IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/38170.html
   My bibliography  Save this paper

How ‘buzz’ reduces uncertainty for new firm founders

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/38170/1/MPRA_paper_38170.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Elizabeth Currid & Sarah Williams, 2010. "The geography of buzz: art, culture and the social milieu in Los Angeles and New York," Journal of Economic Geography, Oxford University Press, vol. 10(3), pages 423-451, May.
    2. Blanchflower, David G & Oswald, Andrew J, 1998. "What Makes an Entrepreneur?," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 26-60, January.
    3. R. J. Bennett & P. J. A. Robson & W. J. A. Bratton, 2001. "Government advice networks for SMEs: an assessment of the influence of local context on Business Link use, impact and satisfaction," Applied Economics, Taylor & Francis Journals, vol. 33(7), pages 871-885.
    4. Robert J. Bennett & Paul J. A. Robson, 2004. "The role of trust and contract in the supply of business advice," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 28(4), pages 471-488, July.
    5. Teemu Kautonen & Roxanne Zolin & Andreas Kuckertz & Anmari Viljamaa, 2010. "Ties that blind? How strong ties affect small business owner-managers’ perceived trustworthiness of their advisors," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 22(2), pages 189-209, March.
    6. Sharon A. Alvarez & Jay B. Barney, 2007. "The Entrepreneurial Theory of the Firm," Journal of Management Studies, Wiley Blackwell, vol. 44(7), pages 1057-1063, November.
    7. Dubini, Paola, 1989. "The influence of motivations and environment on business start-ups: Some hints for public policies," Journal of Business Venturing, Elsevier, vol. 4(1), pages 11-26, January.
    8. Kevin F Mole & George Bramley, 2006. "Making Policy Choices in Nonfinancial Business Support: An International Comparison," Environment and Planning C, , vol. 24(6), pages 885-908, December.
    9. Rotger, Gabriel Pons & Gørtz, Mette & Storey, David J., 2012. "Assessing the effectiveness of guided preparation for new venture creation and performance: Theory and practice," Journal of Business Venturing, Elsevier, vol. 27(4), pages 506-521.
    10. Johan Lambrecht & Fabrice Pirnay, 2005. "An evaluation of public support measures for private external consultancies to SMEs in the Walloon Region of Belgium," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 17(2), pages 89-108, March.
    11. Mercedes Delgado & Michael E. Porter & Scott Stern, 2010. "Clusters and entrepreneurship," Journal of Economic Geography, Oxford University Press, vol. 10(4), pages 495-518, July.
    12. Bjørn Asheim & Lars Coenen & Jan Vang, 2007. "Face-to-Face, Buzz, and Knowledge Bases: Sociospatial Implications for Learning, Innovation, and Innovation Policy," Environment and Planning C, , vol. 25(5), pages 655-670, October.
    13. Chrisman, James J. & McMullan, Ed & Hall, Jeremy, 2005. "The influence of guided preparation on the long-term performance of new ventures," Journal of Business Venturing, Elsevier, vol. 20(6), pages 769-791, November.
    14. David Doloreux & Richard Shearmur, 2012. "Collaboration, information and the geography of innovation in knowledge intensive business services," Journal of Economic Geography, Oxford University Press, vol. 12(1), pages 79-105, January.
    15. David B. Audretsch & Max Keilbach, 2007. "The Theory of Knowledge Spillover Entrepreneurship," Journal of Management Studies, Wiley Blackwell, vol. 44(7), pages 1242-1254, November.
    16. Robert Bennett, 2008. "SME Policy Support in Britain since the 1990s: What have We Learnt?," Environment and Planning C, , vol. 26(2), pages 375-397, April.
    17. Franz Huber, 2012. "Do clusters really matter for innovation practices in Information Technology? Questioning the significance of technological knowledge spillovers," Journal of Economic Geography, Oxford University Press, vol. 12(1), pages 107-126, January.
    18. Esteban Lafuente & Yancy Vaillant & Josep Rialp, 2007. "Regional Differences in the Influence of Role Models: Comparing the Entrepreneurial Process of Rural Catalonia," Regional Studies, Taylor & Francis Journals, vol. 41(6), pages 779-796.
    19. Joan-Lluis Capelleras & Kevin F Mole & Francis J Greene & David J Storey, 2008. "Do more heavily regulated economies have poorer performing new ventures? Evidence from Britain and Spain," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(4), pages 688-704, June.
