05Anchoring relationships through large firms

Case study 7: Nokia and Helsinki University of Technology, Otaniemi

Helsinki University capitalised on their place specific relationship with a major company (Nokia) to lever in investment for a new research lab. The investment shows Nokia’s close links to the city, and in investing in supply chains of local high-growth firms resulting in the benefits of a Regional Innovation Ecosystem.45

Cities must balance the benefits for their universities and growing businesses between capitalising on a region’s relationships with a business and tying their funding and reputation to a single firm.

In an attempt to increase the diversification and scope of their research, Nokia worked with the city of Helsinki to invest in a research lab on the Otaniemi campus of Helsinki University of Technology. The company built on over a decade of research partnerships with the University of Helsinki to deliver this developmental research collaboration. There has also been a history of significant public funding for the firm and Research Centre from the Helsinki region as an investor.46

This long-term association and deep relationship of place brings the University not only the benefits of up-front investment from a major firm but favourable links between research and business interests. The University’s benefits stretch beyond the private funding and applied research opportunities to recruitment – as both research oriented staff and students were attracted by cutting edge technologies linked to a large company.47 However in tying the funding and reputation of the university to a single firm there are risks.

Cities with links to a single firm should support further collaborations with other businesses to reduce potential risks.

After its successes in earlier stage mobile phone technologies Nokia has struggled to compete in the smart phone market.48 By tying reputation and research funding to Nokia, the University of Helsinki exposed itself to some risk to its funding and reputation. In the case of Helsinki, the city and Otaniemi campus made efforts to integrate other partners into the area (including Phillips InnovHub and Tieto) which has mitigated against some of the effects on applied research goals and threats to long-term funding.

The area now has a significant comparative advantage in being a recognised regional innovation centre, reflected in the value of the Otaniemi campus (50 per cent of the Helsinki Stock Exchange turnover in 2011). However this brings further risks of a specialised economy, and the city must balance being reliant on a single industry and supporting a regional strength.

Case study 8: AMRC and WMG Anchor Partners, building on industry links and comparative advantages

Cities must embed supply chain links for smaller firms and reduce the barriers to collaboration to ensure they benefit from links between large businesses and universities.

he Warwick Manufacturing Group (WMG) capitalises on the region’s strength in the automobile industry through investment from automotive industry partners. The Advanced Manufacturing Research Centre in Sheffield is a long established partnership with the University of Sheffield (since 2001) which builds on historical local industry strengths with funding and research investment from industry partners.

Both the WMG (Jaguar Land Rover) and the AMRC (Boeing) use large ‘anchor’ firms to draw research investment into their city economies to work with local firms to embed supply chain innovation benefits. In both cases the large firms have provided significant upfront investment and improved research capabilities. In both cases, smaller firms have benefited from the specialised labour in the area and established supply chains that have been created.

Cities should ensure smaller firms benefit from large companies’ partnerships with univerisities by removing barriers to engagement and easing their access to collaborative opportunities.

WMG do this through their knowledge transfer services, which engage over 1,700 SMEs. Many of these are from the local area but the reach is global, this enables these small businesses not only to access the expertise of the WMG but also access a global network of suppliers. Similarly, the AMRC have small business members but also collaborate with non-member SMEs, including on over 300 projects in the Yorkshire and Humber region.

In both examples, the city is benefiting from universities’ relationships with larger firms and breaking barriers to ensure that smaller high-growth firms are able to gain from supply chain orders and innovation.