. Interviewee M suggested giving such an organisation

a role beyond generally promoting Tech City, such as organising a yearly event like the

British Fashion Council, who besides promoting British designers runs London Fashion

week. This would enable a salaried staff, with funding coming from leading businesses,

membership fees, and UKTI49.

From a regeneration perspective, this body, which could be called Tech City Council, could

take a step back from the short term pressures of politics to plan for long-term cluster

development.

49

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

56

7.0 Conclusions

The variety of clusters and the confusion of theories and studies means that constructing a

critique is no simple task. This paper has highlighted some important gaps in the wall of

cluster knowledge.

Firstly, Porter’s (1990) initial cluster theory lacked reference to the territorial scale over

which agglomerations exist and conceptual fuzziness persists. Efforts to make sense of the

confusion have concentrated on defining clusters functionally, and exploring processes of

innovation and learning. There have been few serious attempts to define clusters spatially or

explore the geographical links between various parts of a cluster and what happens to cluster

relationships at different scales (Phelps 2004).

Urban economic development weaves a complex web of locations stretching over vast

distances. For large global cities like London, those relations encompass networked groups of

intermediate locations and even physically separate cities and towns (what Sir Peter Hall

termed the ‘mega-city region’ (2006)). The interaction between these different locations in

clusters offers potential for further study, and monitoring Tech City as it evolves will be

insightful.

Secondly, this paper highlights the need for reflection over the role of FDI in cluster

formation. Tech City is being marketed to foreign multinationals without proper

understanding of what they will bring. The cluster has evolved as an agglomeration of young

companies, many of whom are still tiny, with a risk that the best ideas and talent will be

exported or stifled. Concerns were also raised in this paper about the type of FDI being

wooed. Economic geographers have raised questions about the extent to which knowledge is

transmitted internationally through networks of multinational companies (Phelps 2008), and

care should be taken to assess their contribution to the local economy.

Finally, this paper has highlighted the need for sustained intervention of a type that the

current government may be reluctant to provide. Both regeneration and cluster development

are processes that take years or even decades to take hold, and require attention to detail.

Central government has proved keen to play a role nurturing the infant Tech City, but unlike

a human baby, its needs are likely to grow as it gets older. This is particularly the case with

the involvement of foreign multinationals, whose structural power in relation to governments

57

requires continued monitoring (Phelps 2008). Thus this paper recommends establishing a

private partnership to take care of the long-term interests of the cluster.

.

58

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Internet sources:

1. BBC (2011) « London 2012 Olympic Park neighbourhood names revealed »

http://www.bbc.co.uk/news/uk-england-london-14364485 [Retrieved Aug 12 2011]

2. BDOnline (2012) 2012 media centre 'would blight Olympic legacy', says Cabe

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cabe/3139228.article [Consulted Aug 21 2011]

3. Bloomberg (2011) « Cameron’s High tech Vision Clouded by Lack of Cheap London

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snowdome-wont-happen/5014751.article [Retrieved Aug 12 2011]

6. Cap Digital www.capdigital.com [Retrieved July 19 2011]

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_CIADT.pdf [Consulted July 14 2011]

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glory.html#ixzz1WR18Zc5h [Consulted Aug 21 2011]

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13. French Finance Ministry competitiveness portal: www.competitivite.gouv.fr [Retrieved July

19 2011]

62

14. FT (2011) Ministers reject Wellcome £1 billion Olympic Bid

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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

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16. LibDems (2009) Olympic media centre will be huge white elephant – Brake

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huge_white_elephant_-_Brake_&pPK=d63a2f43-3342-47dc-95f4-70d9e85f0984 [Conuslted

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plans-creative-business-hub/ [Retrieved Aug 10 2011]

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.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

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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].

63

28. Wired UK (2010): « Help us map London’s Silicon Roundabout»,

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[Retrieved July 12 2011].

