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Research Brief:
The City of London and Research into Business Clusters


Objectives

  1. To undertake a study into the existence of business clusters in the City and the City Fringe
  2. To gauge their importance to the dynamics of the London economy and its competitiveness and innovation

Background

The significance of businesses’ forming geographic clusters with firms in the same or related sectors has moved to the forefront of the Government’s business agenda. The Department of Trade and Industry (DTI) argues that collaboration between firms in networks and clusters is a key driver in the development of a knowledge-driven economy. It is therefore urging local and regional development agencies to focus their strategies on the understanding and promotion of business clusters. By understanding the levers which encourage their growth and the obstacles which slow down or frustrate such growth is seen as a key policy objective.

The Corporation of London, as the local authority for the biggest and most important cluster in London, is ideally placed to help drive this debate forward. As such there is an opportunity for the Corporation to be at the heart of the debate and influence thinking amongst policy makers. With this in mind the Economic Development Unit recently commissioned a ‘scoping study’ outlining methods for researching the cluster of financial and business services in and around the City. This study collected and reviewed current knowledge on ‘cluster theory’ and discussed how it could be applied to the City and the wider London economy. This report also discussed how this research could be taken forward. The key findings of this preliminary research were:

  • there is no universally agreed definitions of clusters;
  • there is virtually no analytical work been done on the development of clusters in the services sector; understanding the interaction between firms is essential in defining where clusters exist;
  • the ability to accommodate continuous change is crucial to the continued competitive success of clusters;
  • there are very high levels of concentration of some specialised services in the City itself and these spill out into boroughs adjacent to the City; and
  • personal face-to-face contacts still seem to be important in business.

The aim of this study will be to further research some of these key preliminary findings in order to greater our understanding of how ‘economic clusters’ work and their importance.

Requirements

  1. To undertake a thorough review of the Cluster Theory literature and other related literature (e.g. related to innovation and competition).
  2. To map and survey the clustering activities in the City and City Fringe to better understand the advantages gained by the City’s critical mass and to see whether there are factors likely to stimulate or conversely undermine the cluster of international financial services activity here in London.
  3. To assess the environmental, economic and social sustainability benefits that arise from the concentration and clustering of central London activities in general, and City activities in particular. The assessment should include comparisons, real or theoretical, with other spatial arrangements.
  4. To provide original empirical research into how closely firms in the City relate to each other, in other words to look at the roles of networks and linkages in the dynamics of co-located groups of firms and their effects on innovation and competitiveness.
  5. To look at the relationship between the businesses in the City and those in the City Fringe. This will involve looking at the purchasing, employment and outsourcing patterns of City firms and to gauge whether de-clustering is occurring between the City and the City Fringe.
  6. To do some preliminary international comparative work (this may just involve talking to collaborators abroad). For example, some work has been done in this area in Holland by the Amsterdam study centre for the Metropolitan Environment, University of Amsterdam, E-mail: r.kloosterman@frw.uva.nl, and OTB Research Institute for Housing, Urban and Mobility Studies, University of Technology Delft, E-mail: lambregtsl@otb.tudelft.nl. For further details of this research refer to http://www.lboro.ac.uk/departments/gy/research/gawc/rb/rb36.html (this research is related to the Clustering of Economic Activities in the Polycentric Urban Regions: The Case of the Randstad).
  7. To suggest possible policy implications for both a London regional level (e.g. for the City of London’s Unitary Development Plan (UDP), the Government Office for London (GoL), the Greater London Authority (GLA) and the London Development Agency (LDA) and national level). In particular, advising on the role of public policy at different levels (local, national and international) in promoting or at the very least not hindering the operation of dynamic, innovative clusters.

Methodology

It is expected that this research will involve desk research, surveys and interviews with a range of large, medium and small organisations in the financial and business services sector within the City of London and the City fringe. It is also hoped that brain-storming sessions and focus groups with the Corporation and other interested parties can be built in at an early stage. Consultants are requested to specify their proposed methods in terms of survey size and type and the number of interviews they intend to make. Consultants will also be expected to demonstrate that they are likely to achieve the necessary research access to businesses.

Deliverables

A final report of no longer than 10,000 words submitted as a word 97 formatted document. It is also hoped that, if feasible, an initial quarterly interim report will be delivered and discussed with the Economic Development Unit and the Department of Planning and Transportation at the Corporation. In particular, this will concentrate on the sustainability benefits that may arise from the concentration and clustering of central London activities in general, and City activities in particular (refer to requirement 3 above). It is expected that the consultants will deliver an interim report around half way through the project and progress reports every month or so informing the Corporation and the Economic and Social Research Council (ESRC) of progress and interim findings. At the end of the project the consultants will be expected to give a presentation of findings at a seminar on this subject.

Timing

It is hoped this research will start by August/September 2001. Research to be completed within around 12 months.

Budget

A maximum of £80,000 is available for the work of which £30,000 has been made available from the Economic and Social Research Council’s (ESRC) Cities-Competitiveness and Cohesion Fund.

Proposals

Proposals to conduct the research should include a description of how the work would be conducted, CVs of the leading researchers (which should demonstrate expertise in either ‘Clusters Theory’ or subjects related to Competition, Innovation or related/relevant aspects of finance) and a quotation of the cost of conducting the research. Proposals should be submitted to:

Richard Bostock
Research Officer
Economic Development Unit
Corporation of London
P.O. Box 270
Guildhall
London
EC2P 2EJ

The closing date for proposals is the 15th August 2001.

Contractual Arrangements

The project is a joint project between the Corporation of London and the Government’s Economic and Social Research Council (ESRC). The appointed consultants contractual relationship will be with the Corporation and the Corporations standard terms and conditions (with some ESRC amendments) for research consultancy will apply.

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