Abstract
The article investigates whether the history of individuals’ spatial relocation has an impact on their propensity to perform an entrepreneurial entry and post-entry performance of firms they start. By looking at entrepreneurs in the IT services sector in Swedish non-core regions between 1991 and 2010, the article investigates the interaction between individuals’ embeddedness in local networks and their exposure to external knowledge accumulation opportunities across different geographical settings, as well as its impact on their entrepreneurial activities. The results of the analysis suggest that individuals with broad spatial relocation histories are more likely to start IT firms in non-core regions, which, in turn, may be expected to survive longer. It is, therefore, claimed that non-local knowledge accumulated through spatial relocation is an important complement to embeddedness in local networks in non-core regions. This complementarity is further related to the evolution of the IT services sector over time.
Highlights
Entrepreneurship is predominantly a local event (Audretsch et al 2012)
Individuals tend to start businesses in the regions where they have previously lived, studied, and worked (Dahl and Sorenson 2009; Michelacci and Silva 2007). Research has explained this locational inertia of entrepreneurs by personal factors (Curran et al 2016; Lafuente et al 2010) and the opportunity to leverage social