Entrepreneurship Critical to Regional Development
Although the report is primarily focused on the U.S. compared to other nations, the final section of the report is titled "Fostering Entrepreneurship is Becoming Critical to Regional Economic Development." The report states:
Entrepreneurship is a key driver of regional economic growth. A recent study for the Small Business Administration found that the most entrepreneurial regions in the United States had 125 percent more employment growth, 58 percent more wage growth and 109 percent higher productivity than the least entrepreneurial regions...The study observed that, “Innovation without entrepreneurship generally yields minimal local economic impact…Innovations are highly portable, whereas entrepreneurship is place-based."In other words, Pittsburgh's strengths in R&D will not provide their full economic payoff in jobs unless the region has a healthy entrepreneurial climate.
What are the keys to making regions more entrepreneurial? The report lists three:
1. Creating Angel Networks, i.e., groups of individuals that provide early stage funding for entrepreneurs. The Pittsburgh Region is fortunate to have a well-managed angel network, BlueTree Allied Angels, but it needs more members to achieve its full potential.
2. Leveraging Knowledge Assets. The report notes that "while linkages between universities and industry can happen on a national or global level, the benefits often occur disproportionately at the regional level...Universities are the wellspring for talent and ideas, and can function as economic magnets to attract investment, entrepreneurs and talent to a region." Here again, the Pittsburgh Region is fortunate to have two major research universities and a leading academic medical center, as well as over a hundred corporate R&D centers.
3. Catalyzing Connectivity. The report states "Combustion behind innovation often emerges from chance encounters, face-to-face communications, and close interactions among people, ideas and resources. To facilitate these connections, successful regions create bridges that bring together entrepreneurs, academics, labor leaders, company officials and public sector leaders."
The third area -- connectivity -- is where Pittsburgh has fallen short in the past, although a recent article in the Pittsburgh Post-Gazette suggests that this may be changing. Interestingly, the Council on Competitiveness report cites Lancaster, Pennsylvania as having a model effort for fostering connectivity:
A series of focus groups in late 2004/05 revealed to Lancaster County, PA (population 500,000) economic developers both a supply-side and a demand-side problem. Entrepreneurs lacked financing while investors complained of a lack of strong management teams in candidate companies. Lancaster County found a solution through the Venture Communities program. Venture Communities is essentially a template to streamline the process for aligning capital, executive talent and industry expertise with entrepreneurs.Here in the Pittsburgh Region, Innovation Works provides support for technology entrepreneurs at the earliest stages, and The Technology Collaborative and the Pittsburgh Life Sciences Greenhouse provide support specifically for startup firms involved in information technology, robotics, and biotechnology. And HELP (Helping Entrepreneurs Learn from Peers) has received funding from local foundations to launch a new web portal that should help entrepreneurs make better connections to all of the various organizations that can help them. But it will need support from all of the companies, individuals, and organization in the community in order to be truly successful.
The Council on Competitiveness report is intended as a call to action for keeping the United States competitive with other countries in supporting entrepreneurship. But it can also be a call to action to the Pittsburgh Region to be more competitive with other regions in the U.S. in supporting entrepreneurship.