Foreign Investors' Reasons for Pursuing Creative Businesses in the United Kingdom
The creative industries in the UK have a global reach, attracting investment from around the world. A new discussion paper, titled "The Motives of Inbound Foreign Direct Investors in the UK Creative Industries," authored by Dr Sara Maioli, Reader in Economics at Newcastle University Business School, and Dr Jonathan Jones, Senior Lecturer at the same institution, sheds light on the specific motivations for foreign direct investment (FDI) in these sectors.
The paper begins with a brief overview of the literature of FDI in the creative industries before analysing data from the Orbis database. It identifies that motives for FDI vary by both creative subsectors and types of investors.
Market-seeking motives are prevalent, with investors aiming to access the UK’s large and sophisticated consumer market for creative goods and services. Resource- and asset-seeking motives also come into play, as some investors seek to acquire or partner with creative firms, gaining valuable know-how, talent, or intellectual property.
Strategic asset-seeking motives are particularly relevant for multinational enterprises, who may invest to strengthen their global creative capabilities and networks by tapping into the UK's established creative hubs. Institutional- and policy-related motives also play a role, with the UK’s favourable policy environment and government support mechanisms attracting inbound FDI, though effectiveness varies across subsectors.
High-tech creative subsectors, such as digital media and video games, attract FDI focused on innovation and knowledge acquisition. In contrast, traditional creative subsectors, like publishing and performing arts, often see investment motivated more by market access and brand expansion.
Financial investors, such as venture capital and private equity, tend to seek growth opportunities and scalable business models within creative start-ups. Strategic investors, like multinational media corporations, prioritise complementary assets and enhancing global footprints.
The study also looks at ways that institutions and governments can encourage more FDI. It examines the impact of Brexit on the UK creative industries from 2014-2019 and offers policy recommendations for encouraging more FDI in the UK's creative industries.
The paper also explores the potential of the creative industries for the Levelling Up agenda, examining transitional pathways to sustainable theatre production in the UK, and looking at the way FDI changes across the UK's regions. Furthermore, the report identifies examples of work taking place in fashion micro and small enterprises towards Net Zero.
In conclusion, the motives for foreign direct investment in the UK's creative industries are nuanced and depend on the creative subsector’s characteristics and the investor's type and strategic goals, blending commercial market-seeking with knowledge and asset acquisition motives aligned with the UK's unique creative ecosystem.
