Hanse Model vs Hub Model in the Design of an European Startup Ecosystem

Hanseatic League

Hanseatic League

In the last years a bunch of city rankings has been published over the Internet, illustrating which city “is the place to move” in Europe for creating Tech Startups: London, Paris, Berlin, Amsterdam to name a few. The rush to city rankings has something to do with the idea that another Silicon Valley in the elder Europe is possible and that the Hub Model is the way to realize it.

I’ve been always uncomfortable in supporting the “Hub Model” idea and I think that those supporting this view are missing two important points:

  1. Europe is not US, we have a different economic history and the way Europeans have built successful economic organizations shows peculiar “social attitude” towards business.
  2. We live in the post-information age, where Internet allows resources coordination across physical and political borders at zero cost and “best practices” often fail

I try to explain my view starting from the way successful industrial districts or clusters were born in USA.

In general, the story is something like this: entrepreneurs choose a strategic place, build a big factory or a constellation of factories, then Americans move quickly around that place and build a kind of eco-system centered on the needs of people working there. This pattern has been observed in Silicon Valley, Detroit or Las Vegas.

Now let’s look at the Europe. The history of industrial revolution, which started in England and spread over the world, owes a lot to farmers, artisans and commodity traders’ traditions and culture. These actors, other than owning means and infrastructures for starting factories (skills, fields, farms, mills, ships…), were used to be organized in guilds, town associations, leagues or commercial ventures in order to share risk and protect common interests. Personal relationships had been always crucial for business in Europe: a lot of industrial districts grew up under the influences of a network of “relations and resources”. The interesting point is that these relations and resources network was referred to a geographic area whose boundaries were not defined by those of cities or countries. It was the human bonds that defined those boundaries.

From a sociological point of view, it seems to me that a relevant difference between EU and US economic growth is time-causality between human relations and business opportunities: looking at history, in Europe the strength of relations caused industrial growth, while in US industrial growth caused relation strengthening.

If you like history, you can find another example of this pattern in the 15th century. During this period, period the Baltic commercial routes were controlled by the European Hanseatic League, “a commercial and defensive confederation of merchant guilds and their market towns [...] created to protect economic interests and diplomatic privileges in the cities and countries and along the trade routes“. The Hanseatic League was nothing else than a very powerful network organization of economic interests across multiple cities and countries. It was an economic and defensive alliance made by people sharing a common stake in trading.

My two cents here is that Europe can play an important role in tech and innovation sectors only if she starts looking at her history and social characteristics. Thinking about an European Hanse Model instead of replicating an American Hub Model is something I feel more promising and sustainable in the Design of an European Model for Innovation Growth. It means fostering the coordination of a modern collaborative network of innovation stakeholders, beyond city boundaries, instead of struggling for the organization of obsolete and unnatural hierarchies.

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