Creative Clusters And Universities_flew

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Creative Clusters and Universities

Terry Flew

To be published in Daniel Araya and Michael Peters (eds.), Education in the Creative Economy, Peter Lang Publishers, 2010 (forthcoming).

The Cluster Concept in Economics and Geography

For much of its history, economics as a discipline has tended to work with a limited understanding to the significance of space. Models of economic equilibrium have very often assumed that markets operate, as the geographer Doreen Massey put it, ‘like angels dancing, on the head of a pin’ (Massey, 1984: 52). Where the question of where economic activity takes place, the focus was commonly on the economic development of nations, most famously articulated by Adam Smith in The Wealth of Nations. The macroeconomic revolution that followed the publication of John Maynard Keynes’ General Theory in 1936 was focused upon the flows of goods, services, people and money between nations, in line with the orientation towards the nation-state that came to characterize the social sciences from the late 19th century onwards (Taylor, 1996).

2 One of the few major economists to have given explicit attention to questions of where economic activity takes place was Alfred Marshall. In his Principles of Economics, first published in 1890, Marshall addressed this question with particular reference to the changing industrial geography of 19th century Britain. In the first instance, industries locate near those parts of the country where the physical raw materials are most available (such as steel mills near coal mines), but the patronage of wealthy individuals and governments could also attract skilled people to a city or region, as with artisans and tailors moving to be near particular courts. He observed that the concentration of a particular region on a single industry had advantages and disadvantages. The advantages are that labor markets develop in such places and what we today term tacit knowledge is fostered by the clustering of a particular group of workers in a region. As Marshall put it:

When an industry has chosen a locality for itself, it is likely to stay there long: so great are the advantages which people following the same skilled trade get from near neighborhood to one another. The mysteries of the trade become no mysteries; but are as it were in the air, and children learn many of them unconsciously. Good work is rightly appreciated, inventions and improvements in machinery, in processes and the general organization of the business have their merits promptly discussed: if one man starts a new idea, it is taken up by others and combined with suggestions of their own; and thus it becomes the source of new ideas. And presently subsidiary trades grow up in the neighborhood, supplying it with implements and materials, organizing its traffic, and in many ways conducing to the economy of its material (Marshall, 1990 [1890]: 225).

3 The obvious disadvantage is that the economic fortunes of the region are very much hostage to developments in that industry. Over time, cities tend to develop a more diverse range of activities, and improvements in transport and communication further this trend, because even though they make it easier to move goods from one place to another (thereby promoting regional specialization), they also make it easier for people to move from one place to another. What Marshall observed in 19th century Britain was not so much the movement of the population from agriculture to manufacturing, as the use of large-scale machinery meant that growth in output was steadily less dependent upon additional supplies of labor, but rather the growth of service occupations and industries, that cluster around growth centers. The rise of services, for Marshall, ‘tended to increase the specialization and localization of industries’ (Marshall, 1990[1890]: 230), as they can make a region less vulnerable to the cyclical fluctuations and the rise and fall of particular manufacturing industries.

Marshall’ observations on regional specialization were not widely taken up by economists, partly because they opened up the thorny question of what happens to equilibrium economic models if we allow for falling costs and increasing returns to scale, which would make monopolies more prevalent and challenge assumptions that the price mechanism operates primarily to ration scarce goods and services (Warsh, 2006). The French economist Francois Perroux developed the concept of growth poles to assist policy-makers to understand how particular regions developed economic dynamism based upon industrial specialization, and Swedish economist Gunnar Myrdal developed the concept of cumulative causation to explain why particular regions could experience eon-going growth based upon the agglomeration of industries and skilled labour, which

4 could occur at the expense of other regions. For the most part, however, these insights were not taken up in the Anglo-American economic mainstream, and they were also at the margins of economic geography until the 1970s, which became more interested in developing a ‘science of the spatial’ that could make the sorts of universal claims that characterized economics, rather than studies of regional differentiation, which came to be seen as limited and parochial (Barnes, 2003).

