Applying Big Data to Economics

Lucy Tallentire from the School of Business, Economics and Informatics at Birkbeck and CSIS PhD candidate Seongil Han report on a recent conference at the Birkbeck Centre for Data Analytics (BIDA).bidaWhat can we learn from Big Data, and how can Big Data analytics be applied to the field of Economics? These were just some of the questions answered by a one-day conference held by Birkbeck Institute for Data Analytics (BIDA) on Monday 5 June. The event was organised in collaboration with the Department of Economics, Mathematics and Statistics, to bring together researchers from statistics, applied mathematics, computer science, finance and economics to enhance the research environment and promote cross-disciplinary collaboration within the College, and with a wider external audience.

Birkbeck’s Professor Stephen Wright kicked off proceedings with an insightful presentation on the application of Big Data to large-scale surveys and maps. In his research project of residential land supply in 27 EU countries, he examines sources such as Google Maps, ONS/Ordnance Survey and Open Street maps to explain large differences across EU countries and identify whether there are restrictions on residential land. Professor Wright concluded that a large proportion of the regional variation in supply of residential land in the EU can be explained econometrically and is very strongly determined by regional geography and history.

Guest speaker Giovanni Mastrobuoni, Professor of Economics in Department of Economics, University of Essex, provided a unique insight into the role of Big Data analytics on police patrols and crime. Based on recent evidence that police deployment reduces crime, the project was designed to identify whether the elasticity of crime with regard to policing remains the same, and whether it is worth randomly increasing mobile police presence in an area. The results suggest, however, that big data is only useful with good prior identification; elasticity is negligible if identification is low, and random mobile patrolling cannot reduce crime significantly.

The second part of the conference focused on big data in business, economy and strategy. Professor Roger Maull, from the Department of Digital Economy in University of Surrey, discussed business models in relation to the digital economy, introducing 3 new approaches to the economy for big data – digitisation, datafication and digitalisation. He explained business models with industry dynamics and emphasised the following qualities:

  • value proposition, or what the customer pays for;
  • value creation, or how one delivers what the customer pays for;
  • value capture, or how the customer pays for it.

Big data has allowed significant advancements in personalisation and customisation, which also link to HAT (Hub of All Things): an IT business services to store and customise the personal data, as a real business model for personal data.

Final speaker Ernesto Damiani, from the Etisalat British Telecom Innovation Centre, Abu Dhabi, introduced the prospect of big data analytics as a service. He started by highlighting the 5 Vs of big data:

  • Variety in analytics model: static ways vs dynamic ways;
  • Volume;
  • Velocity;
  • Value;

He also compared traditional analytics with big data analytics and explained a change in paradigm for data analytics, which is supported by the example of Google.

The conference succeeded in providing a comprehensive introduction to the many ways in which big data analytics, such as text mining techniques, can be applied to Economics and business. Big data analytics continue to attract a great deal of attention in academia and industry, with an increasing amount of unstructured data available on web; it is vital to apply big data analytics to various problems to supplement qualitative information to conventional descriptive analytics and infer the predictive analytics.

BIDA would like to thank the presenters and all those who attended for their insightful comments and discussion. You can find out more about the Birkbeck Institute for Data Analytics on their website.

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“Arsenal, Arsène, David Dein and Me” – An Interview with Alex Fynn

Ahead of an event with Alex Flynn, author of Arsènal: The Making of a Modern Superclub, at the Birkbeck Sports Business Centre on Monday 28 November, James Fisk from the School of Business, Economics and Informatics interviews the author

arsenals-business-strategyThe book provides a comprehensive overview of the modern era for Arsenal, what led you to write the book?

Most of my career was spent in advertising and then, subsequently, I moved in to sports marketing. In advertising I had been successful because I was comparatively honest and would tell clients what they should hear, rather than what they wanted to hear. Comparative honesty was a huge liability in football marketing with it being a cut-throat business. It was a difficult role to have. I enjoyed working for a number of clubs in the Premier League, the Football Association and the Football League, but to some extent I was a fish out of water. I advised people on what they needed to hear and so many of my consultancies were rather short-term. This was then exacerbated by UEFA and the Premier League who centralised control of marketing and I did less and less consultancy work.

