In their search for answers, Cambridge, England, has emerged as a living laboratory to test the economic value of such businesses and the process through which academic innovations are transferred to industry.
Cambridge, which as little as 10 years ago was known primarily for its centuries-old university, today enjoys the biggest concentration of small, technology-based businesses in Europe. The area is often compared to the assortment of high-tech industries in California's Silicon Valley and the Route 128 corridor around Boston.
The city and its environs boast more than 400 such concerns, with from 30 to 50 new firms appearing every year. Many of the businesses, which employ about 12 percent of the local work force, have strong links with the technical departments (mainly computing and engineering) of Cambridge University. The best known companies include Cambridge Instruments, Laser-Scan, Acorn Computer (now a division of Olivetti of Italy), Cambridge Consultants, Marshall and Cambridge Electronic Industries.
Few of the businesses, which cover a spectrum of activities including electronics, instrumentation, biochemicals and health care, employ more than 100 people. Most have been formed in the past decade, either by Cambridge faculty or by those already working for another company in the area.
A study of Cambridge sheds light on the ingredients needed to start a growth of high-tech industry. But few of the lessons from the city can be applied directly to other places that are trying to strengthen the linkage between academic institutes and industry.
An Unmatched Model
One important factor in its success seems to be the relaxed stance taken by university officials toward allowing its academic staff to do spare-time consulting work for industry. Of the 18 academic staff in the university's computing department, 14 have research contracts with local firms, according to department head Roger Needham.
Most European universities place more bureaucratic restrictions on staff links with industry. Such rules, say observers, often inhibit these contacts from taking place.
Cambridge's geography has played a large part in getting its high-tech industry rolling. The university's medieval buildings help make the city a pleasant place to live. Set in the quiet East Anglian countryside, it is within easy reach of London by rail and motorway. Many students at the university are only too glad to stay in the area when they graduate, either to set up their own firms or to join existing concerns.
Many of the reasons for Cambridge's booming high-tech economy rest with events of a decade or more ago. In the early 1970s, Trinity College, one of Cambridge's wealthiest and most venerable, sponsored a science park on the edge of the city. Although slow to develop, it is now the site of Britain's most successful science parks, housing about 60 companies.
The arrival of several high-tech companies has served as momentum for others. Until last summer, David Stanley ran the Cambridge research laboratory of Logica, an established British software company. He then left to form a new consultancy for the computer industry, called Oasis. Stanley said that so many of his friends and colleagues in Cambridge had started their own ventures that he felt impelled to do the same.
This snowball effect has also drawn larger, outside firms. These include big electronics concerns that have set up research laboratories: Xerox, Data General, SRI International of the United States and France's Schlumberger all have Cambridge laboratories, while Britain's GEC recently announced similar plans.
Other outsiders are legal companies, banks and accountants that have set up offices in Cambridge to provide business services to the new generation of high-tech startups. The net effect is that Cambridge boasts large numbers of brainy and determined people, the most important fodder for high-tech companies.' Chris Curry, the joint founder of Acorn, who left in 1985 to begin another Cambridge venture, European Educational Software, said, "The place has a never-ending supply of high-quality expertise."
Some onlookers question the degree to which the many small firms in Cambridge will grow into significant employers. Some companies face difficult times, finding themselves stymied by lack of management or financial resources. Thus Acorn crashed and had to be rescued by Olivetti, while Sinclair Re search, Sir Clive Sinclair's Cambridge computer firm, was forced to sell its computer interests to Amstrad, a British rival. Three of Cambridge's most promising computer-aided design companies were purchased by large American firms after finding it impossible to survive on their own.
For Keith Haarhoff, manager of the Cambridge office of Singer and Friedlander, the merchant bank, the most important lesson from Cambridge is how concentration in a specific industry—in this case high-tech—can stimulate a local economy. He said a similar singleminded approach to tourism, for example, or a retooled automotive industry, could rejuvenate other hard-pressed regions.