The City and Innovation

Theory and research on innovation and entrepreneurship focus on the firm as a unit of analysis. We argue that the city, or place and space, has emerged as a key organizing unit for both innovation and entrepreneurship. The city organizes the key inputs for the processes of innovation and entrepreneurship, by concentrating human capital, firms, knowledge, knowledge-based institutions and other key inputs. We advance this framework by exploring the geographic clustering of a key indicator of commercially-relevant innovation and entrepreneurship – venture capital investment in high-tech companies. We chart the geography of innovation both across and within cities, at both the metro level and the district or neighborhood level for all venture-capital backed startups and for startups in digital industries. Our findings indicate that such commercially relevant innovation is concentrated at two key geographic scales. At the macro-level, it is highly clustered and concentrated in a relatively small number of global cities or metro areas. At the micro-level, it is highly concentrated at tight neighborhood level micro-clusters within these leading cities and metro areas.

Download this Working Paper (PDF)