I wanted to be involved in the game and so turned to writing about it, something I do because I enjoy it and have access to that milieu and, essentially, that’s why I’ve written about Arsène and Arsenal. Indeed, I was one of the first people in England to meet him, having met him in 1985 when he was still the manager of Monaco… and I’ve known David Dein for 50 years or so. The book was written because I had access to all the main protagonists and it’s an intriguing story to tell, something I did with co-author, Kevin Whitcher, who is a big Arsenal fan. I look at it from an objective point of view, whilst my co-author, who  is the editor of the fanzine ‘Gooner’, provides a far more subjective view. He has an unrivalled depth of understanding about his club and I have a breadth of experience working for other clubs and organisations in football so it makes for a good partnership.

What influence do you think the appointment of Arsène Wenger has had on English football?

An enormous influence! He was a revolutionary, changing the way the game was played, changing the way players prepared and trained. His influence on the contemporary game in England really cannot be underestimated. I think that the problem has been that other managers and clubs have copied his innovations and then evolved and advanced them in their own ways. Arsène can be stubborn and, perhaps, in this respect, hasn’t moved on as fast as he should have done. Although, I would consider him a football genius, as with any genius they can occasionally get things wrong; they need to be challenged and to have quality personnel to back them up – something many of the key Premier League managers he’s faced have had. Arsène’s not had substantive back-up, certainly not in the way Sir Alex Ferguson had at Manchester United.

Wenger introduced a paradigmatic shift within the English game, but where do Arsenal go from here? There are recurring jokes within the football fan community that Arsenal fans call for Wenger’s resignation periodically, following defeats to other big clubs. What does the future hold for Arsène and Arsenal?

Well, you’ll have to wind back a few years. You have to accept that the policy of the club is made by the owner and, this owner in particular (Stan Kroenke) really believes  in self-sufficiency – you spend only what you earn. This means not going into debt to win trophies and, for context, the last time Arsenal made a loss was back in 2002. They could have spent much more than they have done in recent times. Arsenal have somewhat reluctantly accepted that paying higher wages and transfer fees gives them a chance of success.

Again, it’s worth bearing in mind that, until recently, success for Arsenal was finishing in the top four and qualifying for the Champions League competition. But the bar Arsenal set in those early years of Wenger’s tenure was much higher, so today fans are left disappointed. HOWEVER, this season is the first in a long time that Arsenal have every position covered, something they’ve often lacked in previous campaigns, although they still lack enough World-Class players. I think it’s down to Wenger’s obstinacy, his desire to be successful without breaking the bank and fitting in with the owner and the boardroom culture at Arsenal. Whilst other clubs tend to prioritise prizes over profits, I think at Arsenal profits come before prizes.

The appointment of Wenger heralded an influx of foreign management talent into the Premier League. How do you think he’s influenced the FA and their appointments of the England national team manager?  

I think, in this context, it’s actually far more appropriate to discuss David Dein. He took the initiative to find Wenger and bring him to England. I think you could say that without Dein you’d have no Wenger. With no Wenger perhaps the Premier League wouldn’t have undergone the changes it has – at least not this quickly. Wenger really was revolutionary in those days; he was a target for the FA when they were looking for a manager. Of course, Dein’s remit was first and foremost Arsenal, but he is a big fan of English football and, when the FA came calling, he tactfully directed them away from Arsène Wenger and on to Sven Goran-Erikson, which wasn’t actually a bad move for the FA.

Now Dein is no longer at Arsenal and by Wenger’s side (although they are still friends and talk regularly). English football, and Arsenal in particular, have really felt the loss of David Dein. Arsenal have felt the loss in as much as Dein would have challenged them, his driving ethos was always to get a winning team. The irony, of course, is that to have an optimum business you really need a successful team.  And success means winning trophies and titles, or at least making a good fist of doing so

With regard to England, Dein has always been passionate about the national team, supported by strong club sides and in this respect, his loss has been that of both Arsenal and the England team. At the moment, the Premier League is not an English league, it’s an international competition that happens to be in England. We won’t ever have a strong national side as the league is dominated by foreign owners, coaches and players who, quite rightly prioritise their clubs.

