Michael Murff and Dr. Jay Goodliffe, Political Science
Escalating in the mid-1970s, two very similar Mountain West economies augmented a dramatic shift from mining and agriculture toward information technology (IT). Both Utah and Colorado took steps to attract computer and software firms in an effort to diversify and develop IT industries. At first glance, Colorado IT markets appear superior in scale and scope due in part to a more sophisticated professional services infrastructure and far more equity finance. Notwithstanding these apparent disadvantages, public IT firms in Utah consistently demonstrate greater profitability and faster growth rates during the last 10 years. While Colorado tends to specialize in birthing new public firms, Utah IPOs manifest greater profitability over time. Several explanations for such disparity exist. This thesis approaches this puzzle by use of several methods: historical comparison, regression analysis, and policy analysis. The results of these analyses show that after controlling for several factors—age, size, growth rates, and public policy—performance differences between mature Utah and Colorado public IT firms largely disappear. While mature Utah firms still edge out the regional competition, Colorado firms, after a lengthy incubation period, move toward performance convergence despite their relative smallness.
CONTENTS
Chapter
1. Mountain West IT Economies: Similar but Disparate? 1
The Puzzle 1
Literature Review 5
Methods and Data 9
Research Design: Most-Similar-Systems? 10
Significance 12
2. Quantitative Analysis 14
Hypotheses 15
Hypothesis Testing 16
Model Specification 19
Variables 22
Results and Discussion 23
Auxiliary Regressions 26
3. Policy Analysis 29
Theoretical Framework 29
Policy Comparison 32
Utah 33
Colorado 36
4. Conclusions—Inferences and Future Research 41
Appendixes
A: High Tech Definition by SIC Codes 45
B: State Growth Policy Assumptions and Origins 46
C: Data 49
References 51
Endnotes 54
Graphs
1a Professional and Related Services, 1850–1990 13
1b Transportation, Communications, and Utilities, 1850–1990 13
1c Banking, Finance, and Clerical, 1850–1990 13
2a Utah Profits over Time: Estimates and Historic Trends 21
2b Colorado Profits over Time: Estimates and Historic Trends 21
3a Profits, Controlling for Age: Control Group no. 1, Lifetime 3b Profits, Controlling for Age: Control Group no. 2, 5<Lifetime 3c Profits, Controlling for Age: Control Group no. 3, 9<Lifetime15 44
Tables
1 Mean Regional IT Profits of Five Time Periods, 1978–1998 3
2 Mean Time Since IPO 17
3 Mean Public Firm Debt 18
4a Utah Growth Rates 28
4b Colorado Growth Rates 28