John H Howard, 18 February 2025
Urban innovation ecosystems, more generally known as Innovation Districts, represent a fundamental shift in how cities leverage knowledge, technology, and human capital to drive economic growth.
They are more than just clusters of businesses and research institutions; they can function as dynamic environments where research translation—converting scientific and technological advancements into commercial and social impact—becomes a key driver of economic and societal transformation.
This insight examines the challenges of balancing public policy, commercial reality, academic missions, and innovation aspirations and the opportunities if appropriate governance arrangements, strong and visionary leadership, and strategic directions are in place. The insight draws in the possibilities and prospects for Tech Central in Sydney.
The Evolving Role of Innovation Districts
The growing significance of place-based innovation in national and regional development strategies reflects a global trend towards concentrated knowledge transfer, research translation, and commercialisation hubs.
Reference is often made to successful international examples that demonstrate how well-integrated governance, clear policy interventions, and targeted investment can create thriving innovation districts. These include the MaRS Discovery District in Toronto, 22@ Barcelona, Manchester’s Oxford Road Corridor initiative, the Guangdong–Hong Kong–Macao Greater Bay Area, and the Asia Silicon Valley Development Plan in Taiwan.
Tech Central in Sydney is being positioned as Australia’s premier technology and innovation district, with an ambition to create a deep-tech and digital industry hub anchored by major universities and private sector leaders like Atlassian, Canva and Safety Culture.
However, achieving this vision requires a delicate balance between policy goals, particularly in relation to property development, urban renewal, research translation, and fostering a vibrant start-up ecosystem.
A Model for Research Translation
Notwithstanding the standpoints of mainstream economics and more contemporary perspectives, such as Smart Specialisation and the Triple Helix framework, the essential foundation for research translation is the intersection and integration of four different forms of capital in an innovation context:
Physical Capital: Research-centric infrastructure, laboratories, testing and prototyping facilities, learning and collaboration spaces, offices and workplaces, cafes, housing, hotels, etc.
Knowledge Capital: Eminent academics, talented knowledge workers, innovative business leaders, patent attorneys and IP lawyers, informed and smart investors, and committed entrepreneurs.
Financial Capital: Investment (public & private), grants and tax breaks (e.g. RDTI), development capital, venture funding.
Social Capital: Networks, trust, shared norms, interpersonal respect, and leadership that enable collective action.
This integration is captured in the diagram below.
The intersection of these capital components creates the environment for purposeful interactions, collaborations, and partnerships. It recognises that people relate to people they trust. Visionary, goal-directed, and service leadership are essential in this framework.
Governance Challenges and the Role of Systems Integrators
A persistent challenge in urban innovation ecosystems is the complexity of governance. Innovation districts often operate within overlapping jurisdictions, requiring coordination across multiple government agencies, private stakeholders, and research institutions.
Internationally, governance structures can take various forms, including:
Regional development corporations (e.g. various models in NSW over the years)
Municipal authority frameworks (e.g., 22@Barcelona).
Public-private partnerships (e.g., MaRS Discovery District).
Institutional-led governance (e.g., MIT Kendall Square).
Private sector ownership (e.g., Station F, Paris).
Incorporated not-for-profit organisations (e.g. Research Triangle, North Carolina)
Innovation ecosystem networks (e.g., Canberra Innovation Network).
Complex multi-stakeholder systems (e.g., Oxford-Cambridge Arc).
Specific purpose collaboration initiatives (e.g. the Bio21 Initiative in Melbourne was a landmark collaboration establishing Melbourne as a global hub for biotechnology and molecular sciences).
For Tech Central to avoid the governance pitfalls seen in other districts, a single, well-resourced coordinating entity should be established to mediate between competing interests. Without this, weak industry-university links will persist, diminishing the precinct’s potential as a true innovation hub.
The Public Policy Overlay: A Moderating Factor in Innovation Outcomes
The policy environment surrounding Tech Central adds another layer of complexity that influences its innovation potential. The precinct operates within a complex governance framework, where numerous government agencies exert development control and consent powers.
Current policy contexts see Innovation Districts within a broader framework of economic and societal imperatives, including:
Inward Investment Attraction: Strategies to draw global firms and venture capital into the ecosystem.
Housing Access and Affordability: Policies ensuring that a portion of new residential developments is allocated for affordable housing and student accommodation.
Transport and Connectivity: Investment in infrastructure (road, rail, and active transport networks) to enhance accessibility and reduce congestion, supporting workforce mobility, including knowledge workers.
Urban Renewal: Transforming underutilised spaces and legacy assets into vibrant mixed-use spaces
Placemaking: Shaping public spaces to strengthen the connection between people and places by combining design, cultural activities, and community engagement to create vibrant, meaningful environments.
Economic Development Targets: Setting employment and productivity goals that may integrate research translation with broader urban economic strategies.
A framework for representing the policy overlay is shown in the following diagram.
Without deliberate intervention, these policy overlays may moderate the intensity of innovation outcomes.
The Governance Challenge
One of the biggest challenges in large urban Innovation Districts is the complexity of governance and leadership, where multiple stakeholders exercise control and influence. This is illustrated in Tech Central, where at least a dozen organisations have formal roles and responsibilities, with only informal coordination and stakeholder engagement arrangements - as illustrated in the diagram below.
Balancing Property Development and Innovation Outcomes
One of the key risks for urban innovation ecosystems is the tension between property development and fostering research-led innovation. Property Developer and Real estate interests often favour high-value commercial tenants, which can displace early-stage start-ups and research-driven enterprises.
Global examples provide several policy solutions:
Zoning Mandates: Ensuring dedicated spaces for research infrastructure and start-ups within precincts.
Value Capture Mechanisms: Redirecting a portion of property gains into innovation-supportive infrastructure and programming.
Innovation Zoning: Reserving specific areas within the district for research and commercialisation activities.
Public-Private Co-Investment: Establishing funding pools that incentivise developers to align with research translation goals.
Performance-Based Incentives: Encouraging property developers to contribute to innovation ecosystems through long-term affordability measures.
Some of these approaches are in play or proposed in Australian contexts.
Conclusion
The success of research translation in urban innovation ecosystems depends on governance, strategic intervention, and policy mechanisms that align economic, knowledge, and research translation outcomes.
For Tech Central and similar developments, avoiding the fate of becoming merely a high-end tech business district requires a clear commitment to embedding research-led innovation into the development model.
By implementing best practices from leading global precincts, policymakers can ensure that Innovation Districts become genuine innovation powerhouses rather than property-driven commercial hubs.
A well-balanced, multi-location innovation network may also ultimately serve Sydney and other large metropolitan areas better than an overly centralised model to ensure long-term sustainability and impact.
This insight is drawn from a work-in-progress project being undertaken by the Acton Institute for Policy Research and Innovation. If you would like to learn more about the project, contact John Howard at john@actoninstitute.au
* Dr John Howard is Executive Director of the Acton Institute for Policy Research and Innovation and is an expert in science, research, and innovation policy. John advises governments, universities, and industry to enhance R&D and innovation performance.
For inquiries, contact john@actoninstitute.au
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