Proximity and Complexity in the Emergence of High ... - Science Direct

Geofoncm,Vol. 29, No. 4, pp. 433-450,1998 0 1998 Elsevier Science Ltd. Ail rights reserved Printed in Great Britain 0016-7185/98 $19.00+0.00

Pergamon PII: SOOl6-7lt?5(98)00022-0

Proximity and Complexity in the Emergence of High Technology Industry: The Oxbridge Comparison

ELIZABETH * Department

GARNSEY*$

HELEN LAWTON SMITHY

and

of Engineering and Judge Institute of Management Cambridge University, Cambridge, UK

t Centre for Local Economic Development, Warwickshire,

Coventry University, UK

Studies, Coventry,

(Received 20 April 1997; and in revised form 5 April 1998)

Abstract: This paper examines similarities and differences in the emergence of hightech enterprise and the growth of associated industry in Cambridgeshire and Oxfordshire since the 1960s. These cases are viewed as instances of a generic phenomenon: the emergence and growth of the science-based ‘innovative milieu’. A conceptual scheme drawn from complexity studies is used to introduce explanatory coherence into the apparently scattered and disconnected factors relevant to the genesis of hightech milieux. 0 1998 Elsevier Science Ltd. All rights reserved. Key words: Innovative milieu; High-tech clusters; Complex systems

Introduction

becoming centres of science and technology-based enterprise.

this paper we are concerned with understanding the origins and development of areas where there is a concentration of ‘high-tech’ enterprise.’ The activities of innovative technology-based firms are among the means by which the emergence of new technological systems takes place (Perez, 1985). An understanding of the growth of local clusters of advanced technology firms can contribute to our understanding of important shifts in economic activity that are currently underway. The literature on this subject has not yet succeeded in explaining why growth of this hind occurs in some places and not in others. Some areas (Bristol in the UK, Canberra in Australia, Bordeaux in France, for example) enjoy apparently conducive conditions without

In

$ Corresponding

author. E-mail: [email protected]

The approach here presented views the innovative milieu as a system of activity, an instance of the emergence of a complex system, shaped by initial conditions, path dependence and chance occurrences with cumulative consequences. We take two cases of the emergence of local high-tech activity, Oxford and Cambridge in the UK, and aim to sort out the reasons for similarities and differences between the two. The paper begins with a brief summary of conceptual approaches to the analysis of high-tech districts and suggests the need for a more dynamic perspective, one which can take into account the influence of individuals as well as structural factors on paths of development. Historical evidence and two high-tech data bases are used to explore the cases. Starting from similar conditions,

433

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Elizabeth Garnsey and Helen Lawton Smith

each took a different path of development, but there are now signs of convergence. These developments would be difficult to interpret without a clear conceptual framework, pointing to the reasons for distinctive features of each case while identifying common dynamic processes. The examples also show that if systems thinking is to be useful in this sphere, it must advance beyond its scientistic origins to provide an interdisciplinary concept of activity systems, alert to political and cultural as well as economic and spatial aspects of interrelated activity. Conceptual approach The need for more effective tools of analysis to explain the emergence and location of new firms and industries has led to extensive theorising about location and the attributes of the innovative locality. An early approach identified a set of conditions conducive to high-tech activity and attributed the growth of high-tech centres to their presence (Miller and C&C, 1985). More recently, writers of the GREMI group have introduced the concept of the ‘innovative milieux’, while the Marshallian Industrial District approach continues to raise issues of relevance (see Amin and Thrift, 1992). In the industrial district approach, interdependence takes the form of transactions between firms in supply chains and other linkages in the supply and recruitment of labour in sectorally specialised areas. There is a focus upon the particular forms of co-operation which take place in these districts, including the sharing of technical information. Scott has emphasised the importance of transaction cost considerations shaping economic interactions in the new forms of regional development (Scott, 1988). In the innovative milieu approach, the local environment or milieu is presented as having innovative attributes as a unit of analysis. The emphasis is on the complex network of relationships between firms (Camagni, 1993). Storper’s contribution to this approach has been to emphasise ‘untraded interdependencies’ among those active in an innovative milieu (Storper, 1995).The focus is on the ability of the milieu to foster or facilitate innovation which is not necessarily sectorally specialised and where links may be horizontal rather than vertical. The characteristics and the operation of the innovative milieu identified by these authors are clearly relevant to our research questions, but our focus

here is on the genesis of such places and their growth processes, rather than their ‘steady state’ attributes. We argue that the presence of local facilitating conditions does not suffice to explain the emergence of an ‘innovative milieu’. identifying sets of propitious conditions cannot provide an adequate explanation for economic growth. It is rather the sequence of cumulative interactions between key conditions that give rise to a local industrial complex and the feedback effects that sustain it (Gamsey, 1996). It is clear also that chance comes into play in path dependent developments of this kind.* Moreover, we require an understanding of the processes through which innovative technology based activity has emerged in some places and not in others in order to explore how activities in innovative milieux come to be interdependent. Our objective is to acknowledge the individuality of each developmental path, while providing conceptual tools for a coherent comparison. Since geographical economic, political and cultural factors are clearly at work, an interdisciplinary approach is needed to incorporate a range of variables and explain how specific patterns arise. We do not propose a predictive model, but an exploratory methodology providing a basis and discourse for comparing interconnected local activity in different places (Gamsey, 1996,1997). An industrial milieu can be thought of as a complex system, one in which the parts are interdependent and together form a whole that has emergent properties. A wealth of cross-disciplinary research on complex systems is now available (Prigogine and Stengers, 1984; Arthur, 1989; Kauffman, 1991; Holland, 1995). This work makes it possible to identify both common processes and distinctive impetus at work in complex systems of many kinds. In the case of the development of a new industrial complex, the key innovative agents are entrepreneurs and enterprises. It is the responses of these agents to opportunities that initiate and interconnect developments. In mainstream and in evolutionary economics, firms and not individuals are the units of analysis (Nelson, 1995, p. 86). This makes it difficult to theorise the influence of entrepreneurs and local activists, despite clear evidence of their importance. We will show that there is scope to attribute iufluence to the actions of individuals in a coherent manner, without resorting to reductionist explanations.

