Entrepreneurship is the driver for regional economic growth across the country. Innovation and entrepreneurship are linked in the competitive communities strategy of brainpower, quality place and innovation. Sustaining economic growth depends on entrepreneurs capitalizing on innovation. A good measure of entrepreneurial activity in your community is to count new company births. Another predictor is the annual dollars invested in R&D activities. The most entrepreneurial regions of the country (large, medium and small) spend 54% more than the least entrepreneurial regions according to a 2004 study by Advanced Research Technologies LLC, The Innovation-Entrepreneurship Nexus. Find out how your region stacks up by checking out the appendix chart that shows Regional Entrepreneurship Index, rankings for New Firm Births, annual Change in New Firm Births and percent of New Firms Growing Rapidly. The following are excerpts from the report on the impacts for large, medium and small regions:


“Differences in economic growth between the most and the least entrepreneurial regions are most significant for large regions. Among large U.S. regions, the most entrepreneurial realize 100 percent greater average annual gains in employment and 146 percent greater average gains in productivity than the least entrepreneurial. In addition, average annual wage growth for the most entrepreneurial large regions is 7.8 percent, which is 73 percent greater than that of the least entrepreneurial (4.5%). Entrepreneurship appears to be linked with higher levels of economic growth and prosperity. These advantages also appear sustainable over time...”

“Among U.S. regions of medium size, the most entrepreneurial realize 85 percent greater average annual gains in employment and 58 percent greater average gains in productivity than the least entrepreneurial. In addition, average annual wage growth for the most entrepreneurial medium-sized regions is 6.1 percent, which is 45 percent greater than that of the least entrepreneurial regions in this category. Like the best of the large regions, the most entrepreneurial medium-sized regions appear to possess an advantage in their ability to leverage indigenous entrepreneurship activity for long-term economic gain.”

“Among small U.S. regions, the most entrepreneurial realize 73 percent greater average annual growth in employment and 50 percent greater average gains in productivity than the least entrepreneurial. In addition, average annual wage growth for the most entrepreneurial among the small regions is 14 percent greater than that of the least entrepreneurial regions in this size category. The entrepreneurial elite among the smaller regions on average also produces 87 percent more new ventures, and, like their large and medium counterparts, are able to sustain their competitive advantage over other small, less entrepreneurial regions.”

Developing regional mechanisms and processes that bring together innovation and entrepreneurs is an important strategy for Competitive Communities. Whether in the form of a “think tank”, a consortium or other means of getting different brains around the table to explore and develop the potentials of new ideas, just do it. You will be surprised at the creativity in your regional community. The following is another excerpt from the report:

“Entrepreneurs assemble the resources necessary to create economic transaction activity (e.g., new products, new markets, new ventures, etc.) around innovation. The Nexus proposition suggests that the enterprising transaction activity of entrepreneurs (i.e., individual or organizational) enhances the economic value of innovations. To derive the greatest benefit from an investment in innovation capacity, therefore, regional leaders may benefit from a greater understanding of the dynamic role of entrepreneurship and the real opportunities that exist at the innovation entrepreneurship nexus. The Nexus Proposition, therefore, proposes that entrepreneurship is a generative process through which innovation influences regional economy. In other words, all or some of the overall impact of innovation on regional economy is indirectly realized through entrepreneurship.”

Also refer to these additional Competitive Communities entries: Successful Communities Measured by Outcomes, Growing Rural Competitive Communities, Nurture Innovation Cultures and Building Innovation Communities - Are You Counting Your Entrepreneurs?