Innovation Cluster Dynamics

The recent news that both OpenAI and Anthropic are opening offices in Zurich reminded me of Michael Porter's seminal 1998 Harvard Business Review article "Clusters and the New Economics of Competition". In it, Porter explored clusters — geographic areas that become unusually successful in specific industries. Porter observed that despite expectations that globalization and faster communication would reduce the importance of location, the opposite occurred. The global economy continues to be dominated by clusters - geographic concentrations of interconnected companies and institutions in particular fields. Zurich exemplifies this perfectly. ETH Zurich, consistently ranked among the world's top technical universities, has been a cornerstone of technical innovation for decades. Google's Zurich office, recently celebrating over 20 years and home to ~6,000 employees, has grown into their largest engineering hub in Europe. This has helped catalyze a broader tech ecosystem, with Microsoft, Apple, Meta, Nvidia, and numerous startups establishing significant engineering presence in the region. Why do such clusters thrive? Porter's framework explains how they create a multiplier effect where companies can gain the benefits of scale without sacrificing flexibility: Talent Pools: ETH Zurich provides a constant stream of top-tier technical talent, while the presence of major tech companies attracts experienced professionals globally. This creates a deep, self-reinforcing talent pool that benefits companies of all sizes. Knowledge Networks: The proximity of academic research at ETH, Big Tech R&D, and startup innovation creates dense networks of technical knowledge and market intelligence. This environment is particularly crucial for AI development, where advances often emerge from the intersection of academic research and industrial applications. Ecosystem Benefits: Companies operate more efficiently through better access to specialized suppliers, institutions, and coordinated activities with related firms. The mature ecosystem built around Google's two-decade presence has created infrastructure and support services that new entrants like OpenAI and Anthropic can instantly leverage. Most intriguingly, once a cluster forms, it often enters a self-reinforcing growth cycle, especially when supported by local institutions and healthy competition. As the cluster expands, so does its influence on policy and institutions. Zurich's evolution from academic excellence to established tech hub and now emerging AI cluster showcases Porter's framework in action. The arrival of OpenAI and Anthropic suggests this cycle is entering an exciting new phase. Links in the comments

Why are some cities innovation powerhouses while others lag behind? This recent study uses 100+ years of U.S. patent data to uncover fractal and scaling patterns that explain how innovation clusters, spreads, and self-organizes in space. By combining patent records with geometric network modeling, the research shows that inventor activity forms fractal clusters, follows Zipf-like scaling, and reaches a peak “inequality horizon” at ~20 km where clustering and diffusion balance. The takeaway: innovation isn’t driven only by major hubs like Silicon Valley - it emerges from the geometry of human connections. Strengthening regional links, not just concentrating growth in large cities, can support more equitable and resilient innovation ecosystems. More: https://lnkd.in/dMEF_3MP #365Papers #Day332 —-------------------------------------------------------- 🌍 𝐋𝐞𝐚𝐫𝐧 𝐠𝐞𝐨𝐬𝐩𝐚𝐭𝐢𝐚𝐥 𝐝𝐚𝐭𝐚 𝐬𝐜𝐢𝐞𝐧𝐜𝐞 𝐰𝐢𝐭𝐡 𝐦𝐞: https://lnkd.in/d4spRwNA