Proximity and complexity in the emergence of high technology industry Systems ideas enable us to introduce explanatory coherence into otherwise scattered and disconnected factors relevant to the genesis of high-tech milieux. The concept of interdependence, for example, is often introduced without theoretical grounding, Here it is viewed as the key emergent property of a system, whereby the parts are integrated. This and other strands in the recent thinking about complex systems provide concepts for the study of timedependent phenomena that are subject to feedback effects and cumulative processes. While the studies of the Santa Fe school have been largely quantitative, the explanatory logic and key concepts of studies in complexity have wider applications (Stacey, 1995). This approach can explore the interplay of structural factors, of human initiative and of chance in the evolution of complex systems of human activity. The systems with which we are concerned here have key cultural and political dimensions. Complex systems made up of human interaction are generated by their participants, whose actions are motivated by their outlook and expectations and who maintain the system through their interactions and interdependence. Thus it is essential to keep in mind “... the whole historical and cultural dimension of the milieu concept, its s~ntaneous character and relational dynamics” (Maillat and Lecoq, 1992, p. 14). The methodology proposed is essentially interpretive, it is an attempt to “endow experience with me~ng” (Rorty, 1979). This type of approach, drawing on rich case evidence, is suited to complex, ambiguous evidence which has not been adequately theorised. The explanation proposed must be further assessed in relation to other evidence that can support or challenge the interpretation. As the conceptual approach is revised and refined, it can provide the basis for models with quantitative dimensions (Allen, 1998). The genesis of a complex system Complexity studies indicate that the influence of initial conditions, chance events and reinforcing processes are at work in the dynamics of complex systems through feedback effects, as consequences shape further outcomes (cf. M~y~a, 1963). Drawing together ideas from complexity studies, we can use the evolution of a local industrial ensemble as an exemplar of the genesis of a complex system (Garnsey, 1997).

435

Similar initial conditions and resource availability predispose developments in certain directions. But beyond this, a series of local events which result from chance occurrences (e.g. locational choices) provide the impetus for further developments. The a~umulation of small events can result in certain contingencies tipping the course of developments along a distinctive path (Arthur, 1989). Each new juncture of this trajectory is influenced by prior developments and shaped by further local events, in path de~ndent mode. The sequence of rei~o~ing processes results from the further consequences of feedback. Catalysts increase the density of interaction and promote adaptive learning. Processes of self-organisation help to create a critical mass of ~te~e~ndent activity and form a centre of attraction and resource generation. The resource mix required to sustain growth may alter as the system evolves. Unlike some ecological systems where autogenic succession occurs, a milieu does not become self sufficient; it remains part of wider economic systems and unless the necessary inputs are continually obtained through exchange, the system will plateau or decline. Growth processes move into reverse when resource constraints and bottlenecks reach a critical level. Some developments are irreversible, but where possibilities remain open, systems may renew themselves. Sustained growth requires economic and institutional ‘selection processes’ operating to provide resources and facilitate innovative developments. These can allow the new system to be integrated into and alter the wider environment with its broader flows of knowledge and resources. To elucidate the processes that underlie the genesis of i~ovative milieux, we examine Oxford and Cambridge in the UK, two cases that resemble each other in a number of ways but where there are a limited range of differences to explain. The approach can then be extended to examine cases where a wider range of differences is to be found (Garusey and Longhi, 1997).

Formatlve conditions; population, science and local industry The two counties are similar in size and population - Cambridgeshire, 1300 square miles, with a population of 684,000; Oxfordshire, 1000 square miles, population 598,000. In 1996, the city of Oxford had

436

Elizabeth Garnsey and Helen Lawton Smith

134,000 inhabitants and the city of Cambridge, 106,000. There are further similarities. Both have historic and influential universities and the residential attractions of cultural centres. Scientific and technological resources are concentrated in their university and government laboratories, providing centres of knowledge capable of supporting hightech commercial activity. Both have a high density of R&D based firms, including very strong biotechnology sectors. Neither area has been involved in major defence oriented activity of the kind that has provided graduate employment in other areas (e.g. Bristol). Differences as regards high-tech activity in the two areas lie in the greater number of firms and employees in Cambridge, the higher average size of firm and research organisations in Oxfordshire, the kinds of scientific research in both universities and government laboratories, and their distinctive sectoral profiles and image. The Cambridge region has been the site of more extensive commercial activity in advanced technology and is better known as a high-tech centre. Its path has been more serviceorientated and diverse than that of Oxford, where manufacturing has remained important and which has only recently emerged as a recognised centre of leading-edge industrial as well as public sector research. In exploring how differences, real and apparent, have come about, we begin with formative conditions.3 The period following the post-war boom marks the onset of relevant developments. We begin with the most obvious similarity - the strong scientific tradition in the two universities. However, as we will demonstrate later in the paper there are important differences in the orientation of research and administrative priorities. Diversity in formative conditions The science base

Cambridge had the stronger science and technology base and greater relative influence of the science faculties in the university. Particularly important was the response of members of the scientific community in Cambridge to the challenge presented by the Wilson government of the time to improve the contribution of the universities to innovation in the nation’s industrial activity. In Oxford, the historic colleges had more influence, the faculties sharing

with them the costs of employment of established staff.4 Third, the university administration had more resources in Cambridge, where the faculties administered not only the research and departmental teaching but also the staffing budget of the university, and had a somewhat greater capacity for strategy formulation independently of the colleges. Fourth, the structure of the science base was as a whole was more ‘big-science’ orientated in Oxfordshire, both in the university and in the government laboratories. As we will show later, the presence of large numbers of scientists and engineers in the government laboratories did not have the same impact on the development of high-tech industry as was the case in Cambridge. This was largely because of the type of science and the earlier commercialisation of research in Cambridgeshire than in Oxfordshire. However, in both places, the university was largely a self-organising complex of colleges and departments, with relatively little by way of central administration. The collegiate structure of both universities creates networks supplementary to those of the departments and brought together academics from different disciplines. These networks brought into interaction scientists who could detect new opportunities and others who could mobilise resources to make this possible. As was pointed out in 1969 in the Mott Report on The Relationship between the University and Science-based Industry in Cambridge: The University already contains probably the largest concentration of physical, technological, biological, medical and agricultural research laboratories in any university in this country. If the Government research laboratories in Cambridge and its immediate neighbourhood are added to these, the whole complex may be regarded as the largest non-industrial concentration in the country. The investment in scientific staff, equipment and supporting facilities is therefore exceptionally high. (University of Cambridge, 1969)

The Mott Report went on to estimate that in Cambridge up to 25% of the research and technical staff of the University were involved in applied industrial research supported by outside funding, in addition to University supported applied research. No equivalent estimates were made for Oxford. The applied sciences in particular were stronger in Cambridge, especially in engineering and in computing, which was to be of particular importance.5 In Oxford the stronger emphasis has been on pure science, and the major scientific strength in chemistry,

Proximity and complexity in the emergence of high technology industry whereas engineering has been the largest department in Cambridge, which also possesses intemationally renowned physics, mathematics and computing departments (Segal, Quince and Partners, 1985, p. 63). The strength of computing at the university influenced the location of the Computer Aided Design (CAD) Centre in Cambridge in 1969. These initial conditions were the basis of a series of inter-dependent reinforcing processes in Cambridge, which largely passed Oxford by in the 1960s. Zndustrialisation

