Working Paper: CEPR ID: DP10263
Authors: Neil Lee; Andrés Rodríguez-Pose
Abstract: Creative cities are seen as important sites for the generation of new ideas, products and processes. Yet, beyond case studies of a few high-profile cities, there is little empirical evidence on the link between local creative industries concentration and innovation. This paper addresses this gap with an analysis of around 1,300 UK SMEs. The results suggest that firms in local economies with high shares of creative industries employment are significantly more likely to introduce entirely new products and processes than firms elsewhere, but not innovations which are simply new to the firm. This effect is not exclusive to creative industries firms and seems to be largely due to firms in medium sized, rather than large, cities. The results imply that creative cities may have functional specialisations in new content creation and so firms are more innovative in them.
Keywords: cities; creative cities; creative industries; creativity; innovation
JEL Codes: O31; O38; R11; R58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Location in a creative city (R32) | Likelihood of introducing entirely new products (O36) |
| Location in a creative city (R32) | Likelihood of introducing entirely new processes (O36) |
| High shares of creative industries employment (Z10) | Likelihood of introducing entirely new products (O36) |
| High shares of creative industries employment (Z10) | Likelihood of introducing entirely new processes (O36) |
| Creative city environment (R11) | Radical innovations (O35) |
| Creative industries (L82) | Likelihood to innovate (O36) |
| Medium-sized cities with strong creative economies (R12) | New product innovations (O36) |