New research confirms what TBED practitioners already understand: there’s no single formula for building successful innovation-driven systems. That’s one of the reasons SSTI advises policy makers to focus on the strengths and needs of your region’s innovation system rather than how much your neighbors are spending. The study’s findings about the role of knowledge spillovers, however, offer useful insight into the characteristics that matter most for improving outcomes in your region.
The paper, published in Small Business Economics, analyzed 377 U.S. metropolitan areas to identify which combinations of regional conditions are most associated with strong high-tech entrepreneurial innovation (as measured by high-tech startup rates and the number of firms receiving SBIR awards). While skilled talent and venture capital were consistently present across successful regions, the researchers found that the type of knowledge spillover occurring within a region mattered just as much.
Specifically, the researchers tested four types of knowledge spillovers (flows between related industries, flows across unrelated industries, industry cluster strength, and regional specialization) and found that cross-industry flows, even if across unrelated sectors, were most prevalent in successful regions.
This suggests the importance of creating opportunities for knowledge to move across sector lines, for example, through cross-industry convenings, collaborative research, or the movement of people between universities, startups, and established firms. Entrepreneurs can play a particularly important role in this process, serving as bridges who carry and recombine knowledge from different domains into new ventures. TBED initiatives supporting innovation entrepreneurs, such as venture development organizations, accelerators, university incubators, innovation hubs, SBIR assistance and mentoring programs can help create the collisions needed to spur more opportunities for spillovers to occur.
A full list of factors analyzed is as follows:
|
Factor |
Metric |
|
Talent |
Bachelor’s degree attainment, creative class employment |
|
Knowledge creation |
Patents per capita, university R&D employment |
|
Knowledge spillovers |
Related & unrelated variety, cluster strength, regional specialization |
|
Business support |
Business incubators per capita, professional services employment |
|
Venture capital |
VC investment per capita |
|
Networks |
Social capital index, business density |
|
Institutional quality |
Economic freedom index |
|
Entrepreneurial culture |
Self-employment rate (proxy for prevalence of entrepreneurial role models in a region) |
This article was prepared by SSTI using Federal funds under award ED22HDQ3070129 from the Economic Development Administration, U.S. Department of Commerce. The statements, findings, conclusions, and recommendations are those of the author(s) and do not necessarily reflect the views of the Economic Development Administration or the U.S. Department of Commerce.