Restructuring for Resilience

Economic crisis is compounded when structural change is amplified by cyclical downturns. Many governments respond to this situation by focusing policy initiatives on technology and innovation as a way to generate economic growth. These initiatives often result in new organizations for managing technology-based economic development that function outside the mission of traditional government agencies. Organized as a nonprofit, these entities attempt to bridge the public and private sector by offering a clear focus, flexibility, and an opportunity to accomplish a public goal without enlarging government agencies. In contrast to traditional economic development, which tends to focus narrowly on attracting business, these new initiatives emphasize longer-term capacity-building as a way to promote and anchor innovative activities and establishments. Without the traditional strictures associated with being part of state government, these organizations are often in a strong position to mediate and manage relationships between private interests and public institutions. The last major U.S. recession in the late 1970s witnessed widespread application of this new organizational form to technology-based economic development. Well-known examples are the North Carolina Biotechnology Center, Connecticut Innovations, and Pennsylvania’s Ben Franklin Program. To date, 42 states have experimented with quasi-public economic development organizations, with varying outcomes and ability to influence economic growth. Despite the importance of these efforts, we have limited understanding of how to design enduring organizations that act as catalysts for regional economic change. The purpose of this article is to examine North Carolina’s experience with the design of two dedicated industrial development organizations. The two organizations were proposed by the same state strategic plan, yet one succeeded and continues to thrive, while the other has been divested of many of its assets and core economic development functions. Initiated by the same state government in close procession, these two organizations arguably provide an example of how organi