Climbing a mountain, travelling North or spending time near the sea we all become aware of differences in the climate. In some places configurations of landscape create specific micro-climates, which create conditions of warmth or shelter allowing plants and gardens to flourish. Recent research suggests that business innovation may work in a similar way, with very local micro-climates being influential in shaping the ability of firms to innovate.

Firms’ ability to innovate  – to develop new products or services – depends on access to knowledge about new technologies, new equipment or new market opportunities. Recent research from Germany and the Netherlands suggests, however, that the availability of knowledge can vary markedly between localities within a city, and even within a particular building or university campus. In Berlin, for example, these ‘knowledgescapes’ can, it seems, differ over distances as short as 50 to 250 metres, either helping or hindering firms’ innovation activity[1]. Research in the Netherlands has shown that across university campuses too the availability of ‘third spaces’ such as cafes or squares where students and staff can congregate and share knowledge has been linked to enhanced creativity and innovation[2].

Micro-geography matters it seems for innovation elsewhere, but how does this work in the UK? New research which we are publishing today gives us the first clues. In this research we examined new innovation intensity measures – based on patents, trade marks and designs – for 32,000 micro-geographic areas across England. Each of these areas – called Lower Census Output Areas – has an average population of 1700 and an average area of 4 square km.

In these very small areas, innovation is strongly and positively related to population density. So, more people per Km2 means (lots) more interaction and ‘buzz’ and greater creativity and innovation. Distance from urban centres also matters – the less accessible a location the lower the level of innovation intensity.

Population density and proximity to urban centres help innovation among urban firms. For rural firms, however, low population densities locally and time-consuming and expensive travel to urban centres may reduce innovation. Indeed, we find that the effects of low population density and distance to urban centres are reinforcing – a double whammy for rural innovation. The impact of lower population density has 1.5 times as large an effect on innovation for an area 80 minutes’ travel time from a town centre rather than 40 minutes’ travel time.

Other factors matter too of course in shaping local innovation. Sectoral composition is important, as is the quality of the local housing stock and environment. Intriguingly, local crime rates reduce innovation levels although the mechanisms which this happens remains unclear.

It’s early days in research on the micro-geography of innovation in the UK, but our own research and the evidence from Germany may mean that we need to re-evaluate the relationship between innovation and ‘place’. Local policies may not be enough, instead we may need to think about innovation policy in terms of neighbourhood knowledgescapes, in just the same way that we think about neighbourhood policies for urban regeneration, planning, policing and health.

Stephen Roper, ERC Director 


Please note that the views expressed in this blog belong to the individual blogger and do not represent the official view of the

Enterprise Research Centre, its Funders or Advisory Group.

[1] Rammer, C.; J. Kinne; and K. Blind. 2020. Knowledge proximity and firm innovation: A microgeographic analysis for Berlin. Urban Studies 57:996-1014.  [2] Soares, I. Weitkamp, G and Yamu, G. 2020. Public spaces as knowledgescapes: Understanding the relationship between the built environment and creative encounters at Dutch university campuses and science parks, Environmental Research and Public Health, 17, 7421.