Questions/comments: Connie Menefee
Over the past decade (1990-2000), I have done a great deal of literature research on how to define high technology, and how to identify factors that contribute to technology transfer and the success of entrepreneurial cities.
The following three items are excerpts from a benchmarking study I did for the Institute of Advanced Manufacturing Sciences (Cincinnati, Ohio). This prompted a regional study that eventually spurred the formation of CincyTechUSA:
Remarks on University-Industry Alliances
Remarks on Technology Transfer
Remarks on Entrepreneurial Cities and Regions
For the CincinnatiUSA Regional Chamber of Commerce, I researched both the Cincinnati-Dayton Aerospace Corridor and the Cincinnati USA Automotive profiles. I researched and wrote the majority of the Cincinnati USA Chemistry Leadership profile.
Overview on Defining High Technology
According to the National Science Foundation, there is no single preferred method for identifying high technology industries.
High technology industries have a great dependence on science and technology innovation that leads to new or improved products and services. They generally have a substantial economic impact, fueled both by large research and development spending, and a higher than industry average sales growth. New product development and capital investment often go hand in hand, making high technology companies an attractive addition to local tax bases.
In addition, innovation demands a trained and talented workforce. This demand can serve the entire business community by drawing talent to the high tech companies, as well as by calling upon the resources of other companies and entrepreneurs in the region and beyond.
Companies grow up around the high tech enterprises and supply raw materials, components, specialized technical expertise in design, marketing, and knowledge management, skilled subcontractors, specialty packaging, distribution, and transportation.
Local universities and organizations can benefit from R&D alliances with high tech companies. Experts consider active universities a key component in successful high tech regions, in part because universities can serve as incubators for high tech start-up companies, as well as providing ongoing technical support to business.
Table of SIC Codes for High Technology (by the book) :note that NAICS codes are now in widespread use, although SIC codes still appear in many sources.
Tip Sheet for Defining High Technology (for Cincinnati)
.....The Pittsburgh High Technology Council stated that defining high technology was one of the most difficult challenges they faced when initiating their first study of the region’s economic development.
HOW TO SUCCEED IN THE NEW ECONOMY
I am providing this summary derived from my research on indicators that benchmark high technology growth. I also researched success factors in the formation of research and development alliances, as well as the challenges inherent in economic development initiatives aimed at high technology.
Trained workforce: Maintaining an adequate labor pool remains a challenge in most areas. Begin training for the New Economy in K-12 with programs that mentor teachers and talented students. Develop a process for integrating volunteers from the business community in K-12. Coordinate with all levels of the educational system to improve responsiveness to the needs of technology-oriented businesses. This includes using the resources of community colleges that can be the locus of life-long learning programs with degree and non-degree training. University science and engineering programs can be integrated into regional workforce strategy, using input from business leaders. The University of Texas in Austin is deeply involved in program development with local businesses. Co-op programs and internships need to be focused in the region, along with aggressive retention programs. A state-level summit on industry and education may be necessary to coordinate resources and ideas. Phoenix has recently begun a technology high school with support from two major corporations.
The community must be able to supply a workforce adept with new technologies and flexible enough to grow with the changes. The city of Louisville made a commitment to turn their ill-prepared workforce around. Computers became part of the school curriculum and, in 1994, Louisville graduated its first class with computer-based learning in every grade. Austin, Pittsburgh, and Phoenix have aggressively tapped into their community college resources to make training widely available.
Formal and informal diverse networks: The New Economy cuts across many aspects of business and personal life. Regions that support diverse networks can tap into a variety of viewpoints, talents, and resources. If the networks don't exist, they can be created. In some areas, these networks promote the region to the "outside" and help form (and re-form) community perception of itself as a hotbed of high tech activity. Technology councils can bring existing groups and informal networks together and serve as a regional forum for promotional and investment decisions. Pittsburgh began one of the first technology councils. Out of the informal networks, strong, new industry associations can grow: these are commonly seen in software, biotech, and electronics. Cleveland, Baltimore, Pittsburgh and San Jose are considered to be pioneers in building networks.
Universities: In the course of their research on successful entrepreneurial regions, Cognetics, Inc. found that growing companies hire employees with above average skill levels, and proximity to an active university community enhances the workforce. Research in both Seattle and Boston revealed intriguing statistics about university-industry relationships: 70 % of the companies in Seattle had a direct active role in the operation of the University of Washington; for a period of time, the two-thirds of a square mile around the Massachusetts Institute of Technology was creating more jobs than were by created 13 states (obviously not, for example, California or New York!). Even now, this area is creating more jobs than 6 states.
