Research on technology clusters points to five elements that are critical to building a technology-based economy.
- Intellectual infrastructure (R&D). In a technology-based economy, a key component for success is a thriving source of new ideas with people who advance their field. This source could be any one of the four sectors already performing R&D or ideally some combination of the four.
- Spillovers of knowledge (commercialization). A technology-based economy also requires a free flow of ideas or spillover of knowledge. This movement can occur formally, for example, through invention licensing, or informally, for example, through the migration of employees.
- Technically skilled workforce. In an economy that is based more on ideas than on manual labor, knowledgeable people with technical skills are fundamental to success. Companies are more likely to locate in areas where a supply of technically skilled workers exists than in areas where training to upgrade workforce skills is needed.
- Access to Capital. For companies to grow, they must have capital. Regardless of the stage or source of capital, companies need financing to expand.
- Entrepreneurial culture. The intangibility of entrepreneurial culture makes it difficult to define. However, in an entrepreneurial culture, people view starting a company as a routine rather than an unusual occurrence, entrepreneurs are celebrated, individuals know many others who have started their own company, and people view company failure as a possible outcome of doing business rather than a cause for social disgrace.
Each element has a direct impact on a tech-based economy. An inadequate intellectual infrastructure strangles the technology-based economy of ideas and innovations, its lifeblood. Similarly, if spillovers of knowledge are not occurring, the R&D performers cannot build on others’ research. Without an adequate supply of qualified workers, the research cannot be conducted. A lack of capital bars the R&D performers from paying for research and development. States and regions can develop and implement plans that influence these elements needed for a technology-based company.