ABSTRACT
This chapter explores the regional high-tech employment effects of dynamic externalities, and the differences by firm size, organizational type, and product. It deals with theoretically arguable hypotheses regarding the nature of high-tech development. The chapter focuses on the history of Texas in which high-tech industry has grown rapidly. Past specialization significantly affected regional high-tech employment growth, and in turn higher initial high-tech employment level and growth led to more specialized locations. For small firms, local initiatives can help improve industrial conditions for new entry. Small firms tend to create a larger proportion of new jobs than their share of employment in the economy. Even in weak or declining regions, small firms are important sources of employment growth. Importantly, small firms are most successful if located in diversified environments. Encouraging regional business initiative tends to lessen dependence on externally controlled firms, facilitating local adaptation to the continuing process of technical change.
