B2B financial service platform FINOM.de has released a study showing the best cities in the world for business innovation. And Phoenix has proven to be among the most innovative cities in the world, coming in at No. 51 in the global rankings.

As a company that is using new technologies to improve business and the life of entrepreneurs and professionals in Europe, FINOM decided to create the first FINOM Innovation in Business Index to see whether certain cities are hubs for business innovation. The study splits the innovation landscape into different areas, including research and development, startup activity and funding availability, in addition to looking at innovation on an individual industry level, for example in artificial intelligence, biotechnology and fintech. The resulting index gives insight into which global cities lead the way in having ecosystems that are fertile for business innovation, and reveals which cities are global leaders for innovation in each industry.

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“Being a B2B financial platform, we are quite aware that business innovation rarely happens in isolation,” comments Yakov Novikov, CEO and co-founder of FINOM. “Throughout history successful innovative companies have initiated the development of a supporting ecosystem in their home town or city, for example Ferrari, which brought employment and manufacturing expertise to Modena in Italy almost a century ago. More car companies subsequently moved to the city, including Lamborghini and Maserati, attracted by its deep industry knowledge and skilled workforce. This process eventually led to the creation of the so-called “Motor Valley” in that part of Italy. The same trend continues to be seen today, with different cities leading the innovation landscape in different industries. The study shows that Boston is the leading city for biotechnology innovation, while San Francisco tops the list for green technologies innovation. These cities have significant industry know-how and a wealth of supplier companies that feed into the supply chain.”

The 100 most innovative cities in the world

How the study was conducted

FINOM began by creating a shortlist of 200 cities based on their size and significance in the business world, which they narrowed down to the best scoring 100. The cities were then analyzed according to two broad categories. The first category, Innovation Areas, was made up of a number of subfactors which relate to different stages of the business innovation process. The second category, Industries, looks at which cities are leading business innovation on an industry by industry level.

For the first category, the research and development spending by companies, governmental organisations and universities in each city was assessed in recognition of the central role that R&D plays in innovation in business.

Next, the industrial ecosystem in each city was assessed to gauge the contribution of industry to the local area. In particular, it looked at the employment manufacturing and engineering companies bring to each city, and whether companies in these sectors are headquartered in the cities. The tech ecosystem was then analysed to measure the diversity and maturity of this sector in each city.

Following this, the number of startups founded since 2010 that have received funding since 2015 in each city were counted in order to acknowledge how innovation in business often comes from more nimble, disruptor companies. The total venture capital funding received by companies in each city since 2010 was also included as a measurement of the local support available for innovative businesses.

For the second category, the study analyzed the size of the local business ecosystem devoted to different innovative sectors, including artificial intelligence, biotechnology and green technologies, in order to capture how much different cities are dominating the growth and development of certain industries.

The resulting index provides an overview of the best global cities for innovation in business, ranked by scores and divided by country.