New England’s Pinnacle: fostering quality entrepreneurial ecosystems

Abstract

This paper has assessed the dynamics of entrepreneurial ecosystems across the US states. To do this, we have used the Startup Formation Rate (SFR) and the Entre- preneurial Quality Index (EQI) from a novel data set called the Startup Cartogra- phy Project, which spans from 1988 to 2014. For this purpose, we have applied the Phillips and Sul (Econometrica 75:1771–1855, 2007, Econometrics 24:1153–1185, 2009)’s club clustering algorithm in order to identify the existence of absolute or regional convergence. Our results suggest the existence of two and three clubs con- vergence, respectively. More importantly, when attending EQI, California and Mas- sachusetts form a club, which is evidence of the importance of quality entrepreneur- ship over quantity. Furthermore, from a geographical point of view, SFR clubs show a scattered distribution throughout the national territory, while the EQI clubs are more homogeneous. In this sense, we apply the Local Moran I test to the EQI club that is formed by California and Massachusetts to analyze the possible spillover effects of these states, to their neighbours. Finally, this gives valuable information for designing entrepreneur policies at different levels.