I work in three domains: Technology, Economics, and Cities. During the last ten years, people have told me how all three fields are separate. During the initial ten years of my career, I worked as an Economist. For the last ten years I worked more in technology and cities domains. Let me share how these three fields intersect and where my work lies. In reality, they co-evolve and cities are the physical layer where that interaction becomes visible. Technology expands what can be done, economics decides what gets funded and scaled, and cities determine how fast ideas spread. Adam Smith's pin-factory example was not just about productivity inside a factory. It revealed: how spatial concentration, task specialization, and process innovation jointly raise output. Growth, from the very beginning, had a technological and organizational dimension. Fast forward to Alfred Marshall. Marshall observed that firms benefit from being near each other—not because of any single firm’s efficiency, but because of shared labour pools, suppliers, and tacit knowledge. What we now call clusters or ecosystems. Robert Solow decomposed economic growth, a large portion was left unexplained by labour and capital. That residual, technical change, shifted the field. Growth was no longer just accumulation; it was learning, methods, and ideas. Paul Romer showed technology was no longer exogenous. Ideas became non-rival inputs, shaped by incentives, education, institutions, and market design. This is knowledge spillovers. Urban thinkers were reaching similar conclusions from a different angle. Jane Jacobs argued that cities are not just containers of growth—they are engines of innovation. Diversity, density, and informal interaction enable ideas to recombine in ways that formal planning cannot predict. Harvard economist Edward Glaeser showed empirically that cities accelerate learning, innovation, and productivity due to agglomeration. Through knowledge-spillover theory of entrepreneurship David Audretsch, Maksim Belitski, and others framed entrepreneurship as the channel through which unused or under-commercialized knowledge escapes incumbents and becomes economic value. My own doctoral work extended this line by explicitly integrating cities into the theory. I examined how urban structure, density, and educated workforce condition the probability that knowledge actually turns into new ventures. Recently, Philippe Aghion and Peter Howitt emphasized creative destruction: innovation reallocates resources, displaces incumbents, and reshapes cities themselves. Economics shapes technology through capital allocation, regulation, competition policy, and public investment. Technology reshapes economics by altering costs, market structures, data availability, and organizational forms. Cities determine speed and direction, acting as facilitators or bottlenecks of innovation and spillovers. In coming days, I will try to explain how AI fits into this framing.

𝗜𝗻 𝟭𝟳 𝘆𝗲𝗮𝗿𝘀 𝗮𝗱𝘃𝗶𝘀𝗶𝗻𝗴 𝗲𝘅𝗽𝗮𝗻𝘀𝗶𝗼𝗻𝘀 𝗶𝗻𝘁𝗼 𝗞𝗼𝗿𝗲𝗮, 𝘁𝗵𝗲 𝗯𝗶𝗴𝗴𝗲𝘀𝘁 𝘀𝗵𝗶𝗳𝘁 𝗜’𝘃𝗲 𝘀𝗲𝗲𝗻 𝗶𝘀 𝘁𝗵𝗶𝘀: 𝗦𝗲𝗼𝘂𝗹 𝘀𝘁𝗼𝗽𝗽𝗲𝗱 𝗯𝗲𝗶𝗻𝗴 𝘁𝗵𝗲 𝘀𝘁𝗿𝗮𝘁𝗲𝗴𝘆. 