Public administration actions that provide technological services to urban areas specialising in knowledge-intensive sectors help to attract new companies, improve the efficiency of existing ones and enhance the prestige of these areas

High-tech companies are one of the main sources of economic growth and job creation. For this reason, analysis of the factors that determine the location of these companies is key to enabling public administrations to facilitate these company’s access to the services they need.

Josep-Maria Arauzo-Carod, Professor at the Department of Economics and Director of the URV’s Research Centre on Economics and Sustainability (ECO-SOS), has analysed the entry of high-tech companies into different neighbourhoods of Barcelona and concluded, first, that they tend to cluster in a few areas of the city rather than being distributed throughout the different neighbourhoods, and second, that services such as knowledge-based infrastructures, equipment and economies of agglomeration play a decisive role in the entry of this type of company. This finding can be extrapolated to other European cities with similar conditions to Barcelona and has clear implications in terms of promoting measures to attract companies.

By means of a spatial exploratory analysis and an economic analysis, and using data from the commercial register, the study looked at the location patterns of 515 new companies in 73 districts of Barcelona during the period 2011-2013, the characteristics of the districts where they are located and those of neighbouring districts, in order to determine what role they play and how the business fabric interacts with its immediate environment. Prior to the study, these metrics regarding the location of tech companies had only been partially taken into account.

Factors that attract tech companies

From the analysis of these parameters, it can be concluded that the entries of high-tech companies are clearly clustered around Barcelona’s main axis, the Avinguda Diagonal, the central business district, the Eixample, and the 22@ district. This pattern is explained by the high concentration of facilities, public services and businesses around this area. In contrast, the entries of non-high-tech companies are spread throughout the city, including the outlying districts.

Regarding the specific factors that increase the attraction of technology-based companies, economic estimates show the positive role played by aspects such as the innovative ecosystem in the 22@ district and the availability of higher education graduates in neighbouring districts.

Business attraction policies

In terms of what attracts high-tech companies, therefore, the study confirms the importance of technological services and infrastructures and the presence of similar companies in the same field. In practice, this means, on the one hand, that “public administrations should take into account the characteristics of the neighbourhood when designing business attraction policies”, which means “strategically focusing public funds and promotional efforts on specific areas of the city rather than distributing them more widely”, explains Josep-Maria Arauzo-Carod.

On the other hand, long-term technology promotion policies, such as those that have been applied to the 22@ district for years, need to be implemented, because “they can have a notable effect when it comes to attracting high-tech companies to specific areas”, Arauzo-Carod points out, adding that “they must involve public-private cooperation processes”.

Bibliographic reference:  Josep-Maria Arauzo-Carod (2021) Location determinants of high-tech firms: an intra-urban approach, Industry and Innovation, 28:10, 1225-1248, DOI: 10.1080/13662716.2021.1929868.