For decades, the conventional wisdom among local officials pursuing employment growth was to attract a large firm to relocate. ‘Smokestack chasing’ often leads to zero-sum games where regional governments bid against each other to provide substantial incentives to large companies making location choice decisions (e.g. Greenstone et al. 2010).
The success of ‘entrepreneurial clusters’ in recent decades has challenged this wisdom. Now many policymakers state that they want their regions ‘to be the next Silicon Valley’. This new emphasis on bottom-up strategies has led to extensive efforts to seed local entrepreneurship (e.g. Lerner 2009). Today’s policymakers are especially eager to announce the launch of an entrepreneurial cluster in a hot industry, such as biotechnology, nanotechnology, or advanced manufacturing.
