Do Entrepreneurship and High-Tech Concentration Create Jobs? Exploring the Growth in Employment in U.S. Metropolitan Areas From 1991 to 2007

Abstract

Technological concentration and innovation have been identified as important forces behind growth, and entrepreneurship has been recognized as an important link between new knowledge and economic growth. This article examines the influence of entrepreneurship and technology concentration on employment growth in U.S. metropolitan areas (MSAs) over the course of the last full business cycle from 1991 to 2007. The findings are in support of the efficacy of entrepreneurship together with high technology expansion in job creation. The findings question the view that entrepreneurship in and of itself, or a high but not growing high technology concentration, can be strong contributors to employment growth. In contrast, this analysis indicates that MSAs with growing high-tech activities and above-average entrepreneurship can be expected to add jobs much faster than other MSAs. The findings suggest a need for a more targeted approach to economic development and job creation.

START-UP OR SCALE-UP?: An Approach through Economic Impact

“…The relationship between new businesses and economic development is quite complex. While most studies focus on its effect on employment (Arauzo-Carod, Solís, & Bofarull, 2008;Doran et al, 2016;Gittell et al, 2014), new firm creation can have two types of effects on economic development: direct and indirect (Fritsch & Mueller, 2004). Indicators for regional performance other than simply employment change should therefore be utilized.…”

“…The issue of entrepreneurship and the support for small and medium sized enterprises (SMEs) have therefore been an important part of the economic strategy of national governments, especially in developed countries (Č adil, Mirošník, & Rehák, 2017). It has also become a concern in recent years in the field of regional science, particularly since many of the formulas that have been proposed as solutions to the economic crisis have been based on the promotion of entrepreneurship (Doran, McCarthy, & O'Connor, 2016;Gittell, Sohl, & Tebaldi, 2014), especially given the long-term relationship between new-firm start-ups and the unemployment rate (Aubry, Bonnet, & Renou-Maissant, 2015). The evidence firmly suggests, moreover, that policymakers should launch policies that promote entrepreneurship as a means of boosting economic activity at the regional level (Hafer, 2013).…”

Metropolitan Innovation in the New Economy

“…First, there is disagreement about its measurement (startup versus self-employment rates), although there is increased awareness that some startups, like patents, are much more important than others. Second, there is disagreement about the role of entrepreneurs in the creation of new knowledge [54,55]. In some instances, they appear to be the passive recipients of unused regional knowledge while in other cases entrepreneurs work closely with designers and inventors to bring new products to the market.…”

Clusters and Regional Performance

“…For example, some studies point to the lower skill levels of residents in distressed communities as a constraint on knowledge spillovers and innovation (Jargowsky, 1997; Moretti, 2012; Wilson, 1987). In turn, this constrained level of innovation could reduce the potential of clusters to create jobs (Delgado, Porter, et al, 2014; Gittell, Sohl, & Tebaldi, 2014). Lower quality of transportation and communication infrastructure, and zoning regulations may also impede the ability of inner cities to support new businesses that would strengthen clusters; however, certain characteristics of inner cities could foster agglomeration.…”