While Cambridge had a more influential scientific community, Oxford was a city more oriented to commercial development. Oxford experienced industrialisation in the form of motor vehicle manufacturing on its outskirts, in Cowley. However, there is little evidence to prove that the car industry has been a major source of managers, technicians and local subcontractors for recently emerging industrial activity in the area (cf. Hayter and Harvey, 1993). More significant was the formation of Oxford Instruments in 1959 by Sir Martin Wood working at the Oxford physics laboratory (Clarendon Laboratory) (though originally trained in the Cambridge Engineering Department). This company which developed on the basis of applying new research on magnetic resonance was to have considerable influence in later decades. In contrast, in Cambridge the only industrial activity was in electronics and scientific instruments in a few firms that had earlier spun out of the laboratories of the university. These few companies (e.g. Cambridge Instruments, the Pye electronics and instrument group) established in the nineteenth century, were a respected part of the small Cambridge industrial scene and still had university connections. The influence of Oxford’s industrial development was felt in Cambridge, where the Holford Report of 1950 had called for stringent planning controls in the city and restraint on industrial growth throughout the county in order to avoid the ill effects of urban industrial expansion. As a consequence, the application by IBM to set up its European Research and Development Centre in Cambridge in the 1960s had been refused. One of the tasks of those in Cambridge who were favourably disposed to science-

437

based industry was to show that this kind of industry, clean and research based, was of a different order from the smoke-stack industry of the motor industry. Sceptics could later point to subsequent congestion as justifying their early concern. Individual initiatives

A key event in Cambridge was the case made for science-based industry in the Mott Report of 1969 and the publicity accorded to these arguments by scientists who had seen the benefits to MIT and Stanford University of close interaction between university departments and research based commercial activity. The report recommended the relaxation of planning requirements for research and development-based enterprise in Cambridge and called for a science park in the city. The challenge was taken up by Trinity College in the following year, when it was decided that the college would found a science park in 1970. That this occurred and eventually proved successful (after several years of occupancy much lower than a commercial undertaking would have tolerated) owed much to the persistence of one individual, the Bursar of Trinity, John Bradfield. The development of hightech industry in Cambridge was therefore by no means planned by the university. Indeed the Mott Report had opposed manufacturing or large scale activities. Moreover planning restrictions, though less stringent than before, still applied to industrial activity in Cambridge as in Oxford. The influence of key individuals was to be felt later in Oxford. Outlook and intellectual

property

At the time the Mott Report was in preparation in Cambridge, a University and Industry Committee was set up in Oxford with the remit of maintaining a channel of information and communication on relations between the university and industry. This committee was informal, lacking the authority and influence of the Mott Committee in Cambridge. Outside the central university framework, in the 1980s some colleges individually sought to bring together the interests of academia and industry. However, proposals by colleges such as Corpus Christi, Wolfson and Exeter to set up science parks failed because of restrictions on the use of greenbelt land. Magdalen eventually succeeded in 1990

438

Elizabeth Gamsey and Helen Lawton Smith

(twenty years after the founding of the Cambridge Science Park) because part of the site to the southeast of the city already had permission for industrial use. There were many, even in Cambridge, opposed to the developments recommended by the Mott report, but the authoritative endorsement of these recommendations swung influential opinion in their favour and brought round local government, with the consequent relaxation of planning restrictions on high-tech firms in the 1970s. In Oxford disapproval of academic enterprise continued to be found in a number of departments of Oxford University, as had been the case in Cambridge at an earlier time (Lawton Smith, 1990; Gamsey, 1992). Cambridge University refrained throughout from taking title to inventions made by its employees. This was later credited with having a major impact on academic enterprise (University of Cambridge, 1990). Policy in Cambridge was essentially laissez faire. In practice, intellectual property rights (IPR) were not dissimilar in the two places since much research was externally funded, and bodies commissioning and funding research had first claim on IPR. It was, moreover, the recommendation of Oxford Committee of Patents (1980) that university employees hold the intellectual property rights and responsibilities arising from the commercial applications of research, a decision motivated mainly by liability considerations.

Structural factors In the 1970s new opportunities for entrepreneurs were available as a result of technological and scientific developments which provided new market openings. In particular, the development of the micro-processor reduced barriers to entry into the computer industry, opening up opportunities outside capital-intensive mainframe products, and led to the foundation of a number of computer firms producing hardware. Subsequently software houses proliferated. The presence of the CAD Centre in Cambridge was a major contributor to these developments. Moreover, the publicity accorded to Clive Sinclair’s enterprise in Cambridge in the 1970s (in early pocket calculators and micro-computers) presented a much publicised entrepreneurial alternative to traditional career structures and contributed to the emergence of a local entrepreneurial culture.

A major difference between the two places was in the kinds of state investment in R&D. A CAD-type centre was not replicated in Oxfordshire. There the government laboratories were engaged in ‘big-science’ for example in nuclear fission research at UKAEA Harwell, and nuclear fusion at UKAEA Culham. The eight government laboratories employed some 8000 people.6 These had a civil service culture and did not spin out new companies in the early years. Even by 1987, only eight advanced technology firms had been formed by current or former laboratory personnel (Lawton Smith, 1990). In the 196Os, which mark our relevant ‘initial conditions’, it would have been difficult to predict (had this even been anticipated) whether Oxford or Cambridge would be more likely to generate a high-tech complex of the kind already detectable on Route 128 around Boston and at the southern end of the San Francisco peninsular (Deutermann, 1966; Cooper, 1971). The initial conditions under which hightechnology industry began to emerge in both areas in the !ate 19609 resembled each other in important respects, as outlined in Table 1. The further consequences of features distinctive to each place (Tables 2 and 3) were not easy to anticipate. However, we have seen that there were differences affecting science-based industry and these differences were initially confirmed by reinforcing processes.

Expansion relnforced In succeeding years, national developments continued to be favourable to technology based enterprise; there were improvements in transport networks and tax benefits increased through the lowering of company and capital gains tax. We can summarise the further local developments of technology based activity in the two places as follows.

