Association for Public Policy Analysis & Management

A large literature examines the question of why some regions succeed in nurturing high-technology industries and entrepreneurship, while other regions, that are seemingly rich in factors that should produce such growth, fail (see Feldman & Kogler, 2010). Answers remain elusive and our current understanding is incomplete. This creates a policy problem, because governments devote considerable resources to try to create vibrant local economies. Answering questions about regional entrepreneurial development therefore carries policy, as well as scholarly significance.

This paper argues one reason behind divergence in regional entrepreneurial development is due to the degree of coherence in the regional system. Regional coherence is defined as the degree of alignment in knowledge, institutional and organizational policies, and actions that create necessary resources for entrepreneurial development, as well as the degree of network density which allows entrepreneurs to access resources. Prior research highlights the importance of institutions, firms, and entrepreneurs to economic growth, yet overlooks causal mechanisms behind actors' interactions (Bjørnskov & Foss, 2016). This paper argues such coherence occurs when a region’s scientific, industrial, and technological bases operate in a synergistic, system-oriented fashion.

The paper begins with a comparative analysis of regional coherence patterns across MSAs in the US over the period 1976-2012 to establish that variations in coherence across regions exist and are related to specific economic outcomes. We focus the analysis on the biotechnology industry. Data from USPTO on all biotechnology patents in the US and their non-patent citations are extracted. Next, these citations are matched to scientific domains following Web of Science’s categorization, and geo-localized to develop a measure of regional coherence, termed regional alignment. Regional alignment measures the synergy of a region’s technological and scientific expertise in certain fields relative to other regions and the nation. County Business Patterns and National Establishment Time Series data are then used to construct geo-localized measures of industrial development to assess the relationship between alignment and economic outcomes in MSAs over time.

We next investigate determinants of regional coherence by considering whether, and how, endogenous institutional actors influence a region’s coherence over time in an in-depth analysis of a specific geographic and institutional setting: the Research Triangle region’s biotechnology industry. The PLACE: Research Triangle database provides information on the universe of entrepreneurial, biotech firms and their founders. Data include firms’ receipt of public and private funding and participation in public and private support intermediaries such as incubators. Panel regressions model the change in alignment over time as a function of the concentration of institutional supports and the policy mix, as well as the firm networks generated by institutions. By focusing on one region, our data allows us to consider if there are breaks in alignment, whether public and private institutional supports and network evolution influences alignment, and the timing of these events. Therefore, findings provide a temporal example of the development of a regional entrepreneurial economy, and improved understanding of the mechanisms behind development. Uncovering the dynamics upon which regional economic trajectories may be intervened is of particular importance to policymakers.