Word count:

Dissertation: 9,549

Including the title page, tables of contents and figures, acknowledgements, abstracts,

diagrams, figures, tables, references, headings, sub-headings, footnotes, endnotes and

bibliography: 12,484

Appendices: 3,896

64

9.0 Appendices

9.1 Appendix 1: List of persons interviewed

The following people were interviewed (listed in chronological order with date of interview).

1. Dr David Bott, Director of Innovation Programmes, Technology Strategy Board

(12.7.2011)

2. Catherine Glossop, Senior Policy Officer (Higher Education and the Knowledge Economy)

at Greater London Authority (12.7.2011)

3. Bob Harris, Regional Adviser Regeneration, Olympics Project Officer, Ravensbourne

University (14.7.2011)

4. Andrew Sissons, Interim Head of Regeneration Delivery, Hackney (15.7.2011)

5. Ralph Ward, Regeneration and Planning Advisor, Thames Gateway and Olympics, CLG

(16.7.2011)

6. John Williams, Chief Executive Gateway to London (25.7.2011)

7. Glenn Shoosmith, founder and CEO of BookingBug (www.bookingbug.com) an online

booking and reservation system for services businesses (26.7.2011)

8. Eric Van der Kleij, CEO of Tech City Investment Organisation, UKTI (26.7.2011)

9. Duncan Ray, City Centre manager Shoreditch, Hackney Council (28.7.2011)

10. Elisabeth Varley, co-Founder & CEO at co-working and events space TechHub

(28.7.2011)

11. Philipp Moehring, associate at internet technology fund Seedcamp (28.7.2011)

12 Tim Barnes, Executive Director of UCL Advances (1.8.2011)

13 Charles Armstrong, CEO and Founder of Trampoline Systems, Director of co-working

space The Trampery (2.8.2011)

14 Alexis Richardson, founder of RabbitMQ (now owned by VMware) (3.8.2011)

15. John McGill, Director, North London Strategic Alliance (4.8.2011)

16. OPLC official who declined to be named. Emailed questions and answers (received

10.8.2011)

All interviewees except John McGill are involved with Tech City. McGill was interviewed

because of his experience instigating a quasi-Local Enterprise Partnership (The North

London Strategic Alliance is developing something which “will look and feel like a LEP but

won’t be called a Local Enterprise Partnership” because the mayor of London, who has veto

65

power, has said there will only be one LEP for London - until next year’s elections at least).

This paper was considering a LEP-style set-up for Tech City, but decided against it after the

interview. The conclusion was that Tech City is too focussed (both in industry terms and

spatially) for an LEP to be appropriate.

66

9.2 Appendix 2: Interview questions

The following set of questions were used as a basis for interview, however additional or

follow-up questions were used where relevant.

1. What is the role of your organisation in Tech City?

2. When did you get involved, and how?

3. What do you understand as Tech City?

a) What are the geographic boundaries?

b) Is this a regeneration strategy, place-marketing or industrial policy of cluster promotion?

c) How do plans for the Olympic park fit with the strategy, in your understanding?

4. East London Tech City, Tech City, Tech City East…. The name keeps changing. Does

this reflect confusion, or an evolving concept? Is the evolution a result of fluid geography

and political negotiations?

5. What is your understanding of cluster promotion, and how does this relate to Tech City?

6. In your understanding, who is coordinating the various initiatives, and could this be done

better?

7. Should the private sector have a greater role?

8. How does Tech City fit with Digital Britain, Digital London, Digital Peninsula, and

Newham’s various Tech City initiatives?

