Making Knowledge-Based Metropolitan Economies

The Making of Knowledge-Based Metropolitan Economies: ICT-Start-ups in International Comparison
Victor Nee, Cornell University (Co-PI, and leader of the Cornell University research team studying the NYC Start-up Economy) / Sonja Opper, Lund University (PI, and leader of the Lund University research team studying cluster emergence in China and Sweden)

ICT products and services have continuously grown in importance over the last decade. Since 2005 more than 50% of the increase in GDP has been due to ICT investments. Work-life and private life are increasingly relying on modern ICT-products facilitating and organizing work and leisure activities. Not only consumption patterns have changed dramatically. New IT-applications have also revolutionized other industries such as the financial and education industries, to name just two examples. This has far-reaching structural implications for the economy.

The production-side of this ongoing revolution, however, has caught fairly limited attention by social scientists. Most importantly, it is unclear why these new tech-producers are seemingly clustering in a few select metropolitan regions. Whereas some metropolitan economies attract quickly growing numbers of highly motivated start-up engineers, generating technological innovation, employment and wealth, others are seemingly bypassed by these new entrepreneurial activities, and are falling back in the technology-race. What is it that explains the rise and dense geographic agglomeration of ICT- start-ups?

This project aims to get to the roots of our understanding, how knowledge-based entrepreneurship is organized, which key factors are required at the start-up stage, and through which inter-personal and inter-firm interactions start-up entrepreneurs create and shape the rise of these new work- and production spaces. The outcome of the project will enhance both our theoretical understanding of how new industries are created and help to provide policy recommendations for how metropolitan regions can attract new businesses and investments.

Obviously, studying the formation of new industries close to its emergence is of utmost importance, as only observation of the foundational stage allows solid and robust inferences on success factors in creating these new industrial niches. Our project will do just that, by incorporating and comparing the foundational experience of new knowledge-based metropolitan economies in Sweden, the US and China. While the comparison of Sweden as one of the most innovative economies in the world with the US and China, as the two key global competitors, is natural, this comparative approach offers additional theoretical insights. First, comparative institutional analysis provides the opportunity to distinguish between general and country-specific factors in the making of ICT-clusters. Second, the direct comparison of industry development in three different types of market-societies, also allows for conclusions to what extent each of them is likely to be able to benefit from the diffusion of new IC-technologies. It is not obvious, that different types of market-societies value new technological ideas similarly and would provide a similar platform for networking and diffusion. Quite clearly, the answer to this question will also be quintessential for a country’s and region’s development prospects in a globalized world.