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(originally published by Booz & Company)


Examining the Innovation Gap in the United States

And although conventional wisdom suggests that new entrants to the workforce recharge and upgrade the skills and knowledge required to innovate, this study found no such evidence. Instead, firms that can tap into a local labor pool with older workers innovate at the same rate, perhaps because they’ve hired experienced managers and employees with well-honed skills.

The authors argue that their empirical findings underline the need for companies to take a territorial viewpoint on understanding the process of innovation in the United States. Certain areas of the country, with the right mix of socioeconomic conditions for firms to draw from, are clearly more “innovation prone,” they write.

Given the disparity in the innovation output of different regions, the authors advise firms weighing a move or an expansion to examine local socioeconomic factors—including infrastructure quality and the number of universities—and state-level laws that might not directly be connected to innovation. For example, noncompete laws, which limit employees’ ability to jump ship to a rival firm in the same state, have become a contentious issue in the tech sector, with companies loath to lose their brightest minds and in-house knowledge to competitors.

Bottom Line:
Successful innovation requires a delicate blend of forward-thinking employees, funding for R&D initiatives, and access to research labs or university hubs. This paper tracks which regions of the country have the socioeconomic elements that are most conducive to supporting firms’ cutting-edge efforts.

Author Profile:

  1. Matt Palmquist is a freelance journalist based in Oakland, Calif.


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