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

Our new paper explores the clusters of European regions according to their role in knowledge exchange networks (Horizon 2020). In the paper, co-authored by Rodrigo Viseu Cardoso, Constance Uyttebrouck and myself, we identify five regional ‘flow profiles’ and shed light on the drivers and barriers to becoming a high-performing knowledge region from the perspective of engagement in European knowledge flows (interregional knowledge flow superstar regions are indicated in orange on the map, cluster 5, while on the other end of the spectrum, the struggling regions in this domain are indicated in red, cluster 1). On that basis, we highlight some key lessons for regional innovation policy. The paper is based on research conducted as part of the ESPON Programme IRiE project. Full paper available in Open Access format here: https://lnkd.in/dkpfS9rQ #InterregionalFlows #ESPON #innovation #Horizon2020 #RegionalInnovationSystem #RegionalInnovationStrategies

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