The Role of High-Tech Entrepreneurship on Regional Development

Abstract

In a globalized business environment characterized by the existence of mature sectors, it is essential to focus our attention on those firms with low entry barriers as well as high growth potential in order to design adequate regional development policies. In this context, we analyze firm growth in Brazilian technology-based companies over the 2002-2013 period testing the Law of Proportionate Effect which allows us to provide useful information for policy makers. This study confirms that firm growth is not a random process and, most importantly, we observe that there has been a positive and significant effect of more profitable firms on firm growth in years of global recession. Consequently, we highlight that public policies should be focused on small, profitable and less indebted firms of the technology-based sector because they would contribute to business dynamism and job creation.