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Can policy transform regions into entrepreneurship and innovation hubs?

This post was contributed by Helen Lawton Smith, professor of Entrepreneurship at Birkbeck’s Department of Management. Prof Lawton Smith attended a workshop – ‘Can Policy Transform Regions into Entrepreneurship and Innovation Hubs? Theory, Evidence and Practice’ – hosted by the college’s Centre for Innovation Management Research (CIMR) on Friday 4 December

Angel of the North - Image courtesy of Tom Blackwell under CC via Flickr.com

Angel of the North – Image courtesy of Tom Blackwell under CC via Flickr.com

The latest CIMR workshop brought together both those who design policies and those who analyse the policy making process. It hosted representatives from the north of England, suggested to be comparatively disadvantaged economically, and the prosperous south. International comparisons were offered to provide insight into what works in policy making and what should be avoided.

 

 

The speakers were

  • Professor Roy Sandbach, ‘Innovation North East… building regional prosperity’
  • Dr Elvira Uyarra, ‘Key challenges of ‘smart’ policies for regional transformation’
  • Dr Adrian Healy, ‘From principles to practices in Smart Specialisation: Lessons from European Regions’
  • Professor Bjorn Asheim, ‘Smart Specialisation – an innovation driven strategy for economic diversification’
  • Rupert Waters, ‘Challenges for policy-makers in Buckinghamshire’
  • Professor Jeremy Howells, ‘Innovation intermediaries and innovation: Changing dynamics and future perspectives’
  • Dr Federica Rossi, ‘Evaluating the performance of regional innovation intermediaries: insights from the experience of Tuscany’s “innovation poles”’
  • Dave Waller,’What makes a successful innovation ecosystem: great innovation and technology; great policies; plenty of investment funds; great culture or none of the above: just leave it to the market’
  • Dr Ana Colovic, ’Why are cluster policies created and how do they work? A comparison between Austria, France, Japan and Sweden’
  • Dr Rosa Fernandez, Chair of final discussion session

The following five themes were addressed throughout the day:

  1. Is it possible for regions to be transformed into Entrepreneurship and Innovation Hubs?

Policy makers everywhere are under pressure to transform lagging regions into leading centres of entrepreneurship, while continuing to support already successful areas of innovation. Roy Sandbach opened the workshop, drawing on the North East Strategic Economic Plan of 2013. The Plan encouraged the North East to ‘become an exemplar for open innovation and Smart Specialisation’, through innovation which would create economic value, social good or both. The Plan hoped to create the conditions and networked solutions to transform the region.

Other speakers argued that the role of policy is to develop new paths for policy, extend existing ones, and create an entrepreneurial state embedded in the economy. Jeremy Howells suggested that the role of policy makers is primarily to change the behaviour of firms, in order to convince them that it is in their interests to innovate.

Adrian Healy spoke on the political reality of delivering Smart Specialisation, using experience from a seven country FP7 Smart Specialisation Project. He argued that innovative and entrepreneurial regions develop independently of politics. Healy cited evidence from academic studies that 80% of economic growth is demand-led, so that only around 20% of structural change could be addressed by policies. He also suggested that policy can sometimes follow practice, such as when private sector developments are imitated by policies which provide supporting infrastructures. In addition, he argued that public procurement can have a crucial role in stimulating entrepreneurship. An example he gave of this was the North East subsea programme, which was not part of the regional development strategy.

Dave Waller also shared his own experience of local innovation policy and practice in England. He demonstrated the dissonance between local politics and economic theory, using an example from Oxfordshire. The result was wasted resources, duplication and fragmentation. Waller suggested more international benchmark evidence was required, building on work such as mapping research and innovation in Amsterdam.

The first theme was not without controversy therefore, and Sandbach concluded with a lesson for the Northern Powerhouse; ‘We must drive the Powerhouse as an economic vision fuelled by innovation rather than as a political item with insular, local devolution debates at the heart.’

