Why Streets Matter: Infrastructure and Innovation
In this study, Dr. Roche examined how the physical layout of neighbourhoods affects innovation by influencing the organization of knowledge exchange. Her analysis and results suggest that variation in street network density may help explain regional innovation differentials beyond the traditional location externalities found by other researchers.
WHAT YOU NEED TO KNOW
Dr. Roche discovered that the density and layout of neighbourhood streets has a considerable effect on innovation and that the actual physical capacity to connect people and ideas may, in fact, be one reason why some cities, and neighborhoods are more conducive for innovation than others. The forms and structure of our cities and neighborhoods are key features of the innovative fabric that powers our economy as a whole.
MORE DETAILS
What Did the Researchers Do?
Maria compiled a novel dataset from various publicly available sources at the neighborhood level in the US. She measured the physical connectivity of each neighborhood using street network density and as a proxy for innovation, the number of U.S. patents applied for in the neighborhood. She also controlled for traditional location effects to take account of both historic and contemporaneous employment and population density, as well as characteristics of the workforce and commuting impacts.
In her analysis, she utilizes a typical feature of neighborhoods built in the first half of the twentieth century, namely a grid-like street network structure. Streets back then were constructed under the intention to grant city dwellers access to the main means of public transportation: the streetcar. However, from the 1950’s on, the United States witnessed a drastic shift in street network design, fueled by affordable automobiles and suburban residences.
As such, the percentage of housing units built prior to the introduction of the car – a proxy for the age of the neighborhood – predicts street layout but should not influence present-day innovation. Additional analysis by Dr. Roche suggests that physical connectivity influences local inter-organizational knowledge exchange within a neighborhood and that the physical layout of neighborhoods bolsters the impact of social factors on innovation (that of bars and restaurants for example).
What Did the Researcher Find?
Taken together, the results of the study provide suggestive evidence that higher physical connectivity has a positive impact on innovation by increasing local knowledge circulation within a neighborhood. These findings support the idea that the actual physical capacity to connect people and ideas may, in fact, be one reason why cities, and some neighborhoods, are more conducive to innovation than others.
HOW CAN YOU USE THIS RESEARCH?
Up until now, researchers studying the geography of innovation have obtained mixed results regarding the relationship between proximity of individuals and organizations within a geographical area and innovation outcomes. The findings of this research further our understanding of what urban structures best support local innovation and the location decisions of different companies.
Organizations faced with location choice should be aware of how their most immediate environment may influence knowledge flows. Similarly, street infrastructure may be worth considering as an important asset that policymakers and regions can leverage as a source of competitive advantage. Dense local infrastructure represents a crucial component for innovation, especially keeping in mind the importance of public spaces for social interaction.
WANT TO KNOW MORE?
Contact: Maria P. Roche (mroche@hbs.edu).
Article citation: Roche, M. P. (2020). Taking Innovation to the Streets: Micro-geography, Physical Structure and Innovation. The Review of Economics and Statistics, 912–928.