The synergism of independent high-technology business starts

Abstract

High-technology business are popular among policy makers and economic development strategists both in the USA and elsewhere. Hence an integral part of many state and/or national development policies revolves around promoting the formation of new small high-technology business. But it is not clear from this paper whether births of new small high-technology firms generally represent either a leading or lagging indicator in economic development, because different results were obtained during the 1976-1980 and 1980-1984 preiods. In the later period, high-tech births lagged general economic development, a result which was reversed during the 1976-1980 period. Moreover, variables which tested the effect of promoting high-technology policies across states did not result in significant increases in new high-technology firms. Policies therefore centered on the promotion of technology starts to the exclusion of non-technology starts are questioned in this paper. The methodology employed to test the wisdom of high-technology promotion compares high-technology business formation rates by state across time periods with several potential explanatory variables and formation rates of non-technology business. Clear answers to the primary research question were not achieved. However; a clear synergism was shown to exist among high-technology births and between high-tech and non-high-tech manufacturing births. In addition, differing from the general business population, high-tech deaths varied substantially across states.