Home > Hyper-Local Venture Development Implementation of a Health IT Cluster in Newark, NJ

Hyper-Local Venture Development Implementation of a Health IT Cluster in Newark, NJ

Here is an application of Cluster Theory to making one’s city a success.

Michael Porter’s Cluster Development theory has drawn much attention from Policymakers and economic development practitioners since its 1990 inception, being seen as a way to enhance economic and employment growth within urban centers. Yet efforts based on it have had limited success due to the lack of a coherent underlying theoretical framework unifying clusters with venture incubation understanding.

In this article Prof. Ehrlich extends cluster development theory to incorporate business incubators, accelerators, science parks and co-working spaces as hyper-local clusters, whose success is based on the same determinants identified by Porter. This theoretical framework focuses on fostering successful high-tech startups through the scale up phase.

And this article goes beyond the theory to share a real-life success story: it provides a case study of the implementation of a Health IT cluster in Newark, NJ, as a demonstration of the development of a hyper-local cluster in practice. This program, funded by JPMorgan Chase, builds on existing regional strengths: the presence in close proximity of significant healthcare assets including hospitals, health insurers, medical device and pharmaceutical companies, and many other healthcare participants. Specific program details, implementation strategies, and promising early outcomes are shown.

During the first two years 50 early stage companies were recruited to join the program. These companies are already successful startups with products/services, customers, and revenues (averaging over US$2 million during the last 12 months). Early results have shown impressive employment and company revenue growth rates. Ongoing efforts focus on building and maintaining momentum to help companies achieve sustainable scale.

 

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About the Author:

Prof. Michael Ehrlich – Associate Professor and Co-Director of the NJ Innovation Acceleration Center, Martin Tuchman School of Management, New Jersey Institute of Technology.