    20. Kevin F Mole & Mark Hart & Stephen Roper & David S Saal, 2011. "Broader or Deeper? Exploring the Most Effective Intervention Profile for Public Small Business Support," Environment and Planning A, , vol. 43(1), pages 87-105, January.
    21. Josep Maria Arauzo Carod & Miguel C. ManjÛn AntolÌn, 2004. "Firm Size and Geographical Aggregation: An Empirical Appraisal in Industrial Location," Small Business Economics, Springer, vol. 22(3_4), pages 299-312, April.
    22. Cassar, Gavin, 2004. "The financing of business start-ups," Journal of Business Venturing, Elsevier, vol. 19(2), pages 261-283, March.
    23. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-670, May.
    24. Kevin Mole & Mark Hart & Stephen Roper & David Saal, 2008. "Differential Gains from Business Link Support and Advice: A Treatment Effects Approach," Environment and Planning C, , vol. 26(2), pages 315-334, April.
    25. Robert Bennett & Paul Robson, 2003. "Changing Use of External Business Advice and Government Supports by SMEs in the 1990s," Regional Studies, Taylor & Francis Journals, vol. 37(8), pages 795-811.
    26. Monder Ram, 1999. "Managing Consultants in a Small Firm: A Case Study," Journal of Management Studies, Wiley Blackwell, vol. 36(6), pages 875-897, November.
    27. Sherwat E. Ibrahim & M. Hosein Fallah & Richard R. Reilly, 2009. "Localized sources of knowledge and the effect of knowledge spillovers: an empirical study of inventors in the telecommunications industry," Journal of Economic Geography, Oxford University Press, vol. 9(3), pages 405-431, May.
    28. Manuel Trajtenberg & Adam B. Jaffe & Michael S. Fogarty, 2000. "Knowledge Spillovers and Patent Citations: Evidence from a Survey of Inventors," American Economic Review, American Economic Association, vol. 90(2), pages 215-218, May.
    29. Alvarez, Sharon A., 2007. "Entrepreneurial rents and the theory of the firm," Journal of Business Venturing, Elsevier, vol. 22(3), pages 427-442, May.
    30. David A. McGranahan & Timothy R. Wojan & Dayton M. Lambert, 2011. "The rural growth trifecta: outdoor amenities, creative class and entrepreneurial context -super-§," Journal of Economic Geography, Oxford University Press, vol. 11(3), pages 529-557, May.
    31. Cooper, Arnold C. & Gimeno-Gascon, F. Javier & Woo, Carolyn Y., 1994. "Initial human and financial capital as predictors of new venture performance," Journal of Business Venturing, Elsevier, vol. 9(5), pages 371-395, September.
    32. Stuart, Toby & Sorenson, Olav, 2003. "The geography of opportunity: spatial heterogeneity in founding rates and the performance of biotechnology firms," Research Policy, Elsevier, vol. 32(2), pages 229-253, February.
    33. Beaudry, Catherine & Schiffauerova, Andrea, 2009. "Who's right, Marshall or Jacobs? The localization versus urbanization debate," Research Policy, Elsevier, vol. 38(2), pages 318-337, March.
    34. Ash Amin & Patrick Cohendet, 2004. "Architectures of knowledge : Firms, capabilities, and communities," Post-Print hal-00279605, HAL.
    35. Veronique A.J.M. Schutjens & Egbert Wever, 2000. "Determinants of new firm success," Papers in Regional Science, Springer;Regional Science Association International, vol. 79(2), pages 135-153.
    36. Dan Hjalmarsson & Anders W. Johansson, 2003. "Public advisory services - theory and practice," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 15(1), pages 83-98, January.
    37. Francis J. Greene & Kevin F. Mole & David J. Storey, 2008. "Three Decades of Enterprise Culture," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-28801-0, October.
    38. Mole, Kevin F. & Mole, Miranda, 2010. "Entrepreneurship as the structuration of individual and opportunity: A response using a critical realist perspective: Comment on Sarason, Dean and Dillard," Journal of Business Venturing, Elsevier, vol. 25(2), pages 230-237, March.
    39. James O. Fiet, 2007. "A Prescriptive Analysis of Search and Discovery," Journal of Management Studies, Wiley Blackwell, vol. 44(4), pages 592-611, June.
    40. Ozgen, Eren & Baron, Robert A., 2007. "Social sources of information in opportunity recognition: Effects of mentors, industry networks, and professional forums," Journal of Business Venturing, Elsevier, vol. 22(2), pages 174-192, March.
    41. Jonathan M Scott & David Irwin, 2009. "Discouraged Advisees? The Influence of Gender, Ethnicity, and Education in the Use of Advice and Finance by UK SMEs," Environment and Planning C, , vol. 27(2), pages 230-245, April.
    42. Kevin Mole, 2002. "Street-Level Technocracy in UK Small Business Support: Business Links, Personal Business Advisers, and the Small Business Service," Environment and Planning C, , vol. 20(2), pages 179-194, April.
    43. Phillip Kim & Howard Aldrich & Lisa Keister, 2006. "Access (Not) Denied: The Impact of Financial, Human, and Cultural Capital on Entrepreneurial Entryin the United States," Small Business Economics, Springer, vol. 27(1), pages 5-22, August.
    44. Bill Taylor, 1999. "Patterns of Control within Japanese Manufacturing Plants in China: Doubts about Japanization in Asia," Journal of Management Studies, Wiley Blackwell, vol. 36(6), pages 853-873, November.
    45. Harald Bathelt & Andersand Malmberg & Peter Maskell, 2002. "Clusters and Knowledge Local Buzz, Global Pipelines and the Process of Knowledge Creation," DRUID Working Papers 02-12, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    46. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    47. Colin Wren, 2002. "Evaluating the effect of soft business support upon small firm performance," Oxford Economic Papers, Oxford University Press, vol. 54(2), pages 334-365, April.
    48. Deniz Ucbasaran & Mike Wright & Paul Westhead, 2003. "A longitudinal study of habitual entrepreneurs: starters and acquirers," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 15(3), pages 207-228, July.
    49. Robson, Paul J A & Bennett, Robert J, 2000. "SME Growth: The Relationship with Business Advice and External Collaboration," Small Business Economics, Springer, vol. 15(3), pages 193-208.
    50. Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 808-827, August.
    51. Sarah L. Jack, 2005. "The Role, Use and Activation of Strong and Weak Network Ties: A Qualitative Analysis," Journal of Management Studies, Wiley Blackwell, vol. 42(6), pages 1233-1259, September.
    52. David Keeble & Clive Lawson & Barry Moore & Frank Wilkinson, 1999. "Collective Learning Processes, Networking and 'Institutional Thickness' in the Cambridge Region," Regional Studies, Taylor & Francis Journals, vol. 33(4), pages 319-332.
    53. Francis J. Greene & Kevin F. Mole & David J. Storey, 2004. "Does More Mean Worse? Three Decades of Enterprise Policy in the Tees Valley," Urban Studies, Urban Studies Journal Limited, vol. 41(7), pages 1207-1228, June.
    54. Martin Andersson & Sierdjan Koster, 2011. "Sources of persistence in regional start-up rates--evidence from Sweden," Journal of Economic Geography, Oxford University Press, vol. 11(1), pages 179-201, January.
    55. Thomas M. Begley & Wee-Liang Tan & Herbert Schoch, 2005. "Politico–Economic Factors Associated with Interest in Starting a Business: A Multi–Country Study," Entrepreneurship Theory and Practice, , vol. 29(1), pages 35-55, January.
    56. Stefano Breschi & Francesco Lissoni, 2009. "Mobility of skilled workers and co-invention networks: an anatomy of localized knowledge flows," Journal of Economic Geography, Oxford University Press, vol. 9(4), pages 439-468, July.
    57. Harald Bathelt, 2005. "Cluster Relations in the Media Industry: Exploring the 'Distanced Neighbour' Paradox in Leipzig," Regional Studies, Taylor & Francis Journals, vol. 39(1), pages 105-127.
    58. Baker, Ted & Miner, Anne S. & Eesley, Dale T., 2003. "Improvising firms: bricolage, account giving and improvisational competencies in the founding process," Research Policy, Elsevier, vol. 32(2), pages 255-276, February.
    59. Cédric Schneider & Reinhilde Veugelers, 2010. "On young highly innovative companies: why they matter and how (not) to policy support them," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 19(4), pages 969-1007, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kevin Mole & Joan-Lluís Capelleras, 2018. "Take-up and variation of advice for new firm founders in different local contexts," Environment and Planning C, , vol. 36(1), pages 3-27, February.
    2. Kevin Mole & David North & Robert Baldock, 2017. "Which SMEs seek external support? Business characteristics, management behaviour and external influences in a contingency approach," Environment and Planning C, , vol. 35(3), pages 476-499, May.