Cambridge-relnforclng effects Early conditions and occurrences, as depicted in Table 1, set off a further train of events. Certain bank managers, notably Matthew Bullock of Barclays Bank, who formed part of the local community, were by the late 1970s sympathetic to hightech ventures and enabled a number of new firms,

Proximity and complexity in the emergence of high technology industry

439

Table 1. Oxford and Cambridge - initial conditions favourable to high-tech developments 1960s Conditions providing a favourable local environment Locational advantages

Resource provision

Residential attractions Proximity to London Central location Transport links

Expertise, research staff Science graduates Medical research Trained technicians Government laboratories

The university as a facilitating local environment World class science Membership of global science network Collegiate structures overcame some departmental barriers

including Acorn Computers, ple of successful high-tech

to take off. The examentrepreneurs encour-

aged further enterprise. New firm formation took place above all through spin-outs from existing firms (Segal, Quince and Partners, 1985). As a result, the numbers of firms in high-technology and new technology activities increased from around 100 in 1974 to over 300 in 1984. Start up rates were at about a hundred firms a year over the next few years (Gamsey and Cannon-Brookes, 1993). An emergent high-tech production network was evident by 1985: firms were shown to be sourcing a proportion of their inputs locally.’ Firms engaged in innovative software applications multiplied, with clusters of firms specialising in CAD, geographic information systems (GIS) and image processing. Job mobility and interaction ensured the circulation of know-how among these firms. Cambridge Consultants Ltd, founded in the 1960s by university engineering department staff was a key catalyst, stimulating the spin-out of a cluster of ink jet printing firms with common suppliers. Among these, Domino Printing Sciences was the most successful

of the new Cambridge firms and stimulated ancillary supplier activity in a 30 mile radius. A cluster of technical consultancies, deriving ultimately from Cambridge Consultants Ltd, in turn gave rise to further firm formation. Firms were attracted into the area by the publicity and prestige generated by the expansion and by the amenities of the area. In 1987 St John’s College founded an Innovation Centre providing support services for start up firms and three small! venture capital funds we.re set up 1~ association with the university, with a dozen or so investments by the early 1990s. High-tech enterprise in Cambridge became a showpiece of the Thatcher era, receiving disproportionate media and attention and criticism, fuelled by ideology. This publicity attracted further activity to Cambridge. The movement of financial service and consultancies into the area, and the attraction of other firms, contributed to the job-generating effects of the high-tech phenomenon, which a 1986 report estimated was creating as many jobs outside as within the high-tech sector.8 Table 4 sums up the

Table 2. Differentiating initial conditions late 1960s -Oxford Big-science orientation of both Oxford University and Government labs More central location Manufacturing tradition Established local supplier networks

Table

3. Differentiating

initial conditions late 1960s -Cambridge

Pioneering computing strengths; Atlas computer; access for commercial use Intellectual property at no point claimed by the university, invested in researchers Influence of scientists and science departments in the university Reputable technology-based firms had already spun out from the university

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Elizabeth Garnsey and Helen Lawton Smith

Table 4. Reinforcement of technology-based

activity in Cambridgeshire

1980s

Publicity and media attention Emergent clusters of activity Strength of computing: computer hardware firms; CAD and GIS spin-outs (associated with CAD Centre) R&D consultancies Inkjet printing firms, five spin-outs from Cambridge Consultants Biotech firms (about 25 by 1994) Local supplier networks emerging

Movement of firms and funds into area Business service firms located in Cambridge More technology firms attracted to area from UK and abroad Inward investment from acquisition of local firms Three small venture capital funds set up; local Investors in Industry office

cumulative processes at work in the Cambridge case. Oxford New firm formation was slower in Oxford than in Cambridge with an average of about five firms a year founded between 1970 and 1980. It was not until the mid-1980s that numbers of computer software and R&D based firms began to expand. Nevertheless, by 1987 there were 182 advanced technology firms employing 10, 659 people (Lawton Smith, 1990).9 If the eight government research laboratories are included as representing R&D activity, the total figure high-tech employment was over 18,000. There were also about 50 firms providing software, business services, and electronics goods, whose equivalents were included in the Cambridge data. The extent of high-tech industry in Oxfordshire was seriously underestimated in The Cambridge Phenomenon Report of 1985. In a section entitled ‘Why not Oxford?’ an estimate for Oxford high-tech firms of ‘about 50’ was given (Segal, Quince and Partners, 1985). In fact there were nearly four times that number of firms in the county even by a more restricted definition of high-tech.” Oxford University was an important source of firms, as had been the case in Cambridge. Over 50 firms had already been formed by academics, technicians and graduates. The majority of firms in Oxfordshire were in manufacturing. Some two thirds surveyed were manufacturing based. Oxfordshire firms grew beyond the small size categories in a variety of sectors, some to

beyond the size of any comparable new Cambridge firms. These include Oxford Instruments, Solid State Logic (1969), which produces recording equipment, and Research Machines (1973), the country’s leading manufacturer of computers in the educational sector. Oxford Instruments is a more successful company than any single Cambridge company, and was influential in the development of the local cryogenics industry. It has been a contributor to firm formation both as source of numerous spin-out firms by former employees and through the deliberate policy of segmenting the firm as it grew. Around 20 firms can be traced back to Oxford Instruments, each stimulating further activity (Lawton Smith, 1991). Moreover, the manufacturing tradition of Oxfordshire was maintained by local sourcing. In 1987, over half of the electrical and electronic equipment sample firms subcontracted locally. Some parts of the Oxford Instruments Group have had an active policy of local sourcing of sub-contracting. As in Cambridge, individuals have had an important influence on the local system. Particularly important from the mid-1980s has been the founder of the Oxford Instruments Group, Martin Wood. With his wife, Audrey, Wood set up The Oxford Trust in 1985 as a charitable organisation which would promote high-tech activity in the region. In order to do so the Trust established an incubator centre, promoted a series of measures designed to support entrepreneurship, and set up a schools programme. In spite of these important developments, summarised in Table 5, Oxford did not achieve a reputation as a high-tech centre; new developments were less

Proximity

and complexity

Table 5. Reinforcement of technology-based

in the emergence

of high technology

industry

441

activity in Oxfordshire 1980s

Growth of Oxford Instruments and impact on local economy Spin-outs from Oxford Instruments Spin-outs by Oxford University academics (e.g. Oxford Lasers 1977) Other new firm formation

Growth in biotech/pharmaceuticals sector Development of cryogenics sector Local subcontracting

Formation of The Oxford Trust in 1985 and expansion its activities Involvement of Sir Martin Wood in local economicdevelopment

Movement of firms into the area New firms started by overseas investors Attraction of other UK firms to the county

visible than in Cambridge, and were obscured to some extent in more extensive industrial activity in the wider region. Comparison: mid-l 990s By the mid-1980s, data on high-tech firms were available on size distribution and sectoral distribution of high-tech firms in Oxfordshire and Cambridgeshire (Tables 6 and 7). However, only ‘order of magnitude’ comparisons are possible because of definitional disparities; we have seen that definitions of ‘high-tech activity’ used in Cambridge were less restrictive than that used in Oxfordshire. Oxfordshire had twice the proportion of firms with over a hundred employees as were to be found in the Cambridgeshire sample. Nearly nine tenths of Cambridge firms had under 50 employees, while Table 6. Technology-based

In the mid-1980s the bulk of firms were independent: 75% in Cambridge, compared to 68% in Oxford, while levels of foreign ownership were similar (Table 8). There were structural forces behind these patterns in the form of planning controls; in both places firms from elsewhere were not as a rule permitted to locate within the city boundaries. The relaxation of planning regulations in Cambridge applied to indigenous firms for the most part. Attempts were made

firms by industrial sector, Cambridgeshire Cambridge 1984 study (Segal Quince) (%)

Chemicals Electronics/instruments Other manufacture Services (tech, s\w) R&D Other Total

only about three quarters of Oxfordshire firms were as small as this. The number of Oxfordshire firms engaged in manufacturing was similar to the estimate for manufacturing in the 1984 Cambridge study, (though the 1986 Cambridge study included a larger number of R&D concerns, reducing the proportiorrin manufacturing in this sample).

