Communities with more highly educated residents have a better chance of attracting high-growth companies

In a study of Inc. Magazine's list of 5,000 high-growth companies, the researchers suggest that access to college-educated employees and the presence of industrial diversity, more than geographic proximity and technology, helped boost a community's ability to host high-growth firms.

"We were aware of the Inc. 5,000 database and we thought it would be interesting to determine, if we could, what do communities -- or counties or cities, for that matter -- offer that makes them more attractive places to these firms, which are the fastest growing companies by revenue in the country," said Stephan Goetz, professor of agricultural economics and regional economics, Penn State and director of the Northeast Regional Center for Rural Development. "From that, the two things that stand out for us are that these firms are found in many different sectors, not just in the high tech space, and that these companies are found across the United States."

The researchers, who report their findings in the current issue of Entrepreneurship and Regional Development, said that while many of the companies on the list are from the high tech sector, a majority comes from other industries, including healthcare and manufacturing.

"The results also seem to be saying that these high-growth firms are more likely to be in places that have a variety of industries rather than just one or two specialized industries," said Minghao Li, a doctoral candidate in agricultural, environmental and regional economics.

The researchers also found that communities with more highly educated residents have a better chance of attracting high-growth companies.

"A higher number of bachelor's degrees in a community is associated with significantly more of these firms, both in terms of the probability that they are there and the number of those firms," said Goetz. "This suggests that university towns have a leg up in terms of spawning these types of businesses."