𝗖𝗶𝘁𝘆 𝗰𝗹𝘂𝘀𝘁𝗲𝗿𝘀 𝗯𝗲𝗰𝗮𝗺𝗲 𝘁𝗵𝗲 𝘀𝘁𝗿𝗮𝘁𝗲𝗴𝘆. When I arrived, every foreign company believed: “𝗜𝗳 𝘆𝗼𝘂 𝘄𝗶𝗻 𝗦𝗲𝗼𝘂𝗹, 𝘆𝗼𝘂 𝘄𝗶𝗻 𝗞𝗼𝗿𝗲𝗮.” That stopped being true. Korea evolved into a network of high-performance clusters. Each cluster has its own industry engine, talent pool, and growth path. Here’s the new map: 🔹 𝗧𝗶𝗲𝗿 𝟭: 𝗚𝗹𝗼𝗯𝗮𝗹 𝗣𝗼𝘄𝗲𝗿 𝗖𝗶𝘁𝗶𝗲𝘀: 𝗦𝗲𝗼𝘂𝗹, 𝗕𝘂𝘀𝗮𝗻, 𝗜𝗻𝗰𝗵𝗲𝗼𝗻 Seoul = HQs + culture + capital Busan = ports + digital finance Incheon = airport + biotech (Songdo) 🔹 𝗡𝗘𝗪 𝗧𝗶𝗲𝗿 𝟭: 𝗜𝗻𝗻𝗼𝘃𝗮𝘁𝗶𝗼𝗻 𝗖𝗶𝘁𝗶𝗲𝘀: 𝗣𝗮𝗻𝗴𝘆𝗼, 𝗦𝘂𝘄𝗼𝗻, 𝗗𝗮𝗲𝗷𝗲𝗼𝗻, 𝗨𝗹𝘀𝗮𝗻, 𝗚𝘄𝗮𝗻𝗴𝗷𝘂, 𝗗𝗮𝗲𝗴𝘂 Pangyo = tech/big startups Suwon = semiconductors Daejeon = deep tech R&D Ulsan = EV + hydrogen Gwangju = AI Daegu = manufacturing + startups 🔹 𝗧𝗶𝗲𝗿 𝟮–𝟰: 𝗨𝗻𝗱𝗲𝗿𝗲𝘀𝘁𝗶𝗺𝗮𝘁𝗲𝗱 𝗯𝘂𝘁 𝗥𝗶𝘀𝗶𝗻𝗴: 𝗣𝗼𝗵𝗮𝗻𝗴, 𝗝𝗲𝗷𝘂, 𝗖𝗵𝗲𝗼𝗻𝗴𝗷𝘂, 𝗖𝗵𝗮𝗻𝗴𝘄𝗼𝗻, 𝗚𝗮𝗻𝗴𝗻𝗲𝘂𝗻𝗴… Pohang = robotics/materials Jeju = smart mobility + wellness Cheongju = chip supply chain Changwon = defense/automation 𝗞𝗼𝗿𝗲𝗮 𝗶𝘀 𝗻𝗼 𝗹𝗼𝗻𝗴𝗲𝗿 𝗮 “𝗼𝗻𝗲-𝗰𝗶𝘁𝘆 𝗺𝗮𝗿𝗸𝗲𝘁.” Choosing the right cluster is now a strategic advantage for partnerships, GTM, hiring, and speed of traction. If you’ve worked OUTSIDE Seoul: 𝗪𝗵𝗶𝗰𝗵 𝗰𝗶𝘁𝘆 𝘀𝘂𝗿𝗽𝗿𝗶𝘀𝗲𝗱 𝘆𝗼𝘂 𝘁𝗵𝗲 𝗺𝗼𝘀𝘁, 𝗮𝗻𝗱 𝘄𝗵𝘆?

As the Cardiff Capital Region continues its series of roadshows to consult on how it will spend the £30m given to it by the UK Government for a Local Innnovation Partnership, those leading it may want to read a fascinating new paper from the Acton Institute which traces how the world’s leading innovation districts were born. It identifies four distinct origins for succ ecosystems: 🚀 The Academic Cradle - Cambridge, Zurich, Pittsburgh where universities commercialise research and spin out world-changing firms like ARM and Climeworks. 🚀 The Government Blueprint - Pangyo, Station F, Barcelona where deliberate public investment and planning engineer a tech hub from the top down. 🚀 The Corporate Spinoff - Eindhoven or Silicon Valley where giants like Philips or Fairchild fracture to create new industry clusters. 🚀 The Cultural Uprising - Berlin or Shibuya where affordability, creativity and rebellion fuel bottom-up innovation. Each model creates different strengths and as the paper argues, the genius of Silicon Valley was that it combined all four - university research, corporate spinoffs, state funding and a culture that celebrated risk. The mistake many have made is trying to replicate that formula rather than translating it by aligning each region’s own mix of institutions, capital and culture around a shared mission. And that’s exactly what Local Innovation Partnerships must do and give each region a coherent innovation strategy instead of another patchwork of agencies and pilot projects. Other lessons from the Acton research apply directly to the UK: ✅ Anchor institutions matter. Every thriving district gains a gravitational centre namely a university, a corporate, or a standout scale-up. ✅ Patient capital is essential. World-class ecosystems take decades, not grant cycles, to mature. ✅ Focus beats dilution. Spreading resources too thinly is to be avoided ✅ Trust can be a differentiator. In an era of geopolitical tension, being a “Trusted Tech” nation is a strategic advantage. But THE most important lesson from the Acton research is that start-ups are the foundational currency of modern innovation districts. They create energy, attract talent, and generate the stories that make places matter. If Local Innovation Partnerships can nurture that start-up energy by aligning anchors, capital and culture, they could finally turn Britain’s innovation potential into long-term prosperity. #Innovation #Startups #InnovationDistricts #LocalInnovationPartnerships #Entrepreneurship #Ecosystem #EconomicGrowth #IdeasForums #IdeasCommunity #Innovation #Startups #InnovationDistrict #LocalInnovationPartnerships #UKInnovatio #Entrepreneurship #EconomicGrowth