    3. Kevin Mole & Robert Baldock & David North, 2013. "Who Takes Advice? Firm Size Threshold, Competence, Concerns and Informality in a Contingency Approach," Research Papers 0009, Enterprise Research Centre.
    4. Joan-Lluis Capelleras & Ignacio Contín-Pilart & Martin Larraza-Kintana, 2011. "Publicly Funded Prestart Support for New Firms: Who Demands it and How it Affects Their Employment Growth," Environment and Planning C, , vol. 29(5), pages 821-847, October.
    5. Greene, Francis, 2012. "Should the focus of publicly provided small business assistance be on start-ups or growth businesses?," Occasional Papers 12/2, Ministry of Economic Development, New Zealand.
    6. Kristine M. Kuhn & Tera L. Galloway, 2015. "With a Little Help from My Competitors: Peer Networking among Artisan Entrepreneurs," Entrepreneurship Theory and Practice, , vol. 39(3), pages 571-600, May.
    7. Liang Han & Alan Benson, 2010. "The Use and Usefulness of Financial Assistance to UK SMEs," Environment and Planning C, , vol. 28(3), pages 552-566, June.
    8. Peter van der Zwan & Ingrid Verheul & Roy Thurik & Isabel Grilo, 2009. "Entrepreneurial Progress: Climbing the Entrepreneurial Ladder in Europe and the US," Tinbergen Institute Discussion Papers 09-070/3, Tinbergen Institute, revised 17 Mar 2010.
    9. Kevin F Mole & Mark Hart & Stephen Roper & David S Saal, 2011. "Broader or Deeper? Exploring the Most Effective Intervention Profile for Public Small Business Support," Environment and Planning A, , vol. 43(1), pages 87-105, January.
    10. Anoosheh Rostamkalaei & Mark Freel, 2017. "Business advice and lending in small firms," Environment and Planning C, , vol. 35(3), pages 537-555, May.
    11. Norin Arshed & Colin Mason & Sara Carter, 2016. "Exploring the disconnect in policy implementation: A case of enterprise policy in England," Environment and Planning C, , vol. 34(8), pages 1582-1611, December.
    12. Monder Ram & Kiran Trehan & John Rouse & Kassa Woldesenbet & Trevor Jones, 2012. "Ethnic Minority Business Support in the West Midlands: Challenges and Developments," Environment and Planning C, , vol. 30(3), pages 504-519, June.
    13. Jonathan M Scott & David Irwin, 2009. "Discouraged Advisees? The Influence of Gender, Ethnicity, and Education in the Use of Advice and Finance by UK SMEs," Environment and Planning C, , vol. 27(2), pages 230-245, April.
    14. Dirk Oberschachtsiek & Patrycja Scioch, 2015. "The outcome of coaching and training for self-employment. A statistical evaluation of outside assistance support programs for unemployed business founders in Germany [Die Erfolgswirkung von Gründer," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 48(1), pages 1-25, March.
    15. Laura Ramaciotti & Alessandro Muscio & Ugo Rizzo, 2017. "The impact of hard and soft policy measures on new technology-based firms," Regional Studies, Taylor & Francis Journals, vol. 51(4), pages 629-642, April.
    16. D.J. Webber & S. Johnson & S. Fargher, 2010. "Sector Variations in SMEs’ Use of External Business Advice," Local Economy, London South Bank University, vol. 25(4), pages 339-355, June.
    17. Nadia Simoes & Nuno Crespo & Sandrina B. Moreira, 2016. "Individual Determinants Of Self-Employment Entry: What Do We Really Know?," Journal of Economic Surveys, Wiley Blackwell, vol. 30(4), pages 783-806, September.
    18. David, Audretsch & Donald, Kuratko & Albert, Link, 2015. "Making Sense of the Elusive Paradigm of Entrepreneurship," UNCG Economics Working Papers 15-4, University of North Carolina at Greensboro, Department of Economics.
    19. Norin Arshed & Sara Carter & Colin Mason, 2014. "The ineffectiveness of entrepreneurship policy: is policy formulation to blame?," Small Business Economics, Springer, vol. 43(3), pages 639-659, October.
    20. Lovgren, Adam & Ross, R. Brent & Peterson, H. Christopher, 2012. "Overcoming Selection Bias in Measuring the Effect of Entrepreneurial Assistance Programs," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124815, Agricultural and Applied Economics Association.

    More about this item

    Keywords

    Buzz; start-ups; new firm founders; business advice;
    All these keywords.

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:38170. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.