3. Why do we need an innovation district?

Several countries with strong knowledge communities are now following the same active and conscious strategy to strengthen innovation capability and attract knowledge-intensive business and industry. They develop compact geographical districts where they facilitate the location of large and small enterprises, entrepreneurial ecosystems and investor milieus, collaborating closely with universities, hospitals and strong research institutes. These districts are characterized by short distances, many common meeting places, and easy access to the knowledge and the funding that is needed. Also, the districts provide a large selection of potential knowledge-intensive jobs.

These places are named “innovation districts”. Firms and institutions located there create new solutions, technologies and services at a much higher rate than elsewhere. They become engines for economic and social development, both nationally and internationally. The list of such districts is beginning to get long. Our overview in this chapter is just a small selection.

SHORT DISTANCES INCREASE LEARNING

What makes these districts innovative? Research points to some clear drivers. First: Shorter distances between actors help increase the exchange of knowledge. Studies of patenting among enterprises and researchers, for instance, show that the shorter the geographical distance to those who have developed other related patents and studies, the more frequently these are cited. If you reduce the physical distance between patentors by 10 percent, the probability that they cite each other increases by 4 percent. In other words, distance has a strong impact on learning.

MATCHING AND SHARING

Secondly, empirical research shows that workers and employers are more easily matched when they are located close to each other (Petrongolo and Pissaridis 2001).

Thirdly, empirical analyses show that when many organizations are gathered in one place, costs for access to shared infrastructure (such as transport solutions, meeting places and learning arenas) drops. Duranton and Puga (2004) show that when sharing, matching and learning get to work together, increased productivity and innovation are created through co-location

FROM BUSINESS PARK TO INNOVATION DISTRICT

Co-location may happen on many levels in the economy. You have the small business parks offering advanced office spaces. One level up you find innovation buildings that have been designed for innovative companies with a need for equipment, specialized premises and interaction with suppliers and customers in the same building. Moreover, in industrial parks and innovation centres, a larger number of businesses are co-located in the same area and benefit from the three features we have pointed out above. Good examples are Mo Industrial Park in Mo i Rana, Herøya Industrial Park in Grenland, Oslo Cancer Cluster at Radiumhospitalet, the innovation centre at Kjeller and Oslo Science Park in Oslo.

Innovation districts are larger geographic urban areas that are developed multifunctionally. They contain a larger critical mass of knowledge and business actors. They connect people and actors both physically, socially and digitally. An innovation district is far more than just the co-location of different functions. Knowledge institutions and the business community are woven together with the city’s infrastructure and services, public agencies and residential areas, in a way that stimulates the innovation ecosystem and enables growth and development. The district becomes an integrated part of the city, ensuring short distances and attractive meeting places where all stakeholder groups can benefit from common resources through learning, matching and sharing. Researchers Katz and Wagner (2014) document how such innovation districts in the United States amplify the ability to innovate and create a basis for high growth. Among other places, they point to Kendall Square in Cambridge (Boston), which has close ties to MIT, and University City of Philadelphia where UPenn is the district’s anchor institution.

THE PENTAHELIX-MODEL

There exists no ready-made recipe for the development of successful innovation districts. It is important to take local factors into account. But that being said, it is clear that some basic elements need to be in place. Five types of actors should have a strong presence in the district for the innovation ecosystem to function optimally:

Universities and research institutes, established companies, founders and entrepreneurs, authorities, and competent capital. When these five types of actors meet and interact effectively, a so-called ”helix” occurs – a positive interaction which increases innovativeness and lays the foundation for new products, services and solutions for societal challenges. Strong innovation districts also become engines for innovation and societal development in the rest of the country. Close ties to the business community and knowledge environments in other parts of the country and beyond national borders are developed. This way, the innovation district becomes a connecting link between knowledge resources elsewhere.

DOCUMENTED SUCCESS FACTORS

On behalf of the EU, Rissola and Haberleithner (2020) have recently summarized the experiences from five different innovation districts in Europe and the United States. There are some clear commonalities that they believe support the successful establishment of such districts:

• The establishment of the district must be clearly anchored in local, regional and national goals and strategies. Without this, it quickly becomes difficult to pull in the same direction.

• An innovation district does not become a success without easy access to talent. Therefore, the district’s innovation activity should be founded on strong expert communities, both in knowledge institutions and in companies. Access to good students as candidates for both research, entrepreneurship and established businesses is absolutely crucial.

• Access to common infrastructure is decisive for a well-functioning interaction between the five types of actors. Attractive meeting places, open testing facilities and laboratories, good conference premises and areas for mixing and mingling are important instruments for the ecosystem to function. The innovation district must direct most of its focus towards the international arenas. The smaller the country, the more important this is. Hence, it is important to establish attractive conditions for visits and for the establishment of foreign companies and international researchers.

• There should be one main actor taking a clear and coordinating role in the development of the district. A successful innovation district depends on well-organized interaction between the players in the area over time.

SELECTED INNOVATION DISTRICTS WITH A LOT TO SHOW: