When Walter Plosila was asked in 1982 by Pennsylvania’s Gov. Richard Thomburgh to set up one of the nation’s first state programs to promote high technology, he knew he’d have to show results—and fast. After all, the governor and legislature were putting both personal prestige and taxpayer dollars behind an effort whose linchpin was state-sponsored collaboration between university researchers and industrial entrepreneurs.

By February 1987, Plosila was ready to prove the program's value: The state’s $120 million investment, he announced, had created or saved 10,664 jobs. In fact, there were numbers galore on what the program had accomplished—including impressive figures on matching private funds raised, patents issued, new companies started, and number of firms that had received assistance. But the key yardstick, Plosila said, was jobs.

The Plosila pitch sounded good, but one year later a state audit declared that his job statistics were “not readily verifiable.” Although no one—even...

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