The attitude of local universities is considered absolutely vital to successful high tech economic development. A university can make it easy or hard for graduate students and other faculty to become the human capital seeds for tech start ups. State-funded university-based research centers or parks (Research Triangle Park) can attract federal funds by supporting the resources for multi-disciplinary teams; thus, spurring innovation and new industry-industry and university-industry relationship. These research parks can house also high tech incubators. The IC2 Institute in Austin is a well-known university associated incubator. Baltimore has several incubators in association with Johns Hopkins Hospital and the University of Maryland. Highly successful universities need comprehensive university-based technology transfer organizations that promote and manage development, licensing, and spin-offs of technology - MIT has the world renowned Industrial Liaison Program.
Experts - academic, public, private: Areas that invite input from experts can benefit in a number of ways. Eminent scholar programs (funded locally or by the state) draw both talent and capital. Atlanta leveraged its Georgia Tech assets to kick off its technology growth strategy. Graduate and undergraduates are often attracted by an eminent scholar. Regions with focused private leadership have been more successful than areas with an over-reliance on public or quasi-public organizations. Experts can be a bridge between the community and university or public entities, as well as business.
Educated investors and entrepreneurs and angel networks: Money is always an issue both for start ups and growing companies. Cultivate and nurture private sources of capital via angel networks and venture capital associations; encourage quasi-public sources of seed or loan capital; provide technical assistance to start up ventures. Local bankers can be educated to understand the issues unique to high technology. Colorado's Colorado Venture Center is considered innovative in angel investor development.
Promotional efforts coordinated: Often, promotional efforts are driven by regional chambers of commerce with the goals of establishing an image of the region as well as attracting new high tech business. Public relations campaigns or "branding" efforts will be useless if the community itself does not buy into the created image.
Airports: Nine of the top ten most entrepreneurial larger metropolitan areas are airport hubs. Recent research also confirms the importance of hub airports. Comparing Cincinnati and Pittsburgh (hub airports) with two non-hub airports (Milwaukee and Nashville), experts found more rapid and even growth in high-technology jobs in the hub cities. A good airport can be a valuable asset to leverage.
Telecommunications infrastructure: Early leaders in building an efficient and cost-effective telecom infrastructure continue to reap the benefits of this investment: Atlanta, Denver and Austin. Bandwidth remains a commodity that can be leveraged.
Quality of life: Although a region can't change its weather, quality of life is within the control of a community. Using the arts, greenspace, recreation, sports, restaurants, housing, low pollution levels, and transportation, cities compete for newcomers and try to hang on to residents. Cost of housing, amount of congestion, and commuting will probably become more important as the "hot spots" fill up and people look around to create new ones. Quality of life is not a luxury, it is a resource.
Support from regulatory entities: Tax structures at the city, county, and state level can either encourage or discourage capital investment in technology. Educating relevant leaders is essential. Communication between governmental entities is also essential. Cooperation usually wins over competition in a region. Many successful regions are supported by state-wide agencies and state-level investment in infrastructure. Coordination of educational resources may have to start at the state-level in order to bring about long-term change.
- Entrepreneurial Hot Spots: The Best Places in America to Start and Grow a Company (1997) David Birch, Anne Haggerty and William Parsons, Cognetics, Inc.
- The Benefits of Being a Hub Airport City: Convenient Travel and High-Tech Job Growth (October 1998) Kenneth Button and Roger Stough. The Institute of Public Policy, George Mason University. (Aviation Policy Program, Working Paper 3.)
- Final Report of Mayor's High Technology Task Force - Indianapolis, IN 1998
- Paul Hadlock, Daniel Hecker and Joseph Gannon , “High technology employment: another view,” Monthly Labor Review, July 1991
- John E. Jankowski, “R&D: Foundation for Innovation,” Research-Technology Management, March-April 1998
- William Luker, Jr. and Donald Lyons, “Employment shifts in high-technology industries, 1988-1996,” Monthly Labor Review, June 1997
- John W. Medcof, “Identifying ‘Super-Technology Industries,’ ” Technology-Research Management, July-August 1999
- Roger Stough, et al., Technology in Virginia’s Regions, Center for Regional Analysis, Institute of Public Policy, George Mason University, June 1997