9. How does it fit in with the rest of London?

10. How important is the digital economy to London’s future?

11. Could Tech City ever be a rival to Silicon Valley?

12. Is there anything else I should have asked or that you would like to add?

67

9.3 Appendix 3: Online survey - companies

1. Please choose the response which you agree with most (tick one answer only)

a) Silicon Roundabout is a successful cluster of hi-tech and digital companies who will

do best without government interference

b) Silicon Roundabout is a successful cluster of hi-tech and digital companies who could

do better with government help

c) The hi-tech and digital companies clustered at Silicon Roundabout are not doing

particularly well, but there is not much the government can do to help

d) The hi-tech and digital companies clustered at Silicon Roundabout are not doing

particularly well, but the government could help

e) None of the above

68

2. How long has your company been located in the Shoreditch area?

a) Less than 1 year

b) 1-3 years

c) 3 years or more

69

3. What drew you to the area? (please tick all that apply)

a) Cheap rents

b) Like-minded companies

c) Suppliers/ customers

d) Talent

e) Vibe

f) Proximity to central London

Other (please specify)

70

4. Please choose the response which you agree with most:

a) I am aware of East London Tech City and what the government is doing to help (go to

question 5)

b) I am aware of East London Tech City but not the details (go to question 5)

c) I am not aware of East London Tech City (go to question 8)

71

5. What do you think are the government’s motivations behind East London Tech City?

(please tick all that apply)

a) To help a successful business cluster

b) To gain credit from an already successful business cluster

c) To create jobs in a growing industry

d) To win foreign investment

e) To encourage innovation in British firms

f) To find a use for the media centre in the Olympic park

g) To regenerate a depressed area

h) Tax revenue

Other (please specify)

72

6. In your opinion, what is the geographic boundary of East London Tech City? (please

tick one answer only)

a) Shoreditch

b) Shoreditch, Hoxton

c) Shoreditch, Hoxton, The City

d) Shoreditch, Hoxton, The City, Olympic park

e) Could stretch as far as The Royal Docks

f) Anything East London

g) Thames Gateway

h) Government left deliberately vague

i) Don’t know

Other (please specify)

73

74

7. Which area is likely to benefit most from the government’s East London Tech City

plans? (please tick one answer only)

a) Shoreditch

b) The City

c) The Olympic park and surrounding area

d) East London

e) London

f) None of the above

Other (please specify)

75

8. Would you consider moving further East? (please tick which most applies)

a) Yes, I am thinking about it at the moment (go to question 9)

b) Yes, if the conditions were right (go to question 9)

c) No (go to question 10)

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9. What is/ would make you consider moving further East? (please tick all that apply)

a) Cheaper rents

b) A safer environment

c) A fun atmosphere – cafes, bars, creative people

d) Subsidies

e) An Olympic park address

Other (please specify)

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10. What are the main setbacks to your business at the moment? (please tick all that

apply)

a) Difficulty raising finance

b) The economic climate

c) Getting customers to pay their bills

d) Too much competition

e) Finding talent

f) Recruiting abroad due to immigration controls

g) Taxes

h) Rising rents

i) None of the above

Other (please specify)

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11. The government recently announced several measures to help East London Tech

City, which are listed below. Which of the following help your business? (please tick all

that apply)

a) Investment from corporate giants such as Facebook, Google

b) Cooperation from research institutions

c) £200 million of equity finance for businesses with high growth potential

d) £200 million for new Technology and Innovation Centres – one of which could be in

the Olympic Park – to attract early stage venture capital,

e) £15 million of tech support.

f) Opening up government contracts to small and medium-sized firms

g) Establishing an Entrepreneur Visa

h) Reviewing its intellectual property laws

i) None of the above

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12. Could government do more?

a) Yes (please specify in box below)

b) No

c) Not sure

Yes (please specify)

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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.”

50

Interviewees D,N

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(Interviewee B)

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9.6 Appendix 6: Interview excerpts (finance and immigration)

Survey2 (Question10) showed companies say their biggest setback is finding talent. Although

the government’s immigration policy is to cut down on numbers, interviews suggest it is

taking steps to help companies bypass the legislation such as with the entrepreneur visa –

although even officials admit more could be done:

“We do need to open up our borders a little more, just a little more. Because, ok, the chief

executive and the founders of the business are fine. They need 50,000 pounds to set their

business up. But then there is the chief technology officer, we don’t have a visa for that. Then

there’s the top five or six skilled employees…. That’s the next area where talent led visa work

is being done.”