The rise of clusters as a stand-alone concept emerges out of the business management literature, and particularly with the work of Michael Porter from the Harvard Business School (Porter, 1990). In extending his competitive advantage model from firms to nations, Porter observed that understanding the dynamic and sustainable sources of competitive advantage required a shift of thinking away from costs and production efficiencies towards those elements that promote productivity growth over time and innovation, and in particular the spillover benefits that can emerge from being in particular locations, including the presence of related and supporting industries. Porter argued that location within particular clusters are able provide three sources of competitive advantage to the firms that are a part of them:

1. Productivity gains, deriving from access to specialist inputs and skilled labour, access to specialized information and industry knowledge, the development of complementary relationships among firms (e.g. hotels, restaurants etc. based around tourism centers), and access to institutions providing public or quasipublic goods, such as universities and training institutions;

5 2. Innovation opportunities, derived from proximity to buyers and suppliers, ongoing face-to-face contact with others in the industry, and the presence of competitors which stimulates pressures to innovate in circumstances where cost factors are similar; 3. New business formation, as there is better information about opportunities, better access to resources required by business start-ups (e.g. venture capitalists, skilled workforce), and reduced barriers to exit from existing businesses as takeovers and mergers are more readily facilitated due to shared informational resources.

Localization, Urbanization and Creative Clusters

Cluster theories bring together two dynamic trends in economic geography. The first is the tendency towards localization, or the clustering of firms in similar or related industries in a particular city or region, and the positive externalities that can arise from such co-location. Marshall’s pioneering analysis of such externalities pointed to the benefits in terms of labor market specialization, tacit knowledge and institutional specialization, and was developed in three directions in the 1980s and 1990s. First, there was a growing interest in the significance of industrial districts, or those cities and regions that appeared to defy trends towards de-industrialization and the shifting of manufacturing industry towards lower cost centers in the developing world. Work on manufacturing districts in the ‘Third Italy’, to take one example, pointed to an evolving historical nexus between clusters of small and medium-sized enterprises (SMEs), embedded trust relations that acted as a positive stimulus to innovation, and the production of quality goods that retained global market demand even in the face of lower-

6 cost alternatives from countries such as China (Piore and Sabel, 1984; Asheim, 2000). Second, there were those regions where conspicuous value adding to a primary product had occurred through cluster developments that had a global impact, such as in the winemaking regions of California and South Australia. Finally, there was the focus on developing new high-technology districts that could become the “next Silicon Valley” (Castells and Hall, 1994; Kenney and von Burg, 2000). The costliness and lack of results associated with many of the ventures, combined with the realization that the lessons of Silicon Valley were hard to generalize to other locations (Leslie and Kargon, 1996), has generated skepticism among economic geographers about the cluster concept, with Martin and Sunley observing that ‘it is being applied so widely that its explanation of causality and determination becomes overly stretched, thin and fractured’ (Martin and Sunley, 2003: 29).

Urbanization is generally understood as involving the large-scale movement of people to cities, whether through migration from the countryside or from other parts of the world. Amin (2003) observes that, historically, ‘the Western city was the factory and the center of commercial life, in short, the engine of capital accumulation … the city became the source of “immobile” resources and agglomeration economies for competitive advantage’ (Amin, 2003: 115). While the disadvantages of cities – such as pollution, overcrowding and high land rents – have seen large parts of industry leave cities to take advantage of locational advantages elsewhere, cities remain central to post-industrial or knowledgebased economies on the basis of factors such as the benefits of proximity for diverse businesses, concentrated consumer demand for services, culture and entertainment, diversity of populations, the concentration of business, professional and legal services in

7 cities, and ther location of corporate headquarters in “global” cities. Lorenzen and Frederiksen (2008) differentiate urbanization economics from those associated with localization on the basis of the place itself attracting a diverse range of industries and types of employment, in contrast to the concentration of a particular industry coming to define the location. The positive externalities that cities develop include their diversity of industries, the sharing of knowledge among unrelated firms and industries, the diversity of labor, skills, knowledge and ideas that act as stimuli to innovation and entrepreneurship, and the range and diversity of institutions and infrastructures (Lorenzen and Frederiksen, 2008: 159-160). Surveying the literature from economics, geography and sociology, Amin concludes:

There appears little evidence to support the claim that cities are becoming less important in an economy marked by increasing geographical dispersal. … [They] assert, in one way or another, the powers of agglomeration, proximity, and density, now perhaps less significant for the production of mass manufactures than for the production of knowledge, information and innovation, as well as specialized inputs (Amin, 2003: 120).