𝗖𝗵𝗶𝗻𝗮’𝘀 𝗽𝗲𝗿𝗶𝗽𝗵𝗲𝗿𝘆 𝗶𝘀 𝗶𝗻𝗻𝗼𝘃𝗮𝘁𝗶𝗻𝗴 — 𝗯𝘂𝘁 𝗻𝗼𝘁 𝗶𝗻 𝘁𝗵𝗲 𝗰𝗼𝘀𝘆, 𝗰𝗹𝘂𝘀𝘁𝗲𝗿𝗶𝘀𝗵 𝘄𝗮𝘆 𝘄𝗲’𝘃𝗲 𝗯𝗲𝗲𝗻 𝘁𝗮𝘂𝗴𝗵𝘁 𝘁𝗼 𝗲𝘅𝗽𝗲𝗰𝘁 Innovation is often regarded a metropolitan privilege; a phenomenon of the "core" that leaves the periphery as little more than a mere observer. Yet, as Guoqing Lyu, Ingo Liefner, and Haining Jiang show in their latest Applied Geography paper, the reality of #China’s high-end equipment manufacturing industry tells a far more nuanced story. It is a narrative of "peripheral #innovation," where remote regions bypass local isolation to forge high-value connections with the nation’s sophisticated urban hubs. Drawing on an extensive analysis of co-invention #patents from 1985 to 2021, the authors reveal that the strength of peripheral regions lies not in local clustering, but in their capacity for "cross-hierarchy" cooperation. Rather than attempting to replicate the dense, closed networks of #Beijing or #Shanghai, peripheral cities often serve as selective outposts. They thrive by bridging the vast geographical and technological gaps to partner with higher-tier cities, a strategy that allows them to overcome structural disadvantages and integrate into the broader national #innovation system. This dynamic is steered largely by the institutional gravity of state-owned enterprises (SOEs) and large-scale firms. These actors possess the organizational muscle and the historical lineage to maintain stable, long-distance pipelines of knowledge. Interestingly, the study finds that while local R&D investment can sometimes lead to inward-looking provincialism, the presence of universities and research institutes acts as a catalyst for outward-looking collaboration, reinforcing the periphery’s role as an open, rather than closed, participant in progress. The full research paper, which offers a robust "tri-polar" framework for understanding these spatial configurations, provides a vital roadmap for place-based innovation policy in emerging economies. The full article is accessible via the DOI below: https://lnkd.in/eBRz4AgT  

Europe doesn’t have an innovation problem. It has a capital allocation problem. Dealroom’s data shows more than 1,200 VC-backed power law outcomes across EMEA. About 2,700 companies are already in the $25–100M revenue range. Europe is now forming several superclusters. The New Palo Alto (NPA) is a supercluster of leading European ecosystems and research hubs that are close together (a Journey of 4 hours). It ranks third globally by unicorn count, first for university spinouts, and accounts for half of Europe’s total startup ecosystem value and 40% percent of its unicorns.   Citywise, London, Paris, and Amsterdam dominate the VC funding, with nearly 77% in total, while London alone attracts 53%.   This cluster benefits from Europe’s leading research institutions, Cambridge, Oxford, and Eindhoven’s Brainport, which produce world-class talent and spinouts. Europe’s scientific and entrepreneurial base is already delivering thousands of “Colts” ($25–100M revenue) and “Thoroughbreds” ($100M+ revenue). But look closely at the shape of that funnel: → 50,000 VC-backed startups → 6,000 reach breakout stage ($15–100M raised) → 1,200 cross the $100M revenue or unicorn threshold → And only 48 reach decacorn or centacorn scale That sharp compression isn’t due to the lack of ideas or talent. It’s due to the absence of deep, patient scale-up capital, especially for IP-heavy, asset-intensive companies in energy, AI infrastructure, new materials, and biotech. We spin out extraordinary research, but when it’s time to compound it into global businesses, foreign LPs and late-stage US funds still dominate the balance sheets. As a result, the economic gravity of European innovation leaks abroad— value created here, harvested elsewhere.   #Venturecapital #AI #Deeptech #Startups   Follow us at APEX Ventures and subscribe to our newsletter for exclusive content on groundbreaking Deep Tech startups:   🔗 https://t2m.io/EV2qHQuo

