The Secret Ingredient to Building Entrepreneurship Right Where You Are

August 17, 2015

To find the most entrepreneurial regions in America, look to the country's coasts and mountains. Florida, the Pacific Coast, and certain regions along the Rockies top a recent study’s search for the most entrepreneurial places in America. The authors looked at the culture that makes these regions tick, finding a strong correlation with startup formation when combined with large stores of human capital and diverse economies.

Regions that are successful in today’s globalizing, innovative economy get the relationship between culture and knowledge creation right. Simply investing in knowledge creation—such as education—doesn’t guarantee a high rate of entrepreneurship. Neither will a diverse industrial base—another kind of knowledge resource—guarantee more economic dynamism. Culture is key.

Regions with lots of entrepreneurial knowledge and culture have high rates of entrepreneurship. Silicon Valley unsurprisingly tops the list, while the South and Midwest lag.

In 1776’s Innovation That Matters report, author Patrick McAnaney refers to culture as an essential building block of a city’s startup ecosystem. “For networks to work effectively,” McAnaney says, “cities must have a basic foundation that allows the startup community to flourish.”

Culture is the invisible hand shaping social capital, which in turn drives the intersection of human and financial capital into worthwhile ventures. Regions in America that have high levels of knowledge and a highly entrepreneurial culture boast startup rates that are on average 18% higher than in regions with lots of knowledge and a lagging culture.

The effect of culture is clear even when looking at large firms. More than three-quarters of Fortune 100 firms and two-thirds of Britain’s Fast Track 100 companies are located in regions with above-average levels of knowledge and entrepreneurial culture.

As one participant in 1776’s roundtables concluded, “A lot of urban development is about laying the foundation for a successful city, and you can then build startups on that foundation.” If recent studies are right, there is no more important foundation than the interplay between knowledge and culture.



Maps of entrepreneurship rates and the interaction between human capital, industry diversity, and entrepreneurial culture.