Formation, growth and mobility of technology-based firms in the US economy*

Abstract

If different types of firms are flourishing in rural and urban areas, then it is appropriate to question whether both urban and rural economic development programs should focus on the formation and growth of the same type of firms. The product life cycle theory suggests that urban areas should garner the lion's share of new firm formations in newly-emerging industries, while rural areas will be the location for mature industrial manufacturing branch plants. This paper examines whether the anticpated rural/urban distribution of high-technology firms and branches are valid for the industry. Data taken from the US Small Business Administration's Small Business Data base for 1976 through 1986 show that high technology has been the high-growth industrial sector in the USA. Central to this growth has been a high rate of new firm formations which have been responsible for over 70% of new jobs formed in this sector. Contrary to expectations based on the product cycle, analysis by urban and rural employment growth...