Handbook of Research on Innovation and Clusters
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Handbook of Research on Innovation and Clusters

Cases and Policies

Edited by Charlie Karlsson

The role of innovations and clusters has increasingly dominated local and regional development policies in recent decades. This authoritative and accessible Handbook considers important aspects of high-tech clusters, analyses insightful cluster case studies, and provides a number of recommendations for cluster policies.
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Chapter 18: The Entrepreneurial Event Revisited: Firm Formation in a Regional Context

Maryann P. Feldman


18 The entrepreneurial event revisited: firm formation in a regional context Maryann P. Feldman 1 Introduction Entrepreneurship and new firm formation is central to current thinking about economic growth, especially at the regional level and specifically in the formation of regional clusters of industrial innovation. Startup firms are the embodiment of innovation, especially for radical new technologies that are not easily absorbed into existing firms (Audretsch, 1995). New industries such as semiconductors, microcomputers, biotechnology, and information and communications technologies (ICT) have largely developed in geographically defined clusters, and although this phenomenon is certainly not new, places with such colourful names as Silicon Valley, Medical Alley or Research Triangle have captured the public imagination as the vehicle for industrial change and economic development. A focal point for development policy is creating attributes that mimic the characteristics of successful locations. Typically, government policy aims to leverage the presence of local research universities, increase the availability of venture capital, encourage a culture of risk taking, and create strong local informational and business development networks. Once established, industrial clusters benefit from virtuous, self-reinforcing processes. A critical question is how these entrepreneurial processes begin, take hold and transform a regional economy. Conditions that we observe in defined clusters tell us how these systems function and the policy prescriptions that follow from studying these environments may not be appropriate for regions that are trying to development an entrepreneurial environment.1 Dubini (1989) characterized environment for entrepreneurship as either munificent or sparse. An...

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