(Interviewee L)

Although not the most crucial setback cited by companies, interviews suggested one avenue

the government could show real leadership is in helping easing access to finance. The risk

model for investing in tech companies is very different than traditional investments, and

funding is unlikely to come from the City unless this is understood. In the U.S., technology

companies on the West Coast are located far from investors on the East Coast. In London,

this is not the case, meaning there is a real opportunity here that merits further study.

The following citations illustrate these points:

“Investors need to understand what tech investment is all about. It’s not about technology

investment necessarily, its more early stage investment, equity investment, VC investment

with high risk, very improbable returns.”

In Europe “there are just far fewer investors which in return results in far fewer investments

which in turn results in far fewer success which in return results in far fewer investors. It’s a

vicious or virtuous cycle.” In London “in the last years because there were more successful

exits there were more successful companies being built and because entrepreneurship is

being viewed as more aspirational or something to aspire to, more companies are being built

and more people get interested in investment.”

“Obviously in the US the venture capital industry is about 50 years-old, here it’s about 15

years-old.”

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“Be it the bubble in the 90s, be it in 2005, be it now, when there is a boom in internet activity

there will be more money flowing to it. But then when it dies down you will also see those

moving away pretty quickly. It’s hard.”

Philipp Moehring, associate at internet technology fund Seedcamp.

In the following citation, the name of the High Street bank was removed in the interests of

fairness, as the researcher did not verify the claim with the bank concerned.

“A lot of companies have struggled with banking. I’ve been to a number of Silicon Valley

Bank events and they are the only financial institution that knows how to engage with

entrepreneurs. And it’s amazing. [Name of High Street bank] are, bless them, completely

useless by comparison. [Name of High Street bank] say there’s no difference between you

and a small corner shop. They wouldn’t bother entertaining you any more than any other

small business, unless you grow to a massive size they don’t care. Our needs are slightly

more complicated than the average small corner shop. Nothing against the small corner shop

but you know hi-tech, high growth business on the internet also have clients in 87 countries

and I need to take 15 different currencies and I’m not taking an awful lot of money yet but

I’m doing it internationally. As a very small business you have a lot of the financial

difficulties of a much, much bigger business. I struggled, and most other business I know of

have really struggled with banks because they just don’t understand your industry. They are

just like, my God you look horrifically risky, I’m not going to even let you open a bank

account, let alone lend you any money, whereas obviously Silicon Valley Bank have a

much, much better understanding of this kind of industry: the risks, rewards, the growth.

And obviously they want to stay with you as the business grows. They take a view that they

deal with an awful lot of hi-tech businesses of which many will go bust and some will become

massive. But they know how to deal with you from end to end. The difference is amazing. You

get invited to events, they have things and you get to meet the right people, whereas you go to

[Name of High Street bank] and they’re not even interested to give you the time of day.”

(Interviewee J)

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9.7 Appendix 7: Institutional and organisational Tech City setup

The following diagrams show the various organisations involved in Tech City. They were all

compiled on the basis of interviews and research.

Fig.28 Diagram of central government agencies involved in Tech City and their different roles. Most influential

are shown in red.

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Fig.29. Diagram of regional government involvement in Tech City, and roles

Fig.30. Diagram of local government involvement in Tech City

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Hackney recognises that Tech City is bigger than Shoreditch, but focuses on Dalston,

Hackney Wick and Hackney Central as growth zones. Greenwich is touting for business with

its Digital Peninsula policy. And Newham has its own Tech City Plus vision for the Royal

Docks (Fig.30). Hackney claims to be working with neighbouring boroughs specifically on

freeing up property to relieve pricing pressures, but collaboration is patchy and dependent on

the personalities involved51.

Islington council, which borders Hackney and

has its own cluster of tech companies in the Camden area, could also be added to the list,

although it is not considered East London

51

Interviewees DKH

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

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Fig 32. Diagram of private sector involvement in Tech City