The Impact of Local Economic Development Policies on Entrepreneurial
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The Impact of Local Economic Development Policies on Entrepreneurial Activity: Evidence from Southern California Cities Hugo Asencio, Fynnwin Prager, Jose Marti nez, and John Tamura S o uth B ay Econ o mi c Fo re ca st , C S UD H , O c tob e r 2 5 , 2 0 1 8
Government and Entrepreneurship?
Entrepreneurship Conference Cultivating Entrepreneurship in Your Communities Mike Grimshaw – Entrepreneurial Institute Provost Mike Spagna Entrepreneurs, policy makers
California Entrepreneurship Kauffman Index: 2017 Rank 1st in Startup Activity (measures new venture creation) Rank 9th in Main Street Entrepreneurship (measures established small business activity) Rank 14th in Growth Entrepreneurship (measures entrepreneurial business)
Los Angeles Entrepreneurship Source: Kauffman Foundation
Los Angeles Entrepreneurship Source: https://www.citylab.com/life/2018/08/the-winners-and-losers-of-americas-startup-economy/566495/
Los Angeles Entrepreneurship Source: https://www.citylab.com/life/2016/02/the-spiky-geography-of-venture-capital-in-the-us/470208/
South Bay Entrepreneurship Hawthorne (funding: 1,640M). One company: SpaceX. El Segundo (funding: 1,070M). 18 companies, such as Radiology Partners ( 496M, Healthcare), Centerfield ( 156M, Internet), Beyond Meat ( 104M, Food), Core Nutrition ( 66M, Food), PeerStreet ( 62M, Internet), and Navitas Semiconductor ( 42M, Electronics). Torrance (funding: 114M). There are 3 major companies: Emmaus Life Sciences ( 45M, healthcare), Health-Ade Kombucha ( 35M, Food), Phyn ( 25M, Mobile software). Inglewood (funding: 96M). ImahinAb ( 48M, Biotech nology), and Relativity Space ( 45M, Industrial) Manhattan Beach (funding: 70M). There are many small startups, many of which are Internet companies. Source: South Bay Economic Forecast (UCLA Anderson Economic Forecast, 2018; CB Insights)
South Bay Entrepreneurship Universities and Colleges CSUDH awarded 10 years accreditation from WSCUC; we have “entrepreneurial spirit”! Shout-outs to Mike Grimshaw (Entrepreneurial Institute), Gary Polk (Toro Incubator), CEIE Dean Kim MacNutt, CBAPP Dean Joseph Wen. South Bay Cities Incubators Business visitation programs Arts districts, Art walks Downtowns, Business Improvement Districts South Bay Workforce Investment Board South Bay Cities Council of Governments City Chambers of Commerce, Industry Associations
Research Questions There’s lots of support and help in the South Bay But is it effective? Does all that effort pay off?
Data Sample: 215 cities in Southern California Quantitative Data Web-based search on cities’ ED programs Dates: November 2017-March 2018 Other sources: U.S. census data Qualitative Data Structured phone/email interviews with ED professionals, city managers, etc. Questions asked: city ED programs, redevelopment funds Dates: November 2017-April 2018 (ongoing) 30 interviews completed Conference held at CSUDH – in-depth discussions around important topic areas
Data City Carson El Segundo Gardena Hawthorne Hermosa Beach Inglewood Lawndale Lomita Manhattan Beach Palos Verdes Estates Rancho Palos Verdes Redondo Beach Rolling Hills Rolling Hills Estates Torrance Economic SelfMedian Household Population Development Score employed % Income 2014 (2010) 8 5.3 73,829 91,714 9 8.3 91,623 16,654 8 6.2 50,137 58,829 8 8.7 45,089 84,293 10 8.6 121,345 19,506 9 9.7 44,377 109,673 4 11.0 51,934 32,769 6 10.8 61,580 20,256 6 11.4 144,868 35,135 5 11.5 200,766 13,438 5 10.6 120,668 41,643 8 9.2 103,782 66,748 2 7.1 220,764 1,860 4 15.3 129,728 8,067 10 7.4 80,862 145,438
Findings More economic development programs when Larger cities Higher levels of employment Presence of colleges This finding suggests a role for county or state governments or regional government councils to provide further support to disadvantaged cities.
Findings More economic development programs (significantly correlated with): Higher average firm size, especially when direct assistance through tax incentives are facilitated. Lower levels of female ownership, especially when promotional programming is employed.
Who is seeking gov’t assistance? Location Firm Type US LA Metro US All firms All firms Firms with less than 2 years in business Firms with 2 to 3 years in business Firms with 4 to 5 years in business Firms with 6 to 10 years in business Firms with 11 to 15 years in business Firms with 16 or more years in business US US US US US Percent of respondents Location Firm Type 3 2.2 5 3.7 3.1 US US US 3.1 US 2.6 US Percent of respondents 5.1 Female-owned 2.3 Male-owned 4.7 Hispanic 2.8 White 10.3 Black or AfricanAmerican 2.1 US Asian Source: Annual Survey of Entrepreneurs (ASE) - Characteristics of Businesses: 2016; Business sought advice or mentoring from government-supported technical assistance program. 3.3