4 52 11 23 6 4 100 (261 firms)

1984 and 1986, and Oxfordshire 1987

Cambridge 1986 (%)

5

28 4 29 29 4 100 (200 firms)

Oxfordshire 1986 (%)

4 53 11 14* 18 100 (182 firms)

*Software only for Oxford. The 1986 unpublished City Council report on a sample of 200 firms in and near Cambridge held that this sample was representative and that the total population of firms was about 400. Sources: Cambridgeshire: Segal, Quince and Partners (1985); Cambridge City Council, 1986; Oxfordshire: Lawton Smith (1990).

Elizabeth Garnsey and Helen Lawton Smith

442

Table 7. Size distribution of high-tech firms in Cambridge and Oxfordshire 1986 Oxfordshire

Cambridge

420 20-50 7100 51-100 Total

%

Firms

%

Firms

78 11

156 22

61 15

111 28

‘:

8

8

ii

182

:

100

Sources: Cambridge City Council (1986), Lawton Smith (1990) (as for).

to attract foreign and UK firms to outlying parts of the County of ~b~dgeshi~, with limited success. In Oxford, planning permission was only accorded after 1987 to allow existing science-based businesses within the city boundary to expand. Thereafter inward investment into the county took the form of ~-~~tion of ti to a greater extent than in Cambridge, where acquisition of local firms was more common. There were no developments near Cambridge comparable to the presence of technology-based international firms in Reading, which may have obscured in~geno~ high-tech enterprise in Oxford&ire. In Oxfordshire, firms were dispersed around the county to a greater extent than in Cambridgeshire partly because the strategy of diverting industrial activity to the four country towns of Banbury, Bicester, Didcot and Witney. These restrictions limited locational choices, reduced the possibilities of informal interaction arising from proximity, and prevented the formation of a high-tech image and sense of identity among Oxford firms. However the policy achieved the very dispersal effect sought unsuccessfully by Cambridge&ire planners.

Comparlngsecondarydata By the mid-1990s data on high-tech firms was gathered and classified by SIC code by both counties’

councils. However, the classification poses further problems. The SIC codes are sectoral and individual firms within the designated codes are not invariably engaged in R&D work. The Cambridgeshire County Council Research Group’s (CCRG, 1994) database includes high-tech, new tech and ancillary specialist firms, a ~pulation of technology-related firms more extensive than that included in the Butchart (1987) classification developed for the Department of Trade and Industry in 1987. Their database sets the total of firms of this kind in Cambridgeshire at over 1P.E (and of employment at around 30,000) for the county as a whole in 1996, an increase of about a third over figures for numbers of firms in Cambridgeshire using the Butchart definition cited in Table 9. On the other hand the Butchart devotion excludes firms as well as extending the number of eligible firms, as seen with reference to telecommunications 8rms. British Telecom alone employs about 700 in Cambridge and a similar number in Oxfordshire, but these are largely in routine servicing jobs, for which reason the sector was excluded from the Butchart definition. Technical consultancy is also excluded by the Butchart definition. In Cambridge this is an important cluster with over 1200 employees in four i~uenti~ firms which are a major source of further spin-out activity and technology transfer.

Table 8. Ownership of high-technology firms in Cambridge and Oxford Cambridge 1984 Independent UK branch UK subsidiary Foreign subsidiary (No. of companies in sample =261)

Percentage

Oxfordshire 1985

Percentage

75 2 11 12 100

Independent UK branch/subsid.

68 21 -

Foreign subsidiary (No. of companies in sampie ~182)

Sources: Segal, Quince and Partners (1985) and Lawton Smith (1990).

1;

Proximity and complexity in the emergence of high technology industry

443

Table 9. Sectoral profiles of high-tech industry* in Oxfordshire and Cambridgeshire Sector

Oxfordshire Firms/organisations

Chemicals/biotech Data processing machinery Electronic engineering Instrument engineering Computer services Research and development Totals

Cambridgeshire Employees

38 37 101 85 207 75 543

1209 914 3387 3198 2349 8408 19,465

Firms/organisations 18 1:: 114 300 108 736

Employees 810 2137 4039 2492 4629 7522t 20,792

*Butchart SIC codes. tThe Cambridgeshire database includes a few university departments which we have omitted. We include research institutes in Cambridgeshire which are the equivalent of the government laboratories in Oxfordshire included in this category. We are interested in R&D as a whole not just commercial R&D.In 1996 employment in these institutes was: The Brabraham Institute (animal physiology) 386; The British Antartic Survey 297; Abington Welding Institute 415; Wellcome Cancer Research 135; Greenwich Observatory 114; and a number of smaller institutes such as the Scott Polar 40, and the European Bio-informatics 50. Sources: Oxfordshire and Cambridgeshire County Councils (1995).

