Proximate (Co-)Working: Knowledge Spillovers and Social Interactions

Abstract

We examine the influence of physical proximity on between-start-up knowledge spillovers at one of the largest technology coworking hubs in the United States. Relying on the exogenous assignment of office space to the hub’s 251 start-ups, we find that proximity positively influences knowledge spillovers as proxied by the likelihood of adopting an upstream web technology already used by a peer start-up. This effect is largest for start-ups within close proximity of each other and quickly decays; start-ups more than 20 meters apart on the same floor are indistinguishable from start-ups on different floors. The main driver of the effect appears to be social interactions. Although start-ups in close proximity are most likely to participate in social coworking space events together, knowledge spillovers are greatest between start-ups that socialize but are dissimilar. Ultimately, start-ups that are embedded in environments that have neither too much nor too little diversity perform better but only if they socialize. This paper was accepted by Toby Stuart, entrepreneurship and innovation. Funding: The authors acknowledge funding from the Kauffman Junior Faculty Fellowship and from the Harvard Business School Division of Research and Faculty Development. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2022.03555 .