Local Entrepreneurs Lead to Long-term Growth

A pair of recently released reports by the Kauffman Foundation focus on efforts at the local level to create jobs and build long-term economic growth. When viewed alongside one another, the message to policymakers seems clear -- focus on nurturing local entrepreneurs over attracting out-of-state firms with financial incentives. 

Evaluating Firm-Specific Location Incentives looks at Promoting Employment Across Kansas (PEAK), one of that state's primary incentive programs, and finds that firms receiving incentives are not more likely to generate new jobs than similar firms not receiving incentives. It also showed that firms relocating from other states were no more likely to experience job growth at higher rates than existing homegrown companies. 

Essentially, the grass is not always greener on the other side. 

The other report provides some empirical support to Brad Feld's 'Boulder Thesis' from his book Startup Communities: Building an Entrepreneurial Ecosystem in Your City. The findings in "Think Locally, Act Locally: Building a Robust Entrepreneurial Ecosystem" suggest that policymakers -- along with entrepreneurship supporters and entrepreneurs themselves -- focus their efforts at the local level. 

The report combines results from surveys conducted at 1 Million Cups Kansas City events and found that: 

  • Entrepreneurs follow local entrepreneurs.
  • Local networks thicken over time.
  • Entrepreneurial demand is high for peer-based learning and networking.
  • Different programs reach different entrepreneurs.

"While the value of experience in building startup ecosystems is irreplaceable, having empirical evidence like this validates what I've witnessed in communities all over the world," Feld said. "Though a small sample, this research provides proof that cities can foster entrepreneurship if they follow a few simple guidelines."

But that doesn't mean that there is one magic program that will work for every city.

"No one entrepreneurial ecosystem can be served by one program," said Yasuyuki Motoyama, a senior scholar in Research and Policy at the Kauffman Foundation and an author of the report. "Because entrepreneurs and their business needs are diverse, you need a host of programs to have an effective community." 

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