Association for Public Policy Analysis & Management

As policy makers and stakeholders at national, state and local levels seek to contribute to local economies through policies and institutions that are aimed at bolstering entrepreneurship and technological innovation, the role of these policies and institutions in the outcomes of entrepreneurial firms must be better understood. Often, a lack of data that adequately measures policy impact and effectiveness limits such an understanding. The role of policy in building social networks that contribute to entrepreneurial success is one such area warranting empirical investigation. Networks are argued to be crucial resources for startup development, especially in industries where knowledge is dispersed and many firms work together to bring products to market (Powell, Koput, & Smith-Doerr, 1996). Furthermore, greater network centrality has been found to lead to greater levels of firm patenting (Whittington, Owen-Smith, & Powell, 2009). We contribute to this literature and ask whether networks of firm founders and assistors matter for entrepreneurial success. Specifically, are firms that are more central in a network of firms and supporting institutions more likely to have higher sales, more employees, greater levels of innovation, and/or issue an IPO? We hypothesize that firms that are more highly connected through founders and institutional supports benefit from greater information and resource access that will ultimately lead to these positive startup outcomes.

Using a case study of bioscience startups and supporting institutions in the Research Triangle Park region of North Carolina, we construct a network of firms that are connected by founders and through governmental, university and for-profit support entities. Our data is from a longitudinal, relational database of over 700 bioscience firms in the region, their founders, and information on when they received services from governmental, university and for-profit support entities. This unique database allows us to analyze the influence of policy and institutions, as network builders, on entrepreneurial outcomes.

We provide descriptive results in the form of correlations between network positions and entrepreneurial outcomes as well as network visualizations. Descriptive results also identify how firms are related to each other in terms of their origin, e.g. through a university or as a corporate spawn, and how firms are related in terms of support entities such as the North Carolina Biotechnology Center (a state funded institution that supports North Carolina biotechnology firms with loans and grants). Regression methods identify significant factors associated with entrepreneurial outcomes, using several network centrality measures as key explanatory variables. Preliminary results indicate that over half of the firms are connected to each other via common governmental, university and for-profit support entities. Findings will shed light on how firms make network connections through such entities that help their companies perform successfully. They will also show that policies supporting entrepreneurship and regional development may be better assessed with the inclusion of indicators of their contribution to entrepreneurial networks. Finally, findings will demonstrate the efficacy of current regional policy attempts to bolster entrepreneurship and strengthen local economies.