Some have credited California's lack of non-compete laws with the development and explosion of technology companies in Silicon Valley. But studies have also shown that states that enforce non-competes had higher rates of new business survival than in non-enforcing states.
In an article for Xconomy.com, Dane Stangler, Kauffman Foundation vice president of Research & Policy, explores the benefits and downfalls of non-compete laws on entrepreneurial activity.
Stangler examines the debate between quality and quantity of new businesses on the economy, as well as the various opinions on non-competes among companies, policy makers and entrepreneurs.
Read an excerpt below.
Non-Compete Agreements: The Good, the Bad, and the Ugly
Twenty years ago, renowned researcher AnnaLee Saxenian wrote a book called Regional Advantage, which compared the development of two high-tech regions, Silicon Valley and Route 128.
Everyone in the tech world knows how this story played out: In the face of global competition and technological trends, Silicon Valley reinvented itself and roared ahead, while Route 128 staggered in comparison.
The reason, Saxenian wrote, was the fluidity of the Valley compared to Route 128: ideas and individuals in northern California could more easily move between companies and, especially, in and out of startups and big corporations than they could outside Boston.
As a result, the speed of innovation and adaptation was faster.
Read the entire article at Xconomy.com.