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Unlocking the Potential of Innovation and Entrepreneurship: The Role of Local Policy in Cities

21 Pages Posted: 14 Nov 2012  

Darrene Hackler

affiliation not provided to SSRN

Date Written: August 27, 2012


As cities face increasing global competition and fiscal constraints in the post-recession economy, many city leaders wonder from what source future growth will emerge. One answer to this question is innovation, but the act of entrepreneurship assembles the components of knowledge and technology in the innovation process and amplifies the factors of economic growth. Cities that create and foster a culture of innovation and entrepreneurship will be better positioned for economic recovery, job creation, greater resiliency, and the potential for regional economic transformation. The paper examines the concepts of innovation and entrepreneurship in relation to job creation from startups and young and second-stage small business and reviews the barriers and policy options that local governments can use to address them. The paper proposes a role for local government policy in cultivating and fostering an innovation and entrepreneurship ecosystem with strategies that research has shown help to remove barriers and support entrepreneurs’ and small business development. Local actions and programmatic approaches can facilitate networks of public and private stakeholders that build trust and collaboration and leverage of local and regional assets. The paper suggests possible problems that these approaches can encounter due to varied conceptions of entrepreneurship and innovation. The last section of the paper considers the fiscal issues associated with development and support of an innovation and entrepreneurship ecosystem, as well as how a nuanced fiscal structure may capture the fiscal impacts.

Keywords: innovation, entrepreneurship, startups, young business, economic development policy, fiscal capacity

JEL Classification: M13, O18, O38

Suggested Citation

Hackler, Darrene, Unlocking the Potential of Innovation and Entrepreneurship: The Role of Local Policy in Cities (August 27, 2012). Available at SSRN: or

Darrene Hackler (Contact Author)

affiliation not provided to SSRN

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