250-Everything-in-Its-PlaceEverything in Its Place: Entrepreneurship and the Strategic Management of Cities, Regions, and States
David B. Audretsch
Oxford University Press
198 Madison Avenue, New York, NY 10016; global.oup.com.
2015. 184 pages. Hardback, $35.00.

David Audretsch is an unabashed advocate of place-based economic entrepreneurship. A distinguished professor and director of the Development Studies Institute at Indiana University, Audretsch argues that the economic performance of places (especially cities and regions) matters as much as that of commercial firms and industries. To back up his argument, he assembles numerous examples of local entrepreneurs overcoming economic stagnation. His success stories range from Berlin and Bilbao to Seattle and San Diego and from Silicon Valley to North Carolina’s Research Triangle Park. He asserts that “. . . place matters . . . not just in the American context but also in the European context, just as it does throughout the world.”

Audretsch became intrigued with place management strategies while watching Berlin rebound after the fall of the Berlin Wall in 1989. His industrial economics training had prepared him to study firms but not places. Looking for answers, he uncovered an array of individual, sometimes competing, social science explanations of place success, but no overarching framework that linked them together. To fill this gap, Audretsch proposes a new field of “strategic place management” to assist policy makers, practitioners, and individuals with a mandate to improve their areas.

In times past, responsibility for such a mandate might have been assumed at the national level. For example, the U.S. Employment Act of 1946 asserted national economic leadership, but this kind of initiative is unlikely in Washington today. Faced with intense global competition and lagging economies while unable to look to the federal government for solutions, localities today must shoulder responsibility for their own destinies.

Critics might suggest that this need has traditionally been filled by the established economic development profession, represented by the nonprofit International Development Council. But what is different about Audretsch’s proposal is that it involves a broader cast of actors and a more extensive set of actions. For example, those familiar with the Berlin turnaround know that elected leaders and public officials worked with business executives, architects, planners, and advertising strategists to create excitement about and investment in the “new Berlin.”

To support his proposal, the author reviews research on place development by urban economists, sociologists, psychologists, and economic geographers. He finds a surprising lack of consensus. On one hand, some researchers conclude that public policy plays no role in developing business clusters. Competing studies, however, find the opposite, citing real-world examples where policy has been critical, promoting cluster development in Austin and San Diego.

To organize the study of place-based entrepreneurship, Audretsch creates a strategic management framework with four descriptive categories. These include the following: factors of production and resources; spatial and organizational structure; human dimensions; and public policy.

The “production and resources” category involves not only traditional natural resources, physical capital, and infrastructure, but also human and knowledge capital, venture capital, and skilled labor. “Spatial and organizational structure” includes considerations of economic specialization as well as diversified portfolios of economic activities, and powerful large firms versus entrepreneurial startups and small businesses.

The “human dimensions” category focuses on interactive networks, linkages, leadership, social capital, and emotional attachments. And “public policy” covers the role of deliberate interventions by governments, organizations, and individuals and the types of policies they can employ.

The framework is a good first step in building the theory and practice of strategic management of places. However, its categories overlap and are not exclusive. Some example places, such as Silicon Valley, are discussed in all four categories. The framework is more descriptive than analytic and comparative. It does not suggest types of strategy that might be effective for particular types of places or economic problems. Nor does it tell the inside story of how successful entrepreneurs actually devised and carried out their strategies. The reader must look elsewhere for such case study details.

Still, Audretsch is definitely onto something important. His overview of influences on the economic performance of places is a useful contribution to knowledge of this emerging practice. Rather than recommending a singular approach, the author reviews the full range of potential strategies, making it clear that no one-size-fits-all approach leads to success.

The book’s one universal piece of advice is to analyze the underlying characteristics of your place and then compile a compatible strategy to fit your needs and opportunities. Clearly that is a wise starting point.