A review of literature and hypotheses on new technology-based firms

This paper examines the existing literature on new technology-based firms in an attempt to understand how such companies contribute to the vitality of an economy and to see which variables are critical in enabling them to do so. From recent research efforts, we have drawn together a set of hypotheses and organized them around four central questions: (1) What do new firms contribute to the economy? (2) What factors contribute to the success of such enterprises? (3) In what cultural contexts do new businesses succeed? and (4) Which government policies are effective in stimulating and supporting new companies? We found that existing studies suggest (1) that new technology-based firms contribute significantly to an economy in terms of exports, employment, taxes paid, research and development, and innovations; (2) that the founders of these new businesses tend to have a strong entrepreneurial heritage, a development- rather research-oriented background, and a high need to achieve and are young and highly educated; (3) that sector differences may be a more important influence on company location than are regional policies; and (4) that no one government program has proven itself to be more than marginally successful in stimulating industrial innovation.