It is insufficient, however, to simply understand the continuing growth of cities as the result of economic forces. In his epic Cities in Civilization, Peter Hall (1998) observes that because the city ‘continues to attract the talented and the ambitious … it remains a unique crucible of creativity’ (Hall, 1998: 7). Through his historical account of great cities, Hall argues that ‘while no one kind of city, or any one size of city, has a monopoly on creativity or the good life … the biggest and most cosmopolitan cities, for all their

8 evident disadvantages and obvious problems, have throughout history been the places that ignited the sacred flame of human intelligence and the human imagination’ (Hall, 1998: 7). The need to think about cultural and economic factors together has, for Hall, become even more imperative in the advanced industrial or post-industrial nations, as their cities ‘have become more and more preoccupied by the notion that cultural industries … may provide the basis for economic regeneration, filling the gap left by vanishing factories and warehouses, and creating an urban image that would make them more attractive to mobile capital and mobile professional workers’ (Hall, 1998: 8).

The Rise of Creative Clusters

The notion that city cultures could constitute a key source of location-based competitive advantage became one of the big ideas of urban economic geography in the 2000s. Landry (2000) drew attention to the role played by creative cities in catalyzing economic and social innovation, particularly through the formation of a creative milieu, who generate what he terms a soft infrastructure of ‘social networks, connections and human interactions, that underpins and encourages the flow of ideas between individuals and institutions’ (Landry, 2000: 133). Florida (2002, 2008) has widely proclaimed that cities with a reputation for tolerance, diversity, openness to new ideas and cultural “buzz” act as talent magnets for what he terms the creative class of ideas-generators who are central to the knowledge-based and creative industries and are, for Florida, the fastest growing segment of the U.S. economy, as creativity becomes ‘the decisive source of competitive advantage in 21st century global knowledge economies (Florida, 2002: 5).

9 The growing interest in creative cities has arisen in part out of the awareness that, in the 21st century, cities have become more important. This was despite forces emerging since the 1970s, such as economic globalization, the suburbanization of major cities, the movement of large-scale manufacturing to the developing world, and the rise of the Internet and globally networked information and communication technologies (ICTs), which could have promoted population dispersal and the decline of cities. Scott (2008) links the resurgence of cities to the rise of what he terms the cognitive-cultural economy, and others term the rise of the creative industries (Hartley, 2005) or the creative economy (UNCTAD, 2008). Scott links the centrality of cities, or what have also been termed global city-regions (Scott, 2002), to three core elements of this “new” economy:

1. The contractual and transactional nature of production in knowledge-intensive and creative industries, which involve ongoing relationships between shifting networks of specialized but complementary firms. Geographical proximity reduces the transaction costs of joining and maintaining such networks across projects and over time; 2. Specialist workers engaged in these industries are drawn to such urban agglomerations as the centre of activity, thereby reducing job search costs, and as “talent magnets” for those aspiring to work in such industries ; 3. The resulting local system of production, employment and social life in turn generates learning and innovation, and ‘a “creative field” or a structured set of interrelationships that stimulate and channel various kinds of creative energies’ (Scott, 2008: 313). This is further promoted by the existence of complementary forms of ‘social overhead capital’ that includes the role played by universities,

10 research centers, design centers and other sites that generate specialist knowledge capital able to be applied in these sectors.

Alongside the resurgence of cities has been a rethinking of the role of culture, from a set of activities defined by their distance from the economy (the non-commercial arts), towards culture as a resource. Landry argued that ‘cultural resources are the raw materials of a city and its value base … Culture, therefore, should shape the technicalities of urban planning rather than be seen as a marginal add-on to be considered once the important planning questions like housing, transport and land-use have been dealt with’ (Landry, 2000: 7). In a similar vein, Venturelli identified culture as the “gold” of the global information economy:

Culture can be seen as the key to success in the Information Economy, because for the very first time in the modern age, the ability to create new ideas and new forms of expression forms a valuable resource base of a society and not merely mineral, agricultural and manufacturing assets. Cultural wealth can no longer be regarded in the legacy and industrial terms of our common understanding, as something fixed, inherited, and mass-distributed, but as a measure of the vitality, knowledge, energy, and dynamism in the production of ideas that pervades a given community … the greater cultural concern should be for forging the right environment (policy, legal, institutional, educational, infrastructure, access, etc.) that contributes to this dynamism and not solely for the defence of a cultural legacy or industrial base (Venturelli, 2005: 396).

