A Dominant Node of Service Innovation: London's Financial, Professional and Consultancy Services

Abstract

The most powerful driver of regional and urban inequality in the UK for the past 15 years has been the economic success of the London region. Innovativeness in London does not arise primarily from technological initiatives, but from the labour intensive, knowledge-based processes characteristic of the city's internationally networked service functions. The financial services are often portrayed as leading these processes, with other professional and business services acting largely in their support. Yet the latter employ more people in central London, and serve a wider array of markets than suggested by this characterisation. This chapter compares the recent innovation experience of the financial services with other forms of KIBS innovation. Major similarities are noted in the need for market responsiveness, high quality labour, and flexible institutional arrangements, but important differences also emerge. These relate especially the influence of information and communications technology, the different forms taken by regulation, and the autonomy allowed KIBS firms by clients. The distinctive national and regional importance of non-financial KIBS innovation require greater attention, even though this poses some daunting methodological challenges.