The FINOM Most Innovative Cities Ranking

The FINOM Innovation in Business Index reveals which global cities are focal points for business innovation and in which areas certain cities are leading the charge in conceiving new ideas and solutions for the modern world.

At FINOM, we are constantly innovating in the financial services space to provide solutions for European SMEs and professionals. Drawing on inspiration from our own industry and others in the process. Each year we are fascinated by the evolution and digitalization of the business world as new and existing companies around the world innovate to answer the needs of society. We therefore decided to construct the Innovation in Business Index in order to recognise which global cities lead the way in establishing a landscape fertile for innovation. 

To begin the study, we compiled a list of indicators that capture the different corners of the innovation landscape, and created an initial shortlist of 200 locations on account of their size and significance in the business world, which we then shortened to the best scoring 100 cities.

The first topic we looked at was research and development, which sits at the centre of all innovation. To capture the full sweep of R&D institutions, both public and private entities were considered, including universities, governmental organisations and private companies.

In many countries, universities are the primary receivers of research funding, responsible for developing new schools of thought as well as educating the business leaders of the future. Each city’s universities were rated for their research capabilities and funding levels. Next, we examined the quality and funding level of governmental R&D organisations based in each location as a measure of the backing that each country allocates to innovation. Additionally, the R&D spending of 2,500 global companies was compiled.

We then moved on to assess the business landscape in each place. To start, we counted the number of start-ups funded in each city since 2015 in order to recognise their role in modernising industries and driving change. We then analysed the tech ecosystem in each location by measuring the maturity and sector diversity of start-up activity.

The contribution of industry to the local economy was also considered by calculating the number of people and share of the working population employed in manufacturing, as well as whether the city is home to the headquarters of any major companies operating in this area. Lastly, venture capital funding figures for companies founded since 2010 were collected in order to reflect the quality of new companies and financial backing on offer in the different locations.

To conclude the study, we analysed innovation on an industry level to identify which cities are leading the way in reshaping different business sectors, including AI and machine learning technologies, FinTech and Biotechnology. The total number of companies and the amount of funding they receive were used to gauge this factor.

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Instructions for journalists

The index reveals the most innovative business cities around the world, ranked by score. The tables below reveal the results, where a higher score indicates a more innovative city. You can filter each factor from highest to lowest and vice versa by clicking on the icon above each column. For a full explanation of how each factor was calculated, please see the methodology at the bottom of the page.

Innovation Areas

  • Company R&D Spending By HQ
  • Governmental R&D Organizations
  • Industrial Ecosystem
  • Startups
  • Tech Ecosystem
  • Venture Capital Funding
  • Universities R&D

Industries

  • AI & Machine Learning Innovation
  • Healthcare
  • Banking & Financial Services
  • IT & Software Development
  • Biotechnology Innovation
  • Hospitality, Recreation & Accommodation
  • Education
  • Mobility
  • FinTech Innovation
  • Retail
  • Green Technologies Innovation
  • Travel
Innovation Areas
Industries

Methodology

The FINOM Innovation in Business Index uses data to determine which global cities are responsible for driving forward innovation in the business world. The study analyses 100 cities across a range of diverse factors to create a final ranking based on a total score.

The cities were selected from an initial shortlist of 200 that are renowned for their start-up activity, research capabilities and strong industrial presence. The final 100 cities were chosen based on their high scores for these factors.

Scoring

Multiple indicators were used when scoring each factor. The underlying indicators were first standardized using a Z-Score [z = (x-μ)/σ; μ=indicator mean; σ=indicator standard deviation] normalization procedure. The final score was computed as a weighted average of the component Z-Scores, and the resulting score normalized to a scale from 50 to 100 using min-max normalization [(value - min)/(max-min)*50+50]. The floor of 50 for the scale was chosen to emphasise that the cities presented in the final dataset represent the highest ranking cities chosen from a shortlist of high-ranking cities.