🔬 Where Biopharma Innovation Lives: U.S. Cluster Trends for 2025 The new ranking of top U.S. biopharma clusters highlights how a few regions continue to shape the future of drug development and life sciences. These clusters concentrate talent, capital, lab space, and regulatory proximity to create powerful innovation ecosystems. Some key takeaways: 🔹 Boston / Cambridge, MA remains the top cluster with exceptional NIH funding, lab infrastructure, and talent density. 🔹 San Francisco Bay Area maintains strong momentum with massive venture capital inflows and innovation intensity. 🔹 BioHealth Capital Region builds on its closeness to NIH and FDA to stay competitive. 📈 Other strong hubs include New York / New Jersey, San Diego, Los Angeles / Orange County, Greater Philadelphia, North Carolina, Seattle / Puget Sound, and Chicagoland. The ranking is driven by five pillars: – Patent output – NIH funding – Venture capital investment – Laboratory infrastructure – Biopharma job base and growth Why This Matters Biopharma clusters are more than locations. They are strategic ecosystems where research, industry, and investment intersect. For companies, the choice of cluster can define access to capital, talent, and strategic partnerships. For investors and policymakers, these movements reveal where the next wave of innovation is building up. 📊 The race for leadership in biopharma is not just about science. It is about ecosystems. 👉 Follow Sadhna Bokhiria & KIRIA Research for sharp, data-backed insight into where biopharma innovation is heading next. #Biotech #Biopharma #Innovation #Pharma #KIRIAResearch #KIRIA

The technologies of the future are created and commercialized in innovation hubs that combine scientific excellence with entrepreneurial ambition. There are thousands of such hubs around the world, and our Global Innovation Index (GII) 2025 seeks to shine a light on those doing well through the GII Ranking of World’s Top 100 Innovation Clusters. For the first time, we have included VC data alongside international patent filings and scientific publications. Adding the VC lens has shifted the top of the table slightly, helping to push China’s Greater Bay Area into number one spot, nudging the Tokyo-Yokohama cluster into second, and lifting Silicon Valley from sixth to third spot this year. Beijing was ranked fourth. Each of those clusters led in a different way. Tokyo-Yokohama was the single biggest source of international patent filings, while the Silicon Valley cluster (around San Jose and San Francisco) attracted more venture capital than anywhere else. Beijing led the world in terms of the number of scientific publications. The Greater Bay Area, which encompasses Shenzhen, Hong Kong and Guangzhou, did not lead in any of the three categories, but its strong showings across the board gave it a balanced profile and put it in first place overall. This cluster ranking, as well as our flagship Global Innovation Index (out on 16 September), is designed to help policymakers, business leaders and researchers better understand the local and global innovation landscape, and to design policies that make innovation ecosystems more vibrant. 