TECHNOLOGY CENTERS DURING THE ECONOMIC DOWNTURN: WHAT HAVE WE LEARNED?
Ross
Gittell, University of New Hampshire
Jeffrey E. Sohl, University of New Hampshire
Principal Topic
The current economy—in recession after a period of strong growth—offers a good opportunity to further knowledge and understanding of the long-term contributions of the high technology entrepreneurial sector of the economy. There is strong evidence that high technology entrepreneurial firms contributed significantly to the long period of economic growth in the 1990s in the United States. Yet, after a period of time when the so-called “new economy” was thought to break rules about economic cycles, less is known about the resiliency of high technology centers and entrepreneurial firms during economic downturns. This paper attempts to further knowledge about the entrepreneurial sector of the US economy during economic downturns.
Method
This paper assesses the recent economic experiences of metropolitan areas and US states with high concentration of high technology firms. Many of the metropolitan areas with significant high technology concentrations (e.g., San Jose) and entrepreneurial states (e.g., Colorado) experienced significant growth in employment and income during the mid- to late 1990s. This analysis considers the 25 leading technology centers, as identified by the Milken Insititue’s “Tech Poles” and the states in which these centers are located to assess their most recent performance and current status. From the analysis we draw insights about the resiliency of high technology centers and entrepreneurial firms.
Results and Implications
Initial data analysis suggests that some of the most prominent high technology centers during the late 1990s, such as Silicon Valley and the Boston metropolitan area, have suffered the greatest decline in the early 2000s. Local economic cycles determined by local industry mix and product life cycles remain relevant even in the new economy. Yet, some high technology centers are more resilient then others. Smaller and more economically diversified high technology centers, with relatively low concentration of large manufacturing establishments and technology centers in relatively low cost states appear to be the most resilient during the current economic downturn. Key factors affecting economic growth include industry mix, the skill set of the labor force, and public policies (including tax policies) that strongly affect the entrepreneurial environment.
CONTACT: Ross Gittell and Jeffrey Sohl, University of New Hampshire, Whittemore School of Business and Economics, McConnell Hall, Durham, NH 0382; (T) 603-862-3340; (F) 603-862-4468; rgittell@chirsta.unh.edu
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