  1. How important is analysis, international comparison and evaluation in developing appropriate policies?

In order to make effective policies, all the speakers agreed that policy makers need to be exceptionally focused on analysis. This might include analysing the national and regional context, the area’s potential for innovation, current programmes, global benchmarking, networks, entrepreneurial activity, university strengths or local corporate innovation strategies.

The workshop heard about geographical disparities, which result in varied difficulties for policy-makers in different regions. A major problem in the North East, for example, is that it has the lowest Business R&D expenditure in the UK and business formation rates have fallen by 10% in the past year. The North East is ranked lowest of 12 regions, and 89th in Europe on Attitude, Ability, Aspiration analysis, and thus presents a particular set of challenges. By contrast, London is ranked second on the 2014 Santander Enterprise Index. Analysis must also relate to the theoretical underpinnings of policy.

That there is a dialogue between academic practitioners and policy makers was very clear. Policy practitioners draw on academic theories (often developed by economic geographers) such as the theory of ‘anchor firms’. Anchor firms are different bases of analytic, symbolic and synthetic knowledge. Elvira Uyrrara argued that analysis should also relate to the formulation of programmes, including their scale of delivery and their tools for measuring and evaluating. She highlighted the diverse set of concepts that underpin Smart Specialisation and argued that the theoretical underpinnings are still in progress.

  1. What is the significance of Leadership, Engagement and Collaboration within and across regions?

There was a general consensus after Roy Sandbach’s presentation that the basis of an effective strategy relies on the set-up of a sound and inclusive governance structure. Entrepreneurial strategy requires a shared vision about the future of the region and the thorough integration of monitoring and evaluation mechanisms.

A contested issue, however, was whether Roy Sandbach was right to suggest that business leadership would always be the driving force in regional transformation, Bjorn Asheim argued that in some contexts, the public sector or universities can be directive. In some areas, it was claimed that local entrepreneurs were disinterested in the policy-making process, such as the SMEs in the North East.

In Europe, Smart Specialisation (SMART) is the single largest attempt at an orchestrated, supranational Innovation and Entrepreneurship strategy, which requires leadership, engagement and collaboration. Dave Waller, having faced the challenges of regional innovation strategies for Smart Specialisation, argued that SMART should be about addressing structural weaknesses and facilitating conversations between the right people.

SMART relies on networking, and the support of regional stakeholders. Elvira Uyrra pointed out that SMART has been criticised for not having a fully developed theoretical framework and for being too vague in terms of its target and mix of policies.

The points resonated with Jeremy Howells and Federica Rossi’s presentations on innovation intermediaries. Howells argued that intermediaries are a conceptual lens through which to view the dynamics and evolution of systems of innovation, and are of major policy significance as catalysts within a system.

Federica Rossi also identified intermediaries as important for changing the behaviour of firms and thus indirectly changing the capacity of regions to innovate. Using the case of Tuscany’s innovation poles, which aimed to provide a range of knowledge intensive business services and to strengthen the regional innovation system, she highlighted critical problems in evaluating interventions. These included a lack of sector differentiation, inadequate indicators and missing activities.

  1. What are the social and economic priorities of regional transformation?

Although innovation and job creation are obvious priorities of regional transformation, Bjorn Asheim highlighted other areas of focus, such as gender, migration and diversity. Adrian Healey also spoke about gender profiles of different sectors, as some are predominately male, and others dominated by women. It was concluded that equality of opportunity certainly needs to form part of any policy-making agenda.

Ana Colovic highlighted national differences in approaches to the design and implementation of cluster policies. She questioned whether cluster policies need to be designed if innovation is going well independently. In addition, she noted some of the challenges for policy makers in reality, such as considering whether all the policy tools available and variety of implementing agencies are made clear to actors. Colovic concluded by thinking about the contrasting budgets allocated in different countries for innovation strategies, and questioned what the appropriate level of budget would be to meet both local and national priorities.

