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How ‘buzz’ reduces uncertainty for new firm founders

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  • Capelleras, Joan-Lluis
  • Mole, Kevin F.

Abstract

To whom should potential new firm founders turn to for advice? This article identifies buzz as a mechanism to transfer the knowledge of who to turn to for advice. Previous work on buzz has linked it with clusters or compared local buzz with international pipelines of information. The interaction between place and business advice was examined in surveys of 599 new firm founders in England and 381 new firm founders in Catalonia (Spain). Our models exploit the denominator from a heteroskedastic probit to capture the local variation in uncertainty We show empirically how buzz can add to collective institutions outside of clusters. Our findings show that buzz influences the taking of advice and the uncertainty surrounding advice. Besides, there were strong impacts from policy on the take-up of advice in Catalonia, but it did not change the variations in uncertainty.

Suggested Citation

  • Capelleras, Joan-Lluis & Mole, Kevin F., 2012. "How ‘buzz’ reduces uncertainty for new firm founders," MPRA Paper 38170, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:38170
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    References listed on IDEAS

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    Keywords

    Buzz; start-ups; new firm founders; business advice;

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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