How Centre for Cities identifies frontier firms and informs UK industrial strategy

A core challenge for Centre for Cities has been understanding the firms and industries driving innovation in the UK economy. Traditional industrial classifications make it difficult to identify “productive cutting-edge firms” operating at the frontier of the economy, limiting the ability to analyse where innovation is happening and how it varies geographically.

The organisation wanted to better understand cities as centres of production but lacked visibility into the firms and industries that will probably be driving innovation growth in the future.

This gap was particularly important in the context of industrial strategy, where understanding the location, clustering, and characteristics of innovative firms is critical for informing policy decisions and supporting economic growth.

Centre for Cities uses The Data City to access highly granular, geographically detailed data on innovative firms across the UK. The data enables the team to identify productive cutting-edge firms at the productivity frontier of the UK economy, which is something that’s not possible using standard classification systems.

The organisation primarily downloads data from the platform and conducts its own analysis, integrating The Data City’s datasets into its research workflows. Key elements, such as company postcodes and sector classifications are particularly valuable, allowing for precise spatial analysis and deeper insight into industry activity.

The data supports a broad range of research, enabling the team to map the distribution of new economy firms, identify patterns of clustering among innovative businesses, examine university spinouts, and assess regional differences in access to finance by combining company data with funding information.

It also feeds into recurring outputs, such as Cities Outlook, where Centre for Cities reports on the number of innovative firms in each local economy, helping policymakers understand how their areas compare nationally.

Using The Data City, Centre for Cities has generated insights that would not have been possible otherwise. The data has enabled the organisation to show that innovative firms are highly concentrated in cities, particularly in city centres, and tend to be office-based and knowledge-driven.

The research has also shown that innovative activity tends to cluster across cities and industries, contributing to a more informed approach within government when shaping industrial strategy.

The outputs supported by The Data City have gained significant traction, including engagement from the Department for Business and Trade, and other policymakers. The findings provide a clearer picture of where innovation is happening in the UK and support evidence-based decision-making at both national and local levels.

More broadly, The Data City has become a core part of Centre for Cities’ analytical toolkit, enabling the team to produce high-quality research, uncover new insights into the UK’s innovation economy, and strengthen its role in shaping policy that supports urban economic growth.