Key locational factors for immigrant entrepreneurs in top entrepreneurial ecosystems

Abstract

This study describes the locational factors that are most valuable and useful to immigrant entrepreneurs in the Bay Area, which is also referred to as Silicon Valley in this paper. Silicon Valley is the world’s leading entrepreneurial and technological ecosystem. As such, it attracts thousands of entrepreneurs with outstanding technical skills and talent from all over the world. Through enduring leadership, Silicon Valley is able to set the pace of entrepreneurship, and the trends that emerge in this ecosystem rapidly spread to establish themselves as rules almost everywhere. Silicon Valley’s appeal to foreign entrepreneurs is based on their hopes of finding investors and markets to scale up their companies. The goal of this study is to identify the locational factors of Silicon Valley that are most valued by immigrant entrepreneurs and to classify and rank the factors that are most closely linked to the successful performance of new ventures founded by immigrant entrepreneurs. Empirical analysis was conducted in 2014 through personal interviews with 54 new ventures that were founded or co-founded by Spanish entrepreneurs in the Bay Area. A follow-up was performed in 2019 to track their performance. This sample is representative of the population of new ventures founded by Spanish entrepreneurs in the Bay Area. Eight top-ranked locational factors cited in the literature were included in the analysis model, together with variables related to the personal profile of the founding team and the markets served by the companies under analysis. After just five years (2014–2019), almost half of the companies had failed. Around 30% remained active but were failing to meet expectations, and only 12 of the 54 companies could be deemed fully successful. Qualitative comparative analysis (QCA) reveals some locational factors as necessary conditions: the capacity to rapidly build a solid network of investors, firms, and other stakeholders; and the unique nature of the Bay Area market, which is especially conducive to testing new products, business models, and technologies. The findings contribute to the literature on entrepreneurial ecosystems by providing new evidence of the resources and locational factors that are most valued by immigrant entrepreneurs in top entrepreneurial hubs. Several managerial implications follow directly from the findings. These implications include a ranking of the environmental factors that appeal most to immigrant entrepreneurs running high-growth new ventures, together with the conditions to which they are indifferent. This study also provides valuable clues and guidelines for policymakers to enhance their entrepreneurial hubs and make them more attractive. The principal limitation of this study is the coverage of the empirical analysis, which was based only on entrepreneurs from Spain. The intention is to expand the data set in future research by including immigrant entrepreneurs from other regions, starting with Latin American countries.