Inside the high-tech black box: A critique of technology entrepreneurship policy

Promoting new technology-based firms is the cornerstone of technology entrepreneurship policies in advanced industrial economies. Drawing on quantitative and qualitative empirical evidence from the UK, this paper provides a critique of these policy frameworks. The aggregate analysis shows that vast majority of these firms are micro firms, a small minority of whom grow rapidly. The paper then highlights the incongruence between the nature of these firms and the public sector technology policies designed to support them. The qualitative data reveals that typically these firms are corporate rather than university spin-offs; most do not undertake large amounts of in-house R&D; most do not have protected IP; and only a small minority are VC-backed. Most derive their main competitive advantages from open innovation sources such as relationships with end-users and customers. The paper offers suggestions for how policy could be recalibrated to better reflect the requirements of local entrepreneurial actors and the types of support required by most high-tech SMEs.