How different types of knowledge impact the growth of new firms
Diversifying into new industries is vital to an economy’s ability to grow and generate wealth. But to branch out into new industrial activities, a city, region or country must first have a pool of people with the right mix of knowledge and experience to make those pioneering firms a success. So how do local economies ensure they have the right mix of experience to allow new ventures to thrive? In a paper published this week in the Proceedings of the National Academy of Sciences, a team led by César A. Hidalgo, director of the Collective Learning Group in the MIT Media Lab, studied the effects of occupation-specific, industry-specific, and location-specific knowledge on the success of pioneer firms. These are firms operating in an industry that has not previously been present in a region. They found these pioneering firms were significantly more likely to survive and grow when their first hires were people with...