Mapping innovation in the UK

Innovation is responsible for about two-thirds of private-sector productivity growth in the UK. But this involves much more than R&D. Since the early-2000s, firms have been focusing their innovation investment in intangible assets, such as organisational improvement and staff training. Nesta, which supports innovation in the UK, says its research shows innovation drives growth


High-growth firms can be found in every part of the UK. Like the general business population, they are particularly abundant in the South East and London (2,445 high-growth businesses between 2007 and 2010). Nesta uses the OECD definition of high-growth firms, which defines them as having ten or more employees and that experience employment growth averaging 20 per cent or more per year over a three-year period.


UK high-growth firms can arise in all sectors and locations, such as business services in Birmingham or computing in Reading. More than 40 per cent of high-growth firms are located outside cities, in towns or more rural areas, a figure which is relatively stable over time.


New companies are not the only ones that grow rapidly. Folding bicycle manufacturer Brompton is an example of one such high-growth firm. Based in Brentford, west London, they have been making their world-famous folding bikes for more than 30 years and sell in 42 export markets.


Imagination Technologies is a high-growth firm with offices in Hertfordshire, Chepstow and Leeds. They design graphics, video and communications processors for smartphones, tablets and TVs, as well as other devices. They are one of the top-three design IP companies in the world.


Industrial clusters, where many firms in the same specific sector co-locate, are also important for economic growth. Prominent clusters include East London for internet companies, Cambridge and Dundee for life sciences and Bristol for semiconductors.


A sector where the UK has seen significant growth in recent years is the creative industries. Nesta’s research shows that, while London dominates the landscape, there are other important creative hotspots beyond the capital in cities like Manchester, Brighton and Hove, Cambridge, Edinburgh, and Bristol, to name a few.


One important source of innovation and employment for all regions of the UK is foreign direct investment, such as the Spanish wind turbine manufacturer Gamesa’s new R&D centre in Glasgow. Nesta research shows that foreign firms now employ one in five UK private-sector employees and help their UK suppliers to become more innovative.


Innovation is as necessary in the public sector as in the private sector. For example, Time Banking Wales aims to transform the relationship between citizen and state by working to deepen the roots of reciprocity in Wales and exchanging units of time, not currency.