ULI UK News

Winner of ULI UK Academic Prize

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This year’s ULI UK Academic Prize, awarded in partnership with The Journal of Economic Geography (JOEG) and Oxford University Press, has been awarded to Tom Kemeny, Southampton University and Maryann Feldman, Frank Ethridge, and Ted Zoller, University of North Carolina for their paper on The Economic Value of Local Social Networks

The Urban Land Institute/Journal of Economic Geography (JOEG) prize is awarded annually to the author(s) of the best JOEG paper published online in the previous calendar year.  Information on previous year’s winners.

To be eligible for the prize, the paper should be on a topic related to a broadly defined urban agenda and the papers are evaluated on the basis of their creativity, quality of scholarship, and contribution to advancing understanding of the geographic nature of economic systems and global economic change.

The independent panel of jurors for this year’s prize were:

  • Edward Glaeser, Fred and Eleanor Glimp Professor of Economics, Harvard University, USA
  • Professor Paul Cheshire CBE, Professor of Economic Geography, London School of Economics, UK
  • Anders Malmberg, Deputy Vice-chancellor and Professor, Department of Social and Economic Geography, Uppsala University, Sweden

The jurors described the paper as “an innovative and very original paper, notable for its theoretical sophistication, its unique data and the scope of its empirical analysis. It promises to set the scene for a long time to come”.

Co-author of the paper, Dr Thomas Kemeny, a Lecturer in Human Geography at Southampton University will present the findings of his paper at the ULI UK Annual Conference on 24th May.

Paper Synopsis and Comments from Author, Tom Kemeny

My co-authors and I are honoured to have our article “The Economic Value of Local Social Networks” (published in the September issue of the Journal of Economic Geography) chosen as the 2016 winner of the Urban Land Institute prize. It is deeply gratifying to gain recognition for work of which we are proud, and we are especially thrilled to be given the opportunity to share our ideas with the wider range of city-focused professionals that the ULI serves. Below, I sketch the motivation for our work, and our findings.

Humanity congregates in cities because proximity and density offer economic advantages. Throughout history, one of the most important of these advantages is cities’ capacity to support the creation and dissemination of ideas. How do cities accomplish this? They enable face-to-face interaction and spur the formation of social networks. These networks enhance the effectiveness with which people can build trust and exchange complicated and especially new ideas. And so, people flock to places like London, New York and San Francisco to be near other people, chiefly in order to access ideas that are bound up in place-based social networks.

Or at least, this is what we are told. In fact, we lack clear evidence confirming that urban social networks produce economic vibrancy. In particular, we have a great deal of trouble distinguishing whether ‘buzzy’ local social networks are a cause of economic success, or merely an outcome of it.

Our article’s main contribution lies in its attempt to resolve this chicken-or-egg problem. We generate high-quality evidence about the independent contribution that local social networks make to economic performance. To do so, rather than comparing places with bigger and smaller networks, we dive down to the micro-level. We consider that firms may perform differently when they become associated with an individual who is unusually well-connected within local social networks. We believe that such well-connected people act as conduits for local knowledge, spreading ideas and bringing the right people together to generate economic value.

To measure the causal impacts of these individuals, we mimic an experimental approach. We start with a pool of entrepreneurial firms in biotechnology and information technology located in 12 US cities. Over the study period, each of these firms adds exactly one person to their board of directors. Individuals added to the ‘treatment’ group of firms are unusually well-connected to local networks. New board members added to the ‘control’ group are only typically connected to local networks. We then compare the evolution of our treatment and control group in order to identify the additional value offered by local interpersonal connections. We consider that such connections could enhance firms’ employment, sales, and the likelihood that they get acquired by another firm.

What we find is that adding an individual with stronger connections to local networks offers firms tangible advantages. Between 2009 and 2012, firms that link to such individuals grow considerably faster. As compared with the control group, the average treatment firm adds over 100 more employees and expands sales by an additional $13 million. Meanwhile, we detect no effect on their likelihood of being acquired.

These findings provide clear confirmation that urban social networks offer economic benefits. For ULI members, one key takeaway is a reminder that cities – and especially cities in high-wage economies like the UK and US – exist as a means for bringing people together to share ideas. A second lesson is that social networks are crucial to the achievement of economic success, and efforts to support their development may reap tangible rewards.

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Co-author, Dr Thomas Kemeny, Lecturer in Human Geography, Southampton University

 

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