Silicon Valley: Poor Case Study for Entrepreneurship

Most successful policies to stimulate entrepreneurship focus on local conditions.

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Looking for a way to foster entrepreneurship? According to a study recently released by the Monitor Group, you should be wary of everyone's favorite example, Silicon Valley.

The Cambridge, Mass.-based consulting firm reports many national, state and local governments' efforts are ineffective, because they're generic. Instead, policy makers need to act based on local conditions.

According to study co-author and Monitor partner Kurt Dassel, the "curse of Silicon Valley" is to blame. "It's the first place everyone thinks about--university spinouts sponsored by venture capital."

But most regions don't have several world-class universities and abundant capital. Luckily, there are alternatives.

"There's more than one way to skin the entrepreneurial cat," said Dassel.

Because of the uncertain economic climate, he identified two models in particular.

First, there's the anchor firm model, where one big company spins off smaller firms, providing them with the necessary seed money.

He also suggested a possible avenue for Detroit: The event-driven model, where events force skilled but unemployed people to consider starting businesses. Citing the example of Reagan-era budget cuts and lab closures that led to the birth of several Internet and life science companies in the D.C. area, Dassel speculated that car company executives and engineers could strike out on their own.

Before policy makers take any course of action, Dassel urged they first take a cold, hard look at their region and its conditions. "From that, you can understand what model will work best," he said.

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