Upscaling Associational Governance: Startups, Scaleups, and Systemic Change

• In Event: Contemporary Issues in Canadian Political Economy

Abstract

How do countries enter new, high-technology industries? The literature on comparative political economy and regional studies offers two very different explanations. Comparative political economists have historically focused on national institutions, describing how deep, flexible capital and labour markets enable countries to develop and scale disruptive new technologies (Hall and Soskice 2001; Hassel and Palier 2021) or, alternatively, pointing to ambitious, national innovation policies (Breznitz 2007; Weiss 2014). The literature on regional studies, and economic geography more generally, has privileged local conditions, as regional leaders draw on bridging or intermediary institutions to support and scale new business models (Feldman, Francis, and Bercovitz 2005; Powell, Packalen, and Whittington 2012; Storper et al. 2015).

Tracing the growth of entrepreneurial activity in Canada, a country that has struggled to scale new high-technology enterprises and high tech industry more generally, this paper argues that both accounts are incomplete. Comparative political economists have generally overlooked the degree to which local intermediaries can compensate for weak national institutions by connecting actors, investing in public goods, and forging collective identities. Drawing on case studies from Waterloo, Toronto, and Ottawa, this paper describes how “regional innovation centres” have nurtured vibrant entrepreneurial communities. Contrasting data from interviews with local startups and scaling firms, however, the paper illustrates how the same regional innovation centres which created protective space for local entrepreneurs, not only failed to tackle systemic barriers to scaling high-technology enterprises but, in several ways, made this problem even worse. To the extent that it documents national-level institutional reform, this was precipitated by a very different set of associations, organized along a very different logic from their regional counterparts.

By bringing these two literatures together, I make four contributions. First, and most obviously, I highlight the role of local agency (Grillitsch and Sotarauta 2020), illustrating how local communities can use associational governance to construct viable, entrepreneurial ecosystems within otherwise inhospitable national environments. Second, I illuminate how local experiments can inhibit systemic change by failing to tackle or even reifying national-level constraints. Third, I demonstrate how associational governance needs to evolve over time as industries mature. As a first step in typologizing this process, the paper concludes by identifying three different processes by which entrepreneurs have tried to upscale local industry into national-level associations. Finally and most broadly, I hope that the paper will inspire more research on the interplay between local and national-level associational governance and innovation policy in Canada and more broadly.

Author

• Darius Ornston, University of Toronto