Creativity, cities and innovation

Neil Lee, Andrés Rodríguez-Pose 24 August 2013

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The creative industries are seen as an economically important source of innovation in many developed countries. Definitions vary, but the creative industries are normally seen as including both obviously ‘creative’ sectors, such as the arts, and more mundane activity like software or publishing. This diverse set of industries has seen significant growth in many countries (see UNCTAD 2010).

Policymakers have enthusiastically backed this fashionable part of the economy. In Europe, the creative industries have been given an important role as part of the ‘Innovation Union’. In the UK, prime minster David Cameron has called for more investment in the sector (BBC News 2012), but much of the policy action is at the city level. Cities ranging from Barcelona to Birmingham have introduced strategies to develop their creative industries.

The creative industries are also important employers. In the UK, there were an estimated 1.15 million people employed in creative industries in 2009 (Department for Culture, Media and Sport 2010). Between 1997 and 2008, employment in the sector saw faster growth than the rest of the economy (Scheffel and Thomas 2011).

Yet ‘creativity’ is not limited to the creative industries. Indeed, research has stressed the role of creative work in other parts of the economy (Marrocu and Paci 2012). In the UK, there were also around 830,000 people working in creative occupations in other parts of the economy, such as graphic designers in manufacturing. While the emphasis from policymakers has been on the creative industries, workers in creative occupations may also be significant drivers of innovation and economic growth.

Despite the obvious links, there is relatively little empirical research on innovation in the creative industries (Müller et al. 2009). In recent research, we consider the links between the creative industries, creative occupations and innovation in the UK (Lee and Rodríguez-Pose 2013). We use a survey of around 9,000 small and medium sized enterprises in the UK in 2007/8.

Defining creative industries and occupations

Our definitions of both creative industries and occupations come from the UK Government. We follow the Department for Culture, Media and Sport in dividing the creative industries into eleven sectors: Advertising, Architecture, Arts and Antique Markets, Crafts, Design, Designer Fashion, Film, Video and Photography, Software, Computer Games and Electronic Publishing, Music and the Visual and Performing Arts, Publishing, and, Television and Radio.

Establishing which firms employ workers in creative occupations is harder. Ideally surveys would include a measure of whether firms employ workers in creative occupations – such as designers or advertising specialists. Sadly, the Annual Surveys of Small Businesses does not include this information. Instead, we use the share of those in creative occupations in each of 101 sector/region combinations. This gives us a good measure of the share of creative occupations.

The literature on the creative industries has tended to suggest that cities are important for innovation in the creative industries, with cities providing sites of knowledge exchange and specialised production which helps creative industries firms create new products. Because of this – and the emphasis placed by urban government on the sector – we also test whether creative industries’ firms in cities are more innovative than those elsewhere.

The creative industries, creative occupations and innovation

Our research uses six measures of innovation. We distinguish first between product and process innovation. Next, for each of these we consider three measures:

  • An overall measure of innovation (whether firms have produced any new type of product or process in the past 12 months).
  • An indicator of whether the innovation was original (i.e. new to the market).
  • The innovation was new to the firm but learned rather than invented.

Our results come from probit regression models in which we also control for relevant characteristics such as firm age, size and ownership structure.

Creative occupations versus creative industries

We find that, as expected, the creative industries are more likely to introduce original product innovations than other sectors. Yet, overall the link between the creative industries and innovation is weaker than expected. Firms in creative industries are no more likely to introduce new or imitated products or processes than are firms in other sectors.

However, we find a considerably stronger link between creative occupations and innovation. Creative occupations are a significant driver of product innovations overall. Alongside this, we show that creative occupations are a key driver of learnt process innovations.

We find that cities are important – but only for creative occupations:

  • Despite the academic and policy literature on this point, creative industries firms located in urban areas are no more innovative than those located elsewhere.
  • However, for creative occupations cities do seem to matter and firms in urban areas in sectors employing more creative workers are particularly likely to introduce processes which are learnt from elsewhere.

One of the key benefits of cities is that they allow workers to move between firms, sharing best practice (Erikson and Lindgren 2009). Creative workers moving from firm to firm may be able to share knowledge about processes, and help introduce them to new firms.

Implications for policy and research

The results raise questions about the dominant perception of the creative industries as an ‘innovative’ sector. Instead, it might be more appropriate to focus on creative workers regardless of the sector in which they work. Government policy which now aims to help creative industries firms to innovate may be better directed to ensuring that firms in all sectors have access to the creative workers.

For researchers, our findings suggest a slightly different approach to innovation studies. Researchers have moved from a narrow, linear view of innovation based on science and research and development to one which reflects the messier and more complex nature of innovation. Yet studies still tend to collect data on research and development but not on other creative inputs of the firm. Including measures such as whether firms engage in design, marketing and branding may help improve our understanding of the links between creativity and innovation.

References

Bakshi, H, McVittie, E and Simmie, J (2008), “Creating innovation: Do the creative industries support innovation in the wider economy?”, London, National Endowment for Science, Technology and the Arts.

BBC News (2012), “Cameron urges overseas investors to back UK arts”, BBC News Online, 30 July.

Department for Culture, Media and Sport (2010), “Creative industries economic estimates 2009 - Statistical Bulletin”, London, DCMS.

Lee, N and Rodríguez-Pose, A (2013), “Creativity, cities and innovation”, Nesta Working Paper 13/10.

Marrocu, E and Paci, R.(2012), “Education or Creativity: What Matters Most for Economic Performance?”, Economic Geography 88, 369–401.

Müller, K, Rammer, C and Trüby, J (2009), “The role of creative industries in industrial innovation”, Innovation: Management, Policy & Practice 11(2), 148–168.

Scheffel, E and A Thomas (2011), “Employment and intangible spending in the UK’s creative industries”, Economic and Labour Review, January.

UNCTAD (2010), "Creative economy report 2010”.

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Topics:  Productivity and Innovation

Tags:  innovation, creative industries

Lecturer in Economic Geography, London School of Economics

Andrés Rodríguez-Pose

Professor of Economic Geography, London School of Economics