Other definitional difficulties arise over whether to classify activity as ‘biotechnology’ or ‘research and development’ for firms at a pre-production stage. This gives rise to inconsistencies in the sectoral allocation of firms. By the county data categories it appears as though Oxford&ire has twice as many chemicals/biotechnology firms as does Cambridgeshire, with a third more employees, but there may be inconsistencies in the way firms are assigned to R&D and biotechnology categories when many biotech firms are not yet engaged in production. More detailed evidence on biotechnology, as distinct from established chemical industry, is required for a direct comparison. The relative size of the R&D sector should also be taken into account in this comparison. In a rapidly changing technical environment, new high-tech activities continually arise.‘l There are another 3000 employed in telecoms in Cambridgeshire, many of these in very new applications of technology, but a negligible number in Oxford&ire. Cambridgeshire rather than Oxfordshire firms took advantage of telecoms deregulation in the 1980s which allowed more entrants into the industry. In line with the prominence of computing at Cambridge University, computer hardware and software activities are more in evidence in Cambridgeshire; the hardware sector is twice as large as in Oxfordshire and there are more software firms in Cambridgeshire (some in computer services, excluded in the Oxfordshire database.) There are more research and development units in Cambridgeshire, but

employment is greater in this sector in Oxfordshire, again because average firm/organisation size is larger (112:70 respectively). Overall, average size of technology based organisations in 1996 was 36 employees in Oxfordshire and 28 employees in Cambridge&ire. In chemicals/biotech, data processing machinery and computer services 8rms were larger on average in Cambridge than in Oxfordshire. Oxfordshire’s engineering firms were bigger than those in Cambridgeshire. By this classification, which is not without its distortions as we have seen, there were two hundred more high-tech firms and about 2250 more high-tech employees in Cambridge&ire than Oxfordshire.. important point to note for the future composition of high-tech industry and R&D activity in general is the changing size, status and orientation of the government laboratories in Oxfordshire. For example, the UKAEA has been split into two: UKAEA (government) and AEA Technology (private sector). Employment has fallen drastically, halved at the Harwell Laboratory over the last decade to around 2500 (Lawton Smith, 1997). An

Unit growth and system growth Despite data limitations, we are in a position to make a rough comparison of the pattern of growth of innovative industrial activity in the two places. A high-tech milieu grows as the result of the expansion of its constituent elements, the high-tech firms. As a result of their expansion, the milieu may be

444

Elizabeth Garnsey and Helen Lawton Smith

able to provide a favourable environment for further business development because of interactive effects, including the attraction of funding and business services to the area. The constituent firms may expand in four ways: 1. through multiplication of new start ups; 2. through attraction of enterprises from outside the area; 3. through incremental growth of existing enterprises; 4. through the rapid expansion of emerging leadfirms. All four forms of growth are in evidence in both places. However in Cambridge, expansion has been mainly through multiplication and incremental growth of local enterprises. Rapid expansion of new firms taking a lead in their sector is not in evidence in the Cambridge area, with a few exceptions.‘* There has been less attraction of technology-based firms to the area than has occurred in Oxfordshire, especially as regards manufacturing firms, though this may be changing. There has also been growth by multiplication in the Oxford area, but there the new leading firm effect is more in evidence, with Oxford Instruments exerting a major influence on the local scene. Nevertheless, in the 1990s the divergence between the two areas was less marked and in some respects developments began to converge as a cumulation of prior factors set new forces in motion. In Cambridgeshire, the multiplication of new start-up firms was the feature of the 1980s.i3 However, the nationwide recession that set in from 1989 levelled off the number and growth of high-tech firms during the worst period of the slump. Its main impact was on formerly leading firms, the larger, long established technology based companies. These lost 2000 jobs between 1988 and 1992. Start-ups soon picked up again and by 1993, the numbers of technologybased firms in the county council data base had multiplied to 1000. As is the case nationally for all firms, most Cambridge technology-based flrrns were small; data for 1993 show 88% of firms with under 50 employees and only 25 firms in total with over 200 employees, these including the older technology-based firms in the area, now mainly foreign owned. But a consolidation of existing firms was in evidence, and there has been incremental growth among many of

them (Gonzalez-Benito et al., 1997). The rate of new start ups was slowing, reaching a maximum in 1993. If the county data are to be relied on, numbers of ‘high-tech’ firms in the CambsTEC area had by 1996 dropped somewhat below the 1992 level as a result of closures and moves which outnumbered start-ups. Fewer start-up firms from the university have been signalled in recent years by inquiries within departments and approaches to the St John’s Innovation Centre. But the expansion in the proportion of firms in size group 40-120 employees in the CambsTEC area between 1992 and 1996 and corresponding employment expansion may signal a new phase of development in Cambridgeshire. The Oxford database does not allow of a comparable analysis. However, it is clear that growth through start-ups and incremental growth continued through 1980s into the 1990s. The Oxford Science Park quickly established itself. By 1997 there were 35 companies on site, including a number of biotech firms and the European research laboratory of the Japanese electronics firm, Sharp. In-migration of subsidiaries and establishment of new firms by inward investors continued in research based activities in Oxfordshire. New arrivals included the research laboratories of the Japanese pharmaceutical firm Yamanouchi, and the US chemicals firm, Dow Elanco. There was also growth of the leading firm: The Oxford Instruments Group continued to expand. By 1994 its associate companies and the joint venture with Siemens employed 950 in the UK, mainly in Oxfordshire, and 450 overseas. In the motor racing sector, six companies in Oxfordshire firms have created 1300 jobs directly, plus 3000 indirectly in supplier firms in the county. This sector has so far not become integrated into the Oxford high-tech industrial milieu (Willis et al., 1996; Henry et al., 1996). Had high-tech in Cambridge continued to grow through all four processes at the rate exhibited in the 198Os, the size of this phenomenon would be very much greater than that of Oxfordshire. But the slow-down in the rate of expansion occurred while high-tech industry in Oxfordshire was growing by multiplication, by attraction and by growth of individual firms. By the mid 199Os, the difference in employment in high-tech sectors according to the 1987 Butchart classification was no more than a few thousand.

Proximity and complexity in the emergence of high technology industry The maturing milieux Clusters of firms are now in evidence in both places. Both locations have become focal points for the rapidly growing UK biotech sector; this occurred earlier in Cambridge than in Oxford. Oxfordshire now has some 40 firms and organisations employing 2000 people in the life sciences sector, on average these are larger than their Cambridge equivalents (Mihell et al., 1996). By the mid1980s in Oxfordshire, some 37 firms produced medical equipment, medical software, or other diagnostic and testing services. In this sector, the most obvious impact of Oxford University can be found. I4 A number of entrepreneurial firms have spun out from Oxford University supported by investment funds in return for equity held by the university. The most successful is the Oxford Molecular Group, formed in 1989 and floated on the stock market in 1994. In April 1997 the value of Oxford University’s share was estimated to be nearly &16 million. The University also owns a 10% share of Oxford Asymmetry, founded in 1991, which makes chemical compounds that pharmaceuticals companies need to develop new drugs. The University’s stake was expected to be worth at least .L5million when the firm floats on the stock market in 1998. It also owns an 8% share in Oxford Biosciences and a 16% share in Oxford Biomedica (The Observer, 1997). These developments, potentially lucrative for the University, have attracted increasing media interest. In addition to the growth of the biotechnology sector, in Cambridge a cluster of innovative telecommunications firms emerged in the 1990s. The telecommunications cluster united a variety of firms in IT, computing and communications technologies, which came to forge a common identity and effort at marketing their collective strengths. In both biotechnology and telecommunications, firms have been founded as ‘strategic start-ups’ in alliance with corporate partners, involving elaborate networking by experienced entrepreneurs with extensive contacts in the corporate world. In June 1997 it was announced that 250 million was to be invested by Microsoft in an advanced research centre in Cambridge, followed by funding from the personal fortune of Bill Gates to rehouse the Computer Science department in a new building adjoining his new research centre. Microsoft had been preceded by

445

Xerox, Hitachi, Toshiba, Olivetti and Oracle, among other firms locating research facilities in Cambridge in close collaboration with university departments.

