Firm Building and Entrepreneurship in Second-Tier High-Tech Regions

Abstract

This paper examines how a second-tier high-technology region leveraged corporate assets—mostly from transnational firms—in building a knowledge-based economy. The paper reviews how firm building and entrepreneurship influence the evolution of a peripheral regional economy. Using a case study of Boise, Idaho (the US), the research highlights several important sources of entrepreneurship. Entrepreneurial firm formation is closely linked with a region's ability to grow incubator organizations, particularly innovative firms. These innovative firms provide the training ground for entrepreneurs. Firms, however, differ and the ways in which firm building activities influence regional entrepreneurship depend on firm strategy and organization. Thus, second-tier high-tech regions in the US are taking a different path than their well-known counterparts such as Silicon Valley or Route 128 around Boston.

Notes

Several of these firms have lost their independent status and were acquired in recent years: The Morrison-Knudsen Company is a major construction firm that was founded in 1912 in Boise. The firm worked on important projects such as the Hoover Dam and the San Francisco Bay Bridge. It was acquired by Washington Group International in 2000 but remains headquartered in Boise. Albertson started as a small grocery store in 1939 in Boise. It grew into a major supermarket chain and was acquired by a group involving Supervalu and CVS Pharmacy in 2006. Ore-Ida was acquired by J.H. Heinz Company in 1965.

We estimate R&D funding at the metropolitan level by using data from the National Science Foundation (NSF) at the state level. Unfortunately, NSF does not collect this type of data for cities or regions. We follow the methodology used by Austrian and Taylor (2007), whereby the level of R&D funding was estimated by distributing the statewide funding according to each county's share of employment in the industry sector Scientific Research and Development Services (NAICS 5417). A limitation of this method in the context of Idaho is that it may skew the distribution of R&D funds allocated to a federal lab located in another metropolitan region (Idaho National Laboratory is located in Idaho Falls, about a 4-h drive from Boise).

The online survey was launched on 26 July 2006 and was closed on 1 October 2007.

We created a high-technology company list that contains about 350 firm entries. E-mail addresses were collected for about 215 firms and the survey was sent to them via e-mail. The survey was also sent out by the following groups: Kickstand (http://kickstand.org/Index.aspx) and Idaho Office of Science and Technology (published the survey link in their newsletter; http://technology.idaho.gov/). Several individuals forwarded the survey e-mail to other individuals and groups. The snowball technique did not allow us to determine the size of the sample.

The online survey allowed individuals and companies to enter their survey response without any filter. This allowed for the possibility of invalid responses. A total of 26 invalid responses were received. They included: 5 responses that were either test entries or jokes, 12 multiple entries (several individuals from one firm filled out the survey), 1 response from an individual for whom the company could not be verified, 5 firms that do not belong in the industry categories we were interested in (i.e. catering service, financial services, etc.), 1 firm that does not exist anymore, and 2 firms located outside of the Boise-Nampa Metropolitan Statistical Area. Of the 135 valid responses, 91 respondents completed the survey.