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Big data finds 70,000 'hidden' companies in the UK’s Information Economy industries

Mapping Information Economy Business with Big Data: Findings from the UK

The UK's Information Economy industries could be 42% larger than current estimates, with at least 70,000 extra ICT-producing companies in operation and hotspots around the country.

This is according to new research published by Dr Max Nathan and Dr Anna Rosso at NIESR, alongside Francois Bouet at Growth Intelligence and funded by Nesta. Using 'big data' the report sets out alternative counts of firms in the Government's 'Information Economy' industries, and compares these to estimates using conventional industry codes.[1]

The authors argue that industries and products typically evolve faster than much conventional data can match. This creates problems for policymakers who want to understand growing fields like the Information Economy. The Government's 2012 Industrial Strategy identifies the Information Economy - defined as telecoms, software, computer and electronics manufacturing, and IT services - as one of seven key sectors for the UK. Ministers have developed an Information Economy strategy to help firms grow, and are promoting tech clusters around the country.

NIESR worked with data developed by Growth Intelligence to plug some of the gaps in current policy knowledge. The Growth Intelligence dataset covers the entire population of active UK companies. Using public administrative data, observed information, and modelled variables built using machine learning techniques, the authors develop a ‘sector-product’ map of Information Economy firms, and employ text mining to explore key features.

They find:

• The largest numbers of Information Economy companies can be found in London (58,248 companies), Manchester (7,582), Guildford and Aldershot (6,172) Birmingham (5,384), and Luton and Watford (4,578).
• Information Economy firms are most clustered in West of London, and Travel to Work Areas[2] like Basingstoke (LQ 1.84), Reading (1.78), Newbury (1.68), Milton Keynes (1.54), and Swindon (1.51). However, we also find hotspots around the country such as Brighton (1.53), Cambridge (1.46), Middlesbrough (1.38), Coventry (1.35), Edinburgh (1.22) and Blackpool (1.20).
• Large cities have less local clustering because of their diverse economies, yet more detailed analysis of larger cities shows that they act as ‘nurseries’ for Information Economy start-ups. Five of the top ten postcode sectors for Information Economy start-ups are located in central London.

These findings should help national and local government understand the characteristics and growth potential of Information Economy firms across the country.

The report is also important for the research community, as it provides a proof of concept exercise highlighting both pros and cons of big-data driven analysis. The use of non-traditional or unstructured sources and scraping/mining/learning tools is growing rapidly and has great potential to close knowledge gaps, bring research closer to policy, and provide rich detail on fast-changing aspects of the economy.

Max Nathan, Senior Research Fellow at NIESR, said:

"The findings are significant as they show that the UK’s information economy is larger, more established and perhaps more resilient than popular perceptions. Our analysis suggests a diffusion of digital platforms and products out of computer hardware and software into other parts of the economy, such as business services and engineering.”

Anna Rosso, Research Fellow at NIESR, added:

“Big data can shine a light on real-world economic shifts that are moving ahead of current administrative data and classifications.”

Hasan Bakhshi, Director, Creative Economy, Nesta, commented:

“Just as it is disrupting industries, technological change is disrupting how policymakers track and measure the economy. This study shows how important it is that UK policymakers invest in big data techniques to understand the most fast-changing and dynamic sectors of the economy”.

Tom Gatten, CEO of Growth Intelligence, also added:

"At GI we are opening up modern data-processing technology to Marketers. This report shows how technology is transforming the way we understand businesses and our economy"

Notes:

The research paper entitled “Mapping ‘information economy’ businesses with Big Data: findings for the UK” is published by NIESR and Growth Intelligence and was funded by Nesta.

The paper will be available on the NIESR and Nesta website after the embargo has lifted.

For a full copy of the area-level data, please contact the NIESR Press Office:
Brooke Hollingshead on 020 7654 1923 / b.hollingshead@niesr.ac.uk .  

To discuss the article or for interviews, please contact:

• Max Nathan: m.nathan@niesr.ac.uk or 020 7222 7665
• Anna Rosso: a.rosso@niesr.ac.uk or 020 7654 1946

NIESR aims to promote, through quantitative and qualitative research, a deeper understanding of the interaction of economic and social forces that affect people's lives, and the ways in which policies can improve them. Further details of NIESR’s activities can be seen on http://www.niesr.ac.uk or by contacting enquiries@niesr.ac.uk.  Switchboard Telephone Number: +44 (0) 207 222 7665

Nesta (www.nesta.org.uk) is the UK's innovation foundation. We help people and organisations bring great ideas to life. We do this by providing investments and grants and mobilising research, networks and skills. We are an independent charity and our work is enabled by an endowment from the National Lottery. Nesta is a registered charity in England and Wales 1144091 and Scotland SC042833.

Nesta recently used the big data approach to measure and map the UK games industry, which you can read here.