Growth problems The reason why the Cambridge Phenomenon firms have ‘failed to grow’ is often raised. In fact the size distribution of these firms reflects the national size distribution of firms in the UK. The absence of significant growth in individual firms can be attributed to a cycle of managerial inexperience, low growth aspirations affected by funding provision, with consequences for performance which affect high-tech enterprise generally in Europe. The shortage of technical and management expertise may be the single most important obstacle facing Cambridge, like other UK high-tech firms. The emergence of experienced entrepreneurs now starting a second generation of firms in Cambridge may prove to be of significance. In Cambridge but not in Oxford, there has been a decline in the proportion of manufacturing firms from about two thirds of the total of high-tech firms in 1984 to about a third in 1996. This may be why average high tech firm size was larger in instrument engineering in Oxfordshire (38 employees) than Cambridgeshire (22 employees) and in electronic engineering (3430 respectively). Young manufacturing firms are generally character&d by larger average employee size than young service firms. The presence of government laboratories in the physical sciences in Oxfordshire came to provide some local entrepreneurs with facilities of considerable value through collaborative arrangements, e.g. to semiconductor firms like Bookham. Such facilities are not available to semiconductor firms in Cambridgeshire, who have tended to follow a licensing strategy. Meanwhile steady expansion continued in Oxford, sustained by local resources and fuelled by a number of new high-tech manufacturing companies larger in size than any new companies in Cambridgeshire, and by inward investment. The County of Oxfordshire has adopted an explicit planning policy based on knowledge-intensive, high valueadded activity. Inward investment of R&D intensive firms, such as research laboratories, rather than

Elizabeth Garnsey and Helen Lawton Smith

446

manufacturing ported.15

firms and warehousing

is sup-

Further competition for skilled labour and for local housing from external firms may have negative consequences on indigenous activity in both centres unless countervailing measures are taken, e.g. dispersal of industry to surrounding small towns, improvements in transport and initiatives on training. There are already signs of ill effects of congestion, skill shortages, high house prices and pressure on amenities in both areas on business conditions in the area.

Inter-firm linkages The recent CBR comparative study of 100 firms showed a much higher incidence of inter-firm linkages in Cambridgeshire than in Oxfordshire (Lawson et al., 1997). This study found that just over three-quarters of the 50 firms in Cambridgeshire claimed to have close links with other local firms, compared with slightly less than half of the li,rms in Oxfordshire. The most frequent inter-firm linkages were to be found in the manufacturing sector in Cambridgeshire, where 80% (17) of surveyed firms had links with other firms, while the least frequent linkages are among firms in the service sector in Oxfordshire were 39% (9) had close inter&m links. Research collaboration between organisations in this sample was higher among Oxfordshire firms (39%) compared with the Cambridgeshire sample (11%) (Lawson et al., 1997).i6 Limited growth of individual firms has au impact on the rate of emergence of inter-firm production networks, since focal firms play an important role in such networks(Miles and Snow, 1986). Case study work on the Cambridgeshire inkjet printing firms confirmed that a single large firm, such as Domino Printing Sciences, can generate considerable ancillary activity around itself and spin out its own competition (Gamsey and Alford, 1996). The deficit of larger firms capable of generating local supplier activity is likely to reduce clustering effects. The establishment of a critical mass of firms engaged in similar activities promotes the density of interactions associated with productive linkages. Case study evidence suggests that Cambridgeshire biotech firms had their major linkages with large pharmaceutical corporations outside the area and obtained many of their supplies from overseas.

Unlverslty policy In the 1990s Cambridge University identified with and took pride in its relation to local high-tech industry. A 1990 university report on relations with industry stated: The university has for many years adopted a nonbureaucratic stance towards the exploitation by staff of inventions, software and other revenue-producing ideas. This policy has been considered to be the major factor in the development of the Cambridge Phenomenon and has also been of considerable advantage to the University. Encouragement to academic staff to pursue their own ideas and to develop the results of their research has been a key factor in the success of the Cambridge Science Park run by Trinity College and more recently the Innovation Centre run by St Johns College. It is not intended to change this policy in any major was, since the incentive that it provides for members of staff has been found to produce substantial returns to the University. (University of Cambridge, 1996)

But high-tech developments were not viewed in the same light among influential circles in Oxford University. It was not until the late 1980s that Oxford University adopted an active position in exploiting its technology. A full time industrial liaison officer was appointed for the first time in 1989. A year earlier, the University established ISIS Innovation as a wholly owned company of the University of Oxford. ISIS Innovation’s main activities are handling downstream IP and dealing with patents and licenses, and managing the Oxford Innovation Society. This was formed so that members, (mainly multinational companies) can have a window on Oxford technology. By the early 1990s Oxford University recognised that there have been problems with its internal procedures. In 1994, a committee was set up to conduct a ‘Review of Technology Transfer Arrangements’. This was critical of the lack of co-ordination of industrial liaison activities. In the Cambridge case, technology transfer from the University to local firms has been encouraged by Trinity College’s Cambridge Science Park, St John’s Innovation Centre, and the University’s own Industrial Liaison and Technology Transfer Office, originally set up in 1970. This exists to help academics commercialise their research, and operates CUTS, the University’s technology exploitation company. A further difference is the position adopted on intellectual property. Unlike Cambridge University, Oxford University has enacted a policy of claiming

Proximity and complexity in the emergence of high technology industry ownership of IPR generated by its staff and students in the course of or incidental to their studies. This replaced the previous Statute under which the University ‘asserts its ownership of them’. The new statute became effective in July 1996 (University of Oxford, 1996). In contrast, Cambridge University invests title to intellectual property in the originator, though much research is funded under arrangements with intellectual property implications, e.g. through industrial contracts. The ethos of the Cambridge University technology transfer company has been somewhat different in the light of the potential for staff to take alternative routes to exploiting their IP. Cambridge University, like Oxford, has invested in local high-tech companies and participates in a number of small, closely monitored seed capital funds, in collaboration with other investors. Cambridge University has played a more central role in providing a range of innovation support activities. Oxford University has been more concerned with ensuring specific returns from intellectual property from investment in science than in promoting wider technology transfer processes.

