The Regional Environment in Indianapolis: Insights From High Growth Companies

As with other “typical” cities in the Midwest, Indianapolis is often overlooked in academic studies, but has much to offer the research, practice, and policy communities interested in entrepreneurship and its benefits.

As with other “typical” cities in the Midwest, Indianapolis is often overlooked in academic studies, but has much to offer the research, practice, and policy communities interested in entrepreneurship and its benefits (Motoyama et al., 2013). Our study supports the idea that Indianapolis (Max, 2013)—specifically, the greater Indianapolis/Carmel metropolitan area—represents an attractive place for business in its unique way.

Of special interest for regional competitiveness is a special subset of companies: high-growth firms, also called gazelles, which make disproportionate economic contributions especially to job creation (Haltiwanger, Jarmin, and Miranda, 2013; Kolko and Newmark, 2007). Most research on high-growth firms focuses on their contributions to the regional and domestic economy, whereas few studies have examined the role of regional environment for high-growth firms (see Motoyama and Danley, 2012; Neumark and Wall, 2006).

This study focuses on the regional environment for high-growth firms in the Indianapolis/Carmel area. Highlights of our findings are:

  • High-growth companies in Indianapolis were able to survive and grow largely without external angel or venture capital investment, two financial forms conventionally associated as the sources of growth. Most of the companies were initially financed by the founder/s, with personal funds being the most common mechanism. In addition, several entrepreneurs used bootstrapping of some kind. 
  • High-growth firms in Indianapolis face challenges in recruiting and retaining the right talent. This is particularly the case for entry-level, recent college graduates and for technology-specific skilled talent.
  • However, there appears to be a “boomerang effect” which draws many former residents back to the region after they have lived elsewhere, often for personal reasons such as raising children or being close to family. 
  • High-growth firms in Indianapolis do not generally have strong direct business ties with other companies in the region, including with vendors and customers, nor do they have significant direct competition in the region. 
  • The locational choice of high-growth entrepreneurs appears to be “by chance,” as opposed to a deliberate choice. The people interviewed were already in the region and did not move to Indianapolis specifically for the purposes of starting or growing a company, but they also touted its many advantages. 
  • Taking these findings together, people start businesses where they live. In other words, talented people in a region, such as entrepreneurs and technical experts, do not choose the place to start a business. This is in contrast to the currently dominant theories of the creative class. 
  • Other regional advantages identified in interviews include market size, locational advantage of proximity to other major markets, and a “Midwestern work ethic,” which seems to imply a hardworking attitude without job-hopping. 
  • Findings on the overall ecosystem are mixed. Most interviewees reported a generally positive overall environment, but not overwhelmingly so, and several interviewees indicated no effect or a negative impact of the overall ecosystem.