  1. What would success look like?

Rosa Fernandez told the workshop that for Roy Sandbach, success would mean 60,000 new jobs created in the North East – but where would they come from? Dave Waller recognised success more in stronger leadership and governance, the development of useful tool kits, better spatial, temporal and more granular mapping of economic activity, and the application of Smart Specialisation principles to all aspects of EU programming.

Adrian Healey, on the other hand, measures success in terms of the gains made from shared governance, shared leadership, common objectives, overcoming fragmentation and getting beyond existing structures. He argued that success would rely on changing the mind-set of local authorities, as the only part of the system not fully connected is the public sector.

The biggest challenge for regions is to build capacity. However, as Henry Etzkowitz argued, the sheer scale of Silicon Valley’s financial and talent resources makes it difficult for Europe to compete. Maybe it need not all be bad news however, as the UK and Europe could yet be a Land of Opportunity.

Find out more

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Cooperation key to tech cluster growth

This post was contributed by Nick Eisen, School of Business, Economics and Informatics engagement correspondent.

CooperationLondon-based institutions such as Birkbeck could play a part in the development of tech start-ups and clusters outside London, even if that role is not the first thing that comes to mind when considering such development.

Addressing this possibility, ‪Emma Swift, Entrepreneur Relations Manager at digital business promoter Tech City UK, ‬ focused on one word: partnership.

Swift was one of a four-member panel at an event entitled “What must tech clusters outside London do to thrive?”.

Part of London Technology Week, the event on 15 June was organised by CE of Birkbeck Enterprise Hub, Ibrahim Maiga, chaired by Sureyya Cansoy, Director of Tech for Business and Consumer at techUK, and hosted by law firm Goodman Derrick at its offices in St Bride Street, five minutes’ walk from the London Stock Exchange.

What form any inside-outside London partnerships might take remained open, though Swift did refer to SETsquared, an enterprise collaboration between Bath, Bristol, Exeter, Southampton and Surrey universities that, according to its website “is a focus for enterprise activity and new business creation”.

In addition, what emerged from the afternoon implied possible outlines for such partnerships while not necessarily explicitly stating them.

Panel members noted that tech clusters outside London should avoid trying to copy it, and should instead continue to recognise and focus on developing what they are already doing well; and many of these clusters are indeed taking this approach.

Paul Smith, Managing Director of Newcastle-based accelerator Ignite100 noted the lower costs, good quality of life, coaching and building professional relationships that Newcastle could offer budding entrepreneurs compared with London. He also drew attention to Newcastle-based anchor firms such as business software solutions company Sage, the founders of which have gone on to support other start-ups: Sage itself having begun as a start-up in 1981.

Smith added that access to London is still useful for non-London businesses, for example, for being seen by potential investors and customers. However, as firms in Newcastle and other clusters show, that need not mean being based in London.

Richard Young, Director of the British Venture Capital Association in Manchester, remarked on the ability of his city’s entrepreneurs to take what they wanted from London back to their home base.

And Julian Blake, 
Editor of TechCityInsider.net, emphasised that universities are essential to the development of tech business.

From the audience, Helen Lawton Smith, Professor of Entrepreneurship and Director of the Centre for Innovation Management Research at Birkbeck’s Department of Management, emphasised that there are many very successful clusters outside London – such as Oxford and Cambridge – which have established large firms that recruit and supply labour and knowledge within their own localities.

Professor Lawton Smith added that, although there are many claims about the rapid increase in the number of tech firms in London, more evidence is needed on that number of firms and their performance, which will also inform policymakers about the demand for infrastructure, services and other requirements.

Perhaps then a wider focus is required. Could London universities offer platforms where non-London start-ups and clusters could showcase their activities, not in order to migrate to London or adopt a London way but to gain recognition and support for their own non-London ways in locations beyond London?

In turn, could such collaborations be another route for London institutions, among those in other parts of the UK, to help broaden perspectives, with knowledge transferring all ways – from and to different parts of the UK, including London?

For those who want to explore such topics further, on Wednesday 24 June, Birkbeck Clore Management Centre will host an event addressing the question: What is the role of universities in creating skills for the digital economy?

Find out more

Photo credit: NASA under CC from Flickr

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