In 1985 SQW’s Cambridge Phenomenon book charted the emergence of a group of some 350 high-tech firms in and around the university city of Cambridge. It traced the origins of many firms, through both direct and indirect routes, back to the University and the local research community. The originators and factors driving growth were analysed and the vital roles played by a small number of key individuals were described.
SQW has recently returned to explore how the Cambridge hi-tech cluster has changed since 1985. The resulting findings have been published in a new book Cambridge Phenomenon Revisited.
A Dynamic Cluster
Over the past fifteen years the growth being seen in the mid-1980s has been sustained and, in a number of ways, strengthened:
- By 1998 there were 1,350 high-tech firms employing some 32,500 people in the area.
- Key sector strengths, most notably in software, have evolved further and formed the basis for both specialist research teams of industry leaders, such as Microsoft, and highly rated firms with Cambridge HQs.
- New activities have come to the fore – most obviously in biotechnology, where there are embedded laboratories of major pharmaceutical companies alongside University departments, the major Genome research project at Hinxton, specialist incubators and science parks, and a significant group of go-ahead independent companies.
- Cambridge University has further enhanced its position as the UK’s leading university for both teaching and research and actively sought to engage with front-ranking science based companies.
- The process of new firm spin-outs continues to be a feature of the Cambridge scene, with founders coming from both existing high-tech firms and the research community. There are signs of higher growth ambitions and well-resourced team starts that can get to market quickly.
- Technology consultancies, a distinctive element of the cluster, have continued to prosper and are evolving into more rounded technology houses. They are a major source of spin-outs and are now active in the seed and venture capital business.
- Finance and professional services have greatly increased their scale and focused on the needs of high-tech businesses. All the big five accoutants/consultancies have significant offices in the city, legal specialists on intellectual property rights and related issues operate from Cambridge and there is an active, locally based, investor community.
- Specialist property provision has improved, with greater involvement from development companies and a broader geographical spread of projects.
Cambridge Phenomenon Revisited
The Cambridge high-tech cluster has seen many exciting changes over the last 15 years. Cambridge Phenomenon Revisited tracks these in two parts.
Part One provides an analytical overview. It outlines the changes that have occurred over the past fifteen years in headline terms – where the 20,000 new high-tech jobs are located and in what kind of firms. Changes in the University and related research institutes are then illustrated within the context of major changes in the UK higher education system. Firms are then considered in four separate chapters dealing with:
- start-ups and spin-outs;
- the area’s major and long established high-tech firms (which continue to play an important part in underpinning roles for the cluster);
- firms that have moved into the region, attracted by its reputation, research strengths and specialist labour supply;
- lastly, highlights of the area’s economic success in terms of the four key sectors (software, telecoms, biotechnology and technology consultancy) and leading firms within them.
The final two chapters of Part One explore what may be identified as the ingredients of the area’s success – considered from the perspective of a business cluster – and then what needs to be done to ensure that success is sustained into the future.
Part Two looks in greater depth at a number of particularly interesting aspects of the Cambridge high-tech cluster.
Detailed analyses are made of two contrasting sectors: biotechnology and instrumentation. The former has emerged as one of the new strengths of the area and exhibits many of the attributes of a competitive cluster. Instrumentation, by contrast, was one of the earliest foundations of high-tech business in Cambridge, but has gone through a difficult period and over the past fifteen years has recorded the weakest sectoral performance.
Two further chapters probe aspects of the area’s business dynamic. First, there is a comparative analysis of entrepreneurship as measured by attitudes of University students. Second, the start-up phenomenon is explored through an econometric analysis that seeks to unravel what factors can be said to cause success in new-start firms.
There are then three chapters that consider the vital framework factors for the development of the high-tech cluster:
- Land and property provision, including the specialist science parks and innovation centres that have been developed to meet the needs of high-tech firms. The planning of future development is a hot topic in the Cambridge area where the challenge is to provide for rapid development in sustainable ways that maintain quality of life.
- The specialist labour market. People are the key ingredient for knowledge-based businesses and this chapter, drawing on surveys of the workers in a number of leading firms, tracks how the local labour market works and could be helped to work better.
- Advanced business services – a catch-all title that includes the accountants, lawyers, consultants and financiers. As well as contributing functional expertise, these actors play a vital role in networking and they have become substantial employers in their own right – exporting expertise developed for and honed on Cambridge clients to other firms throughout the UK.