Our approach aims to understand the links between the creative industries and other sectors in the wider economy; to examine which firms and industries are most 'innovative'; and to bring these together to identify the extent to which strong business-to-business (B2B) linkages to the creative industries are associated with high levels of innovative activity and performance.

Main findings

We find evidence of a significant positive impact from creative linkages on some, but not all, dimensions of innovation behaviour. Our estimates suggest that firms that spend double the average amount on creative products – 6% compared with 3% of their output – are 25% more likely to introduce product innovations either new to their firm or market.

There is also some suggestion that knowledge transfers associated with purchases by firms of creative products may support improvements in their product range and quality.

Our results therefore support the hypothesis that supply chain linkages to the creative industries are positively related to innovation elsewhere in the economy. This suggests that the creative industries may play a more important role in the UK's ecology of innovation than has been recognised to date.

Recommendations

Policymakers should stress the wider benefits of creativity when promoting the contribution that design can make to business performance. Efforts to enable knowledge transfer should also support the exchange of new ideas between creative businesses and firms in other sectors of the economy.

Our findings suggest that policymakers need to reconsider the frameworks on which they base creative industries and innovation policy. Creative industry support measures may be more productively targeted at stimulating innovation links between creative businesses and firms outside the creative industries. And the links point to additional levers by which innovation policy can improve the UK's capacity for innovation.

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