The factors and their component indicators are shown below:

Innovation Areas

  • Company R&D Spending By HQ

    The presence of the headquarters of for-profit companies with a significant R&D spend and research output in each city. A higher score indicates higher spend on R&D by businesses headquartered in the city, and a higher score for research output. The score is based on the following indicators:

    • R&D spending by companies headquartered in each city.
    • Highly ranked for-profit research institutions.
    • R&D spending at “business enterprise” research institutions (national level data).

    Sources: European Commission; SCImago Institutions Rankings; OECD.
  • Governmental R&D Organizations

    The presence of internationally recognized governmental research institutions in each city, and R&D spending at these governmental research institutions. A higher score indicates a greater number of highly ranked governmental research institutions, and greater spending. The score is based on the following indicators:

    • Highly ranked governmental research institutions.
    • R&D spending by governmental research institutions (national level data).

    Sources: SCImago Institutions Rankings; OECD.
  • Industrial Ecosystem

    The contribution of industry to the economy of each city. A higher score indicates a larger industrial presence. The score is based on the following indicators:

    • The number of people employed in manufacturing.
    • The share of the workforce employed in manufacturing.
    • The presence of headquarters of major manufacturing and engineering corporations.

    Sources: OECD.
  • Universities R&D

    The presence of internationally recognized research universities in each city. A higher score indicates a greater number of highly ranked universities. The score is based on the following indicators:

    • Highly ranked universities for computer science research.
    • Highly ranked universities overall.

    Sources: Times Higher Education World University Rankings; SCImago Institutions Rankings.
  • Tech Ecosystem

    The diversity and maturity of the business ecosystem in each city. A higher score indicates the presence of several mature sectors in the city. The score is based on data on the number of funded startups in each business sector. Only sectors where the city ranks in the top half of the dataset contribute to the final factor score.

    Sources: Crunchbase; AngelList.
  • Startups

    The number of companies founded in the city after 2010 that have received funding at some point since 2015. A higher score indicates a larger number of funded startups.

    Sources: Crunchbase; AngelList.
  • Venture Capital Funding

    The total amount of funding raised by companies founded in the city since 2010, presented as a score.

    Sources: Crunchbase; AngelList.

Industries

  • AI & Machine Learning Innovation

    The size of the business ecosystem in each city devoted to artificial intelligence and machine learning technologies. A higher score indicates more companies and funding related to the segment. The score was calculated using companies in the following business areas:

    • Ad Targeting
    • Analytics
    • Artificial Intelligence
    • Big Data
    • Computer Vision
    • Data Mining
    • Intelligent Systems
    • Machine Learning
    • Predictive Analytics
    • Prediction Markets

    Sources: Crunchbase; AngelList.
  • Biotechnology Innovation

    The size of the business ecosystem in each city devoted to biotechnology. A higher score indicates more companies and funding related to the segment. The score was calculated using companies in the following business areas:

    • Bioinformatics
    • Biometrics
    • Biopharma
    • Biotechnology
    • Medical
    • Pharmaceutical

    Sources: Crunchbase; AngelList.
  • FinTech Innovation

    The size of the business ecosystem in each city devoted to FinTech. A higher score indicates more companies and funding related to the segment. The score was calculated using companies in the following business areas:

    • Bitcoin
    • Cryptocurrency
    • Financial Exchanges
    • FinTech
    • Micro Lending
    • Mobile Payments

    Sources: Crunchbase; AngelList.
  • Green Technologies Innovation

    The size of the business ecosystem in each city devoted to green technologies. A higher score indicates more companies and funding related to the segment. The score was calculated using companies in the following business areas:

    • Environmental Engineering
    • GreenTech
    • Green Building
    • Green Consumer Goods
    • Renewable Energy

    Sources: Crunchbase; AngelList.
  • Industry Innovation

    The size of the business ecosystem in each city devoted to a range of business sectors. A higher score indicates more companies and funding related to the segment. Businesses were categorised into relevant business sectors, and the score for each sector is presented as an individual factor:

    • Banking & Financial Services
    • Travel
    • Retail
    • IT & Software Development
    • Hospitality, Recreation and Accommodation
    • Education
    • Mobility

    Sources: Crunchbase; AngelList.