33 economies are covered by our list of the top 100 clusters, including Germany (which has seven clusters), India and the United Kingdom (four each) and Canada and the Republic of Korea (which has three, like Japan). Propelled by the new methodology and strong performance in VC deals, Indian clusters have made remarkable advancements, with Bengaluru jumping from 56th to 21st position, Delhi to 26th (compared to 63rd) and Mumbai to 46th (compared to 88th). In addition to the dynamic hubs in China and India, six vibrant innovation hubs from middle-income countries also feature in the top 100: Brazil (São Paulo), Egypt (Cairo – the top-100 cluster in Africa), Iran (Tehran), Malaysia (Kuala Lumpur), Türkiye (Istanbul) and Mexico (Mexico City) – which enters the top 100 this year for the first time and makes up the second innovation cluster within Latin America. Outside the top 100, some of the leading middle-income economy innovation clusters are Ankara (Türkiye), Bangkok (Thailand), Buenos Aires (Argentina), Islamabad and Lahore (Pakistan), and Rio De Janeiro and Porto Alegre (Brazil). These clusters show how the combination of strategic investments coupled with supportive policy frameworks can build thriving ecosystems. More: https://lnkd.in/e882jzRp #WIPO #GlobalInnovationIndex #GII2025

  WIPO Global Innovation Index 2025 – #Zürich anchors Switzerland’s innovation leadership – fueling a thriving Swiss AI & robotics ecosystem across Zürich, #Lausanne & #Geneva!   Live from Hong Kong Science Park: The World Intellectual Property Organization (WIPO) has just released the Top 100 Global Innovation Clusters ranking, now based on patents, publications, and venture capital investments. Results here: https://lnkd.in/evjAcgKH 🇨🇭 Will Switzerland top the Global Innovation Index again in 2025? Here are the 2024 results https://lnkd.in/euxnBskw showing how Switzerland continues to punch above its weight – combining academic excellence, corporate R&D, and startups. For 2025, we shall find out on Sept 16, 2025 (https://lnkd.in/eG66K528) 🇨🇭 What we know today from World Intellectual Property Organization – WIPO Ranking of World’s Top 100 Innovation Clusters https://lnkd.in/evjAcgKH: #Zürich remains Switzerland’s top cluster in the global Top 100 – ranked 14th worldwide by intensity (innovation output per population and 40th worldwide by size.  🇨🇭 Swiss startups are scaling globally: supported by growing VC flows, a new generation of companies in AI, robotics, biotech, and climate tech are pushing Switzerland onto the global stage of innovation. ✨ Highlights for Zürich    ~2,045 patent filings, 12,211 scientific publications, and 730 VC deals per million inhabitants (2019–2023).  Knowledge leaders: ETH Zürich, University of Zurich, Empa.  Top patenting actors: ETH Zürich, Sika Technology, IBM. 🇨🇭 Startups and scale-ups driving the boom: The below chart from the Greater Zurich Area highlights the thriving AI and software ecosystem in the area with the main player in AI co-locating in Zürich like OpenAI or NVIDIA start-ups like ANYbotics (robotics for industrial inspection), Sevensense Robotics (AI navigation for autonomous robots), NNAISENSE (deep learning & AI solutions), Daedalean AI (AI for autonomous aviation systems), Scandit (computer vision & smart data capture), InSphero (biotech & 3D cell culture) and others on the interface of medicine, transport, finance, neurotech, aviation and automation thriving.DealRoomm   🇨🇭The Swiss innovation triangle:  Together, Zürich, Lausanne, and Geneva form a European frontier-tech hub – world-class science, venture capital, and startups.   EPFLL (Lausanne): spearheading robotics, AI, quantum, and energy research with spinoffs like Flyability (drones for inspection) and Lunaphore (biotech diagnostics). Ville de Genèvee: vibrant in fintech (Temenos, Taurus), medtech (Distalmotion, Sophia Genetics), and cleantech, connected to international organizations and global investors, andGenolier Innovation Hubb.