Introduction

Competitiveness at the spatial level is a questionable concept (Begg, 2002; Camagni, 2002) despite ‘the competitive advantage of nations’ having proved an influential slogan in the 1990s (Porter, 1990). What can be said with confidence is that firms are more or less competitive depending on the kinds of competition they are set up to engage in (quality, time and price being distinctive kinds of competitiveness) and that places that have high concentrations of firms in any or all of these are ‘competitive’. This means ‘competitive’ in terms of influencing other firms to co-locate, either to compete or to exploit localisation or agglomeration economies. This will, in turn, boost secondary markets for housing, utilities, healthcare and the like, and drive up property rentals to points where these may eventually be deemed ‘uncompetitive’.

The observation about competitive places being so because of being the location for many successful, competitive businesses will be developed later in this chapter, save to say that convincing evidence of its veracity arose in research conducted to examine small- and medium-sized enterprise (SME) performance in the ‘knowledge economy’ (Cooke and Clifton, 2002). In brief, the best performing UK SMEs are innovative, having introduced products new to the market, new processes or organisational reforms up to three years before being surveyed. This is true in weakly performing and strongly performing local or regional economies. The difference between weakly and strongly competitive areas is that the latter have high densities of innovative firms.

The aim of this chapter is to show how, by creating a competitiveness index based on regions and localities, one can arrive at a method for assessing the competitiveness of firms. As will be shown, important to firm competitiveness, at least at SME level, are forms of collaboration, networking or social capital. Thus, the relative economic competitiveness of regions and localities in the UK, and presumably many if not most market economies where SMEs predominate, will be argued to depend, ironically, on possession by firms, and relevant support organisations, of a sophisticated understanding and use of cooperation. This is an argument that was developed conceptually at the regional level some years ago (see, for example, Cooke, 1994, 1999; after Dei Ottati, 1994; Franchi, 1994; Körfer and Latniak, 1994) as ‘the cooperative advantage of regions’; however, now it can be extended conceptually and empirically to localities.