Conclusion; prediction and action We set out to explore the emergence and growth of two local industrial complexes with a view to understanding similarities and differences in their experience. Starting from not dissimilar initial conditions, our two cases appear to be converging once more as centres of high-tech industry, but by different routes, with persisting differences and unpredictable futures. It would have been hard to predict at the outset which of the two would be the more successful centre of high-tech enterprise. Initial conditions were similar, but minor differences were reinforced by feedback effects, in path dependent mode. Oxford initially had the greater resource base for high-tech industrial development, but the prevailing university culture was one of hostility or indifference to high-tech enterprise. A countervailing influence was provided by the founders of Oxford Instruments. Their initiatives built up reinforcement effects, feeding back through spin-outs, ancillary activity and the foundation of the Oxford Trust and Innovation Centre. The success of Oxford Instruments was itself the result not only of strategic vision but the cumulation of small events. The

447

provision of small private funds, for example, enabled the company to recover in the early 1970s from a serious growth reversal crisis of the kind that has overwhelmed many new firms. Oxford Instruments is not a lone influence. The relative performance of the Oxfordshire high-tech manufacturing sector has had steady cumulative effects. The bigger manufacturing firms have a greater capacity than small service firms for generating ancillary activity around them and for job creation. These developments have enabled Oxford to rival Cambridge as a centre of high-tech activity. The wider implications of developments in both places continue to be neglected, however. Resources allocated to science at the national level have not been matched by local resources required to support new industry. Moreover, the industrial developments we have described and which favour male professionals, have been highly uneven in their employment effects and have increased the polarisation of the labour market. It still remains to address problems of inequality, which, together with the ethical implications of military and biotechnical activity, have not yet been widely debated locally. Nor have solutions been proposed to the environmental problems to which any high-tech boom would give rise. Civic enterprise, pioneered by the Oxford Trust, and encompassing the Oxfordshire BiotechNet, is well established. There are a number of university and business discussion groups in Cambridge, designed to bring together people from various parts of the community to address current issues. These activities are building up in intensity. It remains to be seen whether focused task forces, like those of the Joint Venture Silicon Volley initiative, take form and come to propose and press through solutions at the level of the region. This again depends on individual initiative and collective effort. The Cambridge example reveals the scope for the unexpected. Despite the absence of a favourable industrial structure, individual initiatives and liberal approach of the university led earlier to the expansion of high-technology enterprise. The role of Cambridge as a centre of computer hardware and software continues to have strong knock-on effects. Publicity about the ‘Cambridge Phenomenon’ has been among the most important initiatives attracting further business to the area. In Oxford, in contrast, high-tech enterprise connected with the university has gone largely unrecognised, obscured

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Elizabeth Garnsey and Helen Lawton Smith

wider regional activity, and it is only recently that the biotechnology sector has received media attention.

by

Complexity thinking has helped clarify the reasons for this unpredictability, which lie in the interplay of structural determinants, chance events and individual initiatives. In contrast to much of economics, which excludes individuals from its analysis (e.g. Nelson, 1995, p. 86), systems thinking can assign significance to individuals. The history of technology and of business reveals time and again the key role played by specific individuals whose action brings into being, sustains and renews a complex system of activity which might have been otherwise without their small but critical moves. The approach avoids reductionism by stressing the way collective influences come into play at the different levels of aggregation. A rationale for an explanatory approach which assigns agency to specific individuals instead of subsuming them within determining structures is provided by a leading exponent of complexity thinking. Drawing on his work with Prigogine, Peter Allen points out that underlying our stylised representations of the world: “... is the richer, more difficult, microsocopic reality of diversity and individual subjectivity, which in fact provides the basis for the adaptive responses of the system and its creativity.... moments of instability and structural change in a system are precisely when the macroscopic average description breaks down..“. Theory must encompass -... the individuals and local events within the system who, cumulatively and at critical points are... the source of diversity and change”. (Allen, 1998, Introduction. p. 2.) Cambridge, a variety of individuals played a part in promoting pioneering science-based industry. These came from a wide circle: entrepreneurs, scientists, former scientists, bankers and publicists. In Oxford, significant individual initiative came above all from scientific entrepreneurs. In both places, successful entrepreneurs are now investing in other local ventures with good prospects; if they do well enough these indigenous venture capitalists may alter the conservative climate of investment. The Cambridge Phenomenon is often viewed as a triumph of individual enterprise, since it was neither planned nor controlled. But, as in Oxford, high-tech development would never have occurred without the influence of the national system of innovation, in particular public investment in scientific research and teaching. In

These examples show that high-tech industry can emerge through processes akin to co-evolution and spontaneous order in ecological succession, processes that harness individual enterprise and the social relations of proximity. Such developments can run into collective constraints through resource shortage, congestion and reversal. Self organisation and spontaneous order operate within bounds. Knowledge-based developments of this kind call for a resource pool that can only be achieved by public investment in science and technology; moreover collective purpose may be required where spontaneous synchrony breaks down. Complex systems can outrun the capacity for spontaneous order, slide into stagnation or overheat. There is a need for coordination and integration by members the university and the civic and business communities working together if their new industrial ecology is to be sustainable.17

Notes 1. We use the popular term ‘high-tech,’ for ease of use, to refer mainly to R&D intensive firms in electronics, instrumentation, computing, telecommunications, biotechnology, new materials and R&D (see also Butchart, 1987). 2. The concept of path dependence gained currency from the diffusion of work on the development of technologies (Arthur, 1989). 3. Selection of the ‘initial conditions’ of a development process depends both on the objectives of the analysis and the phenomena in question. Geographical endowments provide a way of defining the starting point for a comparison of local developmental paths. 4. In both Oxford and Cambridge the colleges are privately endowed autonomous institutions which provide accommodation and teaching to groups of about 300 students from all faculties, and are administered by their fellows. Most college fellows also hold salaried posts in a university department, funded by the national Higher Education Funding Council, on a joint basis with the college in Oxford; in Cambridge college academic fellowships are not salaried for university employees. 5. Currently Oxford has an arts:science ratio of 1.4:1 as against 1:l in Cambridge. This reflects a long standing contrast of emphasis in the two places. 6. UKAEA Harwell (4200), UKAEA Culham (800), National Radiological Protection Board (300), Medical Research Council Microbiology Unit (145), Joint European Torus (6CKl), Rutherford Appleton

Proximity Laboratory (1600),

and complexity

in the eme rrgence of high technology industry

Institute of Virology (6), Insti-

449

together with the intended and unintended consequences of policy on the local milieu require a more

tute of Hydrology (150). 7. A 1986 study showed that a third of a sample of 200

sustained analysis.

high-tech firms were obtaining a third of their inputs locally (Cambridge

City Council,

1986); 90%

of

clerical staff and 87% of manual staff were recruited

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