11 In terms of urban policy, thinking about culture as an economic resource and as an asset generating competitive advantage has given rise to what Stevenson refers to as a new civic gold rush in urban planning and cultural policy alike, promoting strategies aimed at ‘fostering strategically the cultures of cities and regions … [where] culture and creativity have become forms of “capital” … traded in an international marketplace comprised of cities eager to compete with each other on the basis of imager, amenity, liveability and visitability’ (Stevenson, 2004: 119-120).

The creative cities debate can be understood at two levels (Stevenson, 2004; Mommaas, 2004; Cooke, 2008; Costa, 2008). First, there are debates about whether whole cities are creative, and whether some cities are more creative than others. Such claims have been made about cities such as London (Landry, 2005), New York (Currid, 2007), Los Angeles and Paris (Scott, 2000). ‘Creative city’ indices inspired by the work of Florida and Landry have generated “league tables” designed to address such questions. Is San Francisco more creative than Los Angeles? Is Dublin more creative than Glasgow? Is Barcelona more creative than Madrid? Is Melbourne more creative than Sydney? Storper and Scott (2009) observe that aside from problems arising from the metrics used for such exercises, they are premised upon assumptions that urban growth and the capacity to attract creative and knowledge-intensive industries is primarily driven by “supply” factors, or the ability of local authorities or cultural elites to generate the right “settings” to attract creative workers, and systematically downplay the role played by global macroeconomic forces in driving the location of such industries. It is not surprising, then, that cities such as New York, London, Los Angeles and Paris feature in such discussions, as

12 these are global cities and centers of global information and service industries more generally.

A second approach focuses upon creative clusters and the capacity of local authorities to incubate creative industries growth in particular parts of major cities, sometimes referred to as cultural quarters (Bassett et. al., 2005; Cooke, 2008). Such strategies are closer to the Marshall-Porter tradition of cluster development, as they are premised upon the spatial agglomeration of related activities more than a hard-to-define creative ethos residing in some sections of an urban population. In an evaluation of creative cluster initiatives in four cities in The Netherlands (Amsterdam, Rotterdam, Tilburg and Utrecht), Mommaas (2004) observed that strategies have been driven by a heterogeneous mix of policy priorities including:

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Attracting globally mobile capital and skilled labour to particular locations;

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Stimulating a more entrepreneurial and demand-oriented approach to arts and cultural policy;

•

Promoting innovation and creativity in the society more generally, through opening up possibilities for greater interaction between culturally vibrant locales and innovation in other sectors of the economy;

•

Finding new uses for derelict industrial-era sites such as warehouses, power plants etc. as sites for post-industrial activities, such as residential apartments, arts centers and business incubators;

13 •

Promoting cultural diversity and cultural democratization, and being more inclusive of the cultural practices of hitherto marginalized social groups and communities.

Given such an eclectic mix of motivations, it is not surprising that the scorecard for the new ‘creative’ urban cultural policies is mixed. In an overview of such developments in European cities, Bassett et. al. (2005: 150-153) argue that some of the benefits have included:

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Moving questions of culture from the margins to the centre of urban development strategies;

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Broadening understandings of culture from elite arts and formally defined arts centers to the wider spectrum of informal arts practices, popular culture and cultural consumption in urban spaces;

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More integrated approaches to urban planning and zoning that recognize the significance of lifestyle and consumption activities as well as production;

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Development of new cultural infrastructures that have acted as catalysts for urban regeneration and given cities more of a cultural image that also acts as an attractor for tourism and possibly investment.

