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Home Sweet Home: Entrepreneurs' Location Choices and the Performance of Their Ventures

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Author Info

  • Michael S. Dahl

    ()
    (DRUID, Department of Business and Management, Aalborg University, DK-9220 Aalborg Ø, Denmark)

  • Olav Sorenson

    ()
    (Yale School of Management, Yale University, New Haven, Connecticut 06520)

Abstract

Entrepreneurs, even more than employees, tend to locate in regions in which they have deep roots ("home" regions). Here, we examine the performance implications of these choices. Whereas one might expect entrepreneurs to perform better in these regions because of their richer endowments of regionally embedded social capital, they might also perform worse if their location choices rather reflect a preference for spending time with family and friends. We examine this question using comprehensive data on Danish start-ups. Ventures perform better--survive longer and generate greater annual profits and cash flows--when located in regions in which their founders have lived longer. This effect appears substantial, similar in size to the value of prior experience in the industry (i.e., to being a spin-off). This paper was accepted by Gérard P. Cachon, organizations.

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File URL: http://dx.doi.org/10.1287/mnsc.1110.1476
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Bibliographic Info

Article provided by INFORMS in its journal Management Science.

Volume (Year): 58 (2012)
Issue (Month): 6 (June)
Pages: 1059-1071

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Handle: RePEc:inm:ormnsc:v:58:y:2012:i:6:p:1059-1071

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Related research

Keywords: organizational studies; effectiveness-performance; behavior; economics; econometrics;

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Cited by:
  1. Buenstorf, Guido & Schacht, Alexander, 2013. "We need to talk – or do we? Geographic distance and the commercialization of technologies from public research," Research Policy, Elsevier, vol. 42(2), pages 465-480.
  2. Marco Vivarelli, 2012. "Entrepreneurship and Post-Entry Performance: the Microeconomic Evidence," DISCE - Quaderni del Dipartimento di Scienze Economiche e Sociali dises1286, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
  3. Wennberg, Karl & Wiklund, Johan & DeTienne, Dawn R. & Cardon, Melissa S., 2010. "Reconceptualizing entrepreneurial exit: Divergent exit routes and their drivers," Journal of Business Venturing, Elsevier, vol. 25(4), pages 361-375, July.
  4. E. Stam & J.G. Lambooy, 2012. "Entrepreneurship, Knowledge, Space, and Place: Evolutionary Economic Geography meets Austrian Economics," Working Papers 12-11, Utrecht School of Economics.
  5. Koen Frenken & Elena Cefis & Erik Stam, 2013. "Industrial dynamics and clusters: a survey," Working Papers 13-11, Utrecht School of Economics.
  6. Vivarelli, Marco, 2012. "Drivers of entrepreneurship and post-entry performance : microeconomic evidence from advanced and developing countries," Policy Research Working Paper Series 6245, The World Bank.
  7. Alex Coad & Bram Timmermans, 2012. "Two's Company: Human Capital Composition and Performance of Entrepreneurial Pairs," DRUID Working Papers 12-12, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
  8. Leung, Ming D., 2012. "Job Categories and Geographic Identity: A Category Stereotype Explanation for Occupational Agglomeration," Institute for Research on Labor and Employment, Working Paper Series qt31b4c6p8, Institute of Industrial Relations, UC Berkeley.
  9. Aurora A.C. Teixeira & Marlene Grande, 2013. "Determinants of the economic performance of Portuguese Academic Spin-offs: do Science & Technology infrastructures and support matter?," FEP Working Papers 502, Universidade do Porto, Faculdade de Economia do Porto.
  10. Koen Frenken & Elena Cefis & Erik Stam, 2011. "Industrial dynamics and economic geography: a survey," Eindhoven Center for Innovation Studies (ECIS) working paper series 11-07, Eindhoven Center for Innovation Studies (ECIS).
  11. Bram Timmermans & Ron Boschma, 2012. "The effect of intra- and inter-regional labour mobility on plant performance in Denmark: the significance of related labour inflows," Papers in Evolutionary Economic Geography (PEEG) 1213, Utrecht University, Section of Economic Geography, revised Jun 2012.
  12. Vivarelli, Marco, 2012. "Entrepreneurship in Advanced and Developing Countries: A Microeconomic Perspective," IZA Discussion Papers 6513, Institute for the Study of Labor (IZA).

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