Innovation Commercialization in a Rural Region: The Case of Greater Johnstown, Pennsylvania

by Thomas S. Lyons, Ph.D. and Gregg A. Lichtenstein, Ph.D.

As the economy continues to globalize, developed countries with higher wage rates, like those of the United States, increasingly seek to encourage economic development that focuses on the front end of the product lifecycle – R&D. The goal is to get new ideas coming out of university and private laboratories to market as quickly as possible.

The rationale for this economic development strategy is that it leverages the U.S.’s strengths, which include knowledge, expertise and the availability of financial capital, and minimizes its greatest weakness, which is its inability to compete with developing countries when it comes to cost-saving standardized production.

This strategy – which goes by several names, including technology transfer, technology commercialization and innovation commercialization – has been adopted and supported at all levels of government. Millions of dollars are poured into these efforts each year, and yet we are only beginning to understand what does and does not work in this arena.

There is a strong tendency to attempt to replicate the successes of places like Silicon Valley, the Golden Horseshoe and the Research Triangle, using essentially the same tools and approaches. However, the question of whether these regions’ success in implementing innovation commercialization strategies can and should be replicated in other locations remains unanswered.

This article examines an innovation commercialization effort in the Greater Johnstown, Pennsylvania region to explore the compatibility between traditional approaches to this strategy and the opportunities and constraints posed by a rural area.

The Greater Johnstown region’s approach

The Greater Johnstown region is a principally rural area in the western part of Pennsylvania that comprises two counties and includes the small cities and towns of Johnstown, Cresson, Ebensburg, Loretto and Windber. The region has struggled in recent decades with the decline of the coal and steel industries and the departure of manufacturing plants to offshore locations. It also has a declining population and a median household income that is 28 percent less than that of the nation.

Despite these challenges, the region is not without its assets. It is home to four small institutions of higher education – Mount Aloysius College, Penn Highlands Community College, Saint Francis University and the University of Pittsburgh at Johnstown; six private R&D organizations with a wide spectrum of activities and several vibrant companies in diverse industries. The four colleges/universities boast a total enrollment of about 7,000 students and 650 faculty; however, none of these institutions grants a graduate degree in a technology-related field.

The private R&D facilities, however, do engage in postdoctoral R&D work. In an effort to leverage these assets, Johnstown Area Regional Industries (JARI), a regional economic development organization, and several other partners applied to the Commonwealth of Pennsylvania’s Keystone Innovation Zone (KIZ) Program for funding to create a Greater Johnstown KIZ (GJKIZ).

The KIZ Program was developed by the Pennsylvania Department of Community and Economic Development as a vehicle for investing in regional collaboratives involving institutions of higher education, communities and private businesses. Its goal is to foster the creation of new technologies and to support the entrepreneurs who take these technologies to market. The state investment in a KIZ can be used to support operations, engage in planning and provide a pool of tax credits.

JARI and its partners were successful in getting the GJKIZ recognized and supported by the state. GJKIZ’s winning approach was two-fold: to link together the intellectual capital of the institutions of higher education and the private R&D organizations, then link that capital with local entrepreneurs and enterprise development service providers. The overall goal is to maximize the region’s ability to create new ideas and commercialize them without creating an additional level of administrative bureaucracy.

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