Problems with these policies have included:

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Blurring of the distinctiveness of arts and culture, and absorption into civic “boosterism” and strategies primarily focused upon real estate development;

14 •

Possibly contradictory aims and policy agendas, particularly between economic development and social inclusion;

•

The danger that the drive to harness the cultural and creative assets of locations acts as a homogenizing force, promoting minor variations on the same thematic elements (Peck, 2005);

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The tendency of creative cities to bifurcate between urban ‘creative’ elites and a large supporting army of low-wage service industry workers (Peck, 2005; Scott, 2008; Storper and Scott, 2009).

Locating the University in Creative Clusters

While there is an extensive literature on the relationship between cities and globalization, and the role of universities in knowledge-based and creative economies, there has been surprisingly little work undertaken on the relationship between cities and universities. The result is that ‘the role of cities in the globalizing environment are studied independently of the institutional place of their universities’ (Perry and Wiewel, 2008: 4). We find no consistent theme over time or across nations around the question of where universities should be located, and while almost all major cities have universities, there are many major universities located outside of major cities. Indeed, there is an influential tradition of the modern research university that emphasized campuses being located away from major population and industry centers in order to promote independent scholarship, whose most visible manifestation can be found with many of the major U.S. public universities established in the late 19th century. Indeed, the word campus, first used to

15 describe the grounds of Princeton University in New Jersey, refers to a field, and has implied a space located outside of the city grounds (Haila, 2008: 31).

The literature on universities and clusters has been overwhelmingly focused upon the high-technology sectors, with the relationship between the Massachusetts Institute of Technology (MIT) and the Route 128 high-tech cluster outside of Boston, and the relationship between Stanford University and Silicon Valley south of San Francisco, providing key case studies. Both cases have proved difficult to replicate in other contexts, despite various attempts worldwide to do so. In the case of MIT, it is important to understand not only its relationship to proximate ICT companies, but also to nearby Harvard University and a range of prestigious universities also located around Boston (Northeastern University, Boston University, Brandeis, Tufts University, and University of Massachusetts), which make the Boston area one of the most research-intensive regions in the world. Hulsink et. al. (2007) find that the ICT companies around Route 128 have not been particularly strong on knowledge sharing, and that much of the research intensity of the region derives from relations among the universities and colleges themselves, rather than knowledge transfer with industry. The Stanford University/Silicon Valley link is a more successful example of knowledge transfer through clustering of a research university with knowledge-intensive industries, although Leslie and Kargon (1996) note that most attempts to replicate the “Silicon Valley model” have failed, and suggest that one reason for this is that both the university and the start-up businesses emerged together. Interestingly, they observe that attempts to replicate the model in countries such as South Korea, with the Korean Advanced Institute of Science and

16 Technology (KAIST) have been more successful than the various attempts to reproduce it in the United States.

Seeking to align universities more closely to industry and policy agendas is consistent with what Gibbons et. al. (1994) referred to as ‘Mode 2’ of knowledge production, differentiated from ‘Mode 1’, or the traditional university model, on the basis of the following criteria:

MODE 1

MODE 2

Conditions of knowledge production

Grounded within rules and practices of an academic discipline

Conditions of knowledge valorisation

Academic discipline as a ‘single collective stakeholder’ Advancement of disciplinary knowledge

Grounded in context of application and expectations of external clients Multiple stakeholders, both within and outside the academy Solving of practical problems as they arise in social context Trans-disciplinary, projectbased teams Multiple sites: universities, corporations, government agencies, ‘think tanks’, activist organizations, consultants etc. Multiple criteria (contribution to economic productivity, social cohesion etc.)

Purpose of knowledge Mode of knowledge production Where knowledge is produced

Individuals or disciplinebased groups Traditional sites: universities and research centers

Quality control mechanisms

Internal mechanisms (e.g. academic peer review)

Source: Gibbons et. al., 1994.

Although this debate has largely occurred in the science and technology areas, Ang (2004) has noted its relevance to the humanities in general, and cultural studies in

17 particular, where ‘knowledge production has become much more widely distributed, taking place in many more types of social settings, and involving many different types of individuals and organizations … [and] to the extent that universities continue to provide quality graduates, they undermine their monopoly as knowledge producers’ (Ang 2004: 479). Hartley (2005) also identifies its particular significance in the context of the rise of creative industries, and for universities based in cities where ‘there is also a large number of people who are trend-conscious, early adopters, curious about the new, and relatively unencumbered by family commitments … Universities are not just destinations, but hubs, and young people with time on their hands who are just hanging around are just as important to the creative sector as more traditional forms of investment’ (Hartley, 2005: 24-25).

