A variety of social and economic factors stimulate entrepreneurial
activity and thus generate more robust economic development. These
factors include an increasing focus on capital formation, changing
institutional relationships, supportive government programs,
reassessment of intellectual property, and new approaches to
innovation. Almost any state and city (or nation for that matter) can
work to strengthen its positive, high-tech attracting factors. It can
improve its accessibility to the national highway system, improve its
airport, work to strengthen its attraction to business services of all
kinds, including headquarter companies. It can simultaneously work to
improve its amenities. By emphasizing and providing the structural
stimulants it can provide a fertile environment for establishing
entrepreneurs and new ventures. Societies and locales that encourage
entrepreneurship and the formation of new ventures should have
advantages in the innovation race and should have a higher sourcing
innovative capacity than other lesser endowed societies.

An interesting example of a negative structural influence is the
state of Minnesota. Minnesota has been described as a "great place to
start a business." It is conducive to start-ups because of its good access to
venture capital, entrepreneurial base, and available skilled talent.
However, once a company starts growing, the situation changes.
Personal and corporate income taxes and business property levies are
among the highest in the nation. Minnesota's state and local tax burden
as a percentage of income was third highest in the United States in
1989 ( Ferguson, 1992). Minnesota is among the top five states for
environmental regulation. Workers' compensation taxes are double or
triple that of neighboring states. As a result, companies starting up in
Minnesota but expand elsewhere. General Mills may be staying in
Minnesota and increasing its R&D spending there, but its manufacturing
facilities are being located elsewhere, in more favorable environs.

Structure of a society, a locale, or a country has tremendous influence
on that region's propensity to produce entrepreneurs, small ventures,
and hence innovation. By enunciating the positive structural elements
and eliminating possible negative influences, a region can enhance its
ability to draw and maintain entrepreneurs and hence create small
ventures, economic growth, and innovation.

The following chapters examine eight structural attributes and
postulate their relationship to innovation and to a society's sourcing
innovative capacity.

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