In discussing the possible relationship of universities to creative clusters, we need to be aware of three endemic questions that arise with the clusters concept itself:

1. Is it primarily about mapping existing centers of cultural development and leadership, or about policy-driven strategies to create such sites? Storper and Scott (2009) observe a sleight of hand in existing ‘creative cities’ literature, which downplays the role of macro-trends in the global creative economy in promoting certain sites as creative cities vis-à-vis the enabling role of supplydriven or ‘atmospheric’ factors such as a thriving arts scene or a tolerant and diverse culture. The result is that every city is presented as having the potential to become a creative city, even though in practice there are strong correlations between those cities that are leaders in global financial, service and entertainment industries and those deemed to have a strong creative infrastructure;

18 2. Is the focus upon bottom-up, grassroots initiatives to cultivate the ‘soft infrastructure’ of cultural development, or on the top-down initiatives of government authorities to bring together cultural and educational activities in designated cultural quarters? There is considerable evidence that the two can be in conflict, particularly insofar as creative cluster initiatives come to be more associated with urban ‘branding’ and real estate development than with questions of cultural access and cultural diversity; 3. Are creative clusters seen as primarily sites of cultural production or cultural consumption? Pratt (2009) has observed that considerably more attention has been given to the latter than the former, and there tends to be an implicit assumption that consumption-led urban cultural regeneration will in itself provide the basis for attracting cultural producers and sustaining cultural infrastructures. There are also major issues that arise from the characteristically “hourglass” structure of the creative industries, with a small number of large employers and a very large number of individual providers and small-medium enterprises (SMEs), which means that employment structures in these industries can be highly volatile (Cunningham, 2005).

When we bring universities into the mix, we need to note a further range of questions that arise:

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Does the university have a range of teaching activities, and associated student recruitment strategies, that link to the activities associated with a creative cluster?

19 •

Does the university prioritize research that links in with the firms, industries and activities associated with a creative cluster?

•

Does the university see itself as having a role in developing the local cultural infrastructure, and enabling its graduates to pursue careers linked to this creative cluster?

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Does the university see its graduates as being primarily employed in and around its local catchment area, or are they expected to move elsewhere upon graduation?

What this would indicate is that the relationship of universities to creative clusters is likely to be very contingent. For those universities that have been located outside of major urban centers, there would not appear to be much point in seeking to re-badge local cultural activities as part of a cultural quarter or creative cluster in the hope that this will be part of redefining the local area as a creative city. Universities located in parts of cities that are hubs of cultural activity will need to make some strategic decisions. First, there are arguments against going down the path of being a more applied ‘Mode 2’ university. Marginson (2006) has argued that globalization and the rise of global ‘league tables’ for universities mean that those institutions aspiring to global research university status should not go down the path of applied, locality-based and industry-focused research, as global research indicators remain largely driven by what can be termed ‘Mode 1’ priorities.

Second, there is a great deal of fluidity within urban spaces for the emergence of creative clusters, which policy-makers and university administrators will find it difficult to respond to. If we take one of the better known recent collaborations between a university

20 and a creative movement – the role played by Goldsmiths, University of London in the rise of the ‘Young British Artists’ of the 1990s and 2000s (Damian Hirst, Tracey Emin etc.) – it is not apparent that this played much of a role in the development of the South London area of which Goldsmiths is a part, as the dynamics of developing cultural sites in London were far more contingent in their nature (Pratt, 2009).

Finally, universities that see their future development as being linked to creative clusters will need to make serious commitments to the individuals and sectors involved. There is a need to think about curriculum, resourcing, student recruitment, research activities, cultural development and community engagement, and graduate destinations as a package, and a will to make genuine changes to institutional practice as required. It will not simply be enough to point to evidence of co-location as proof of a cluster, since the clusters literature points to real and substantive differences between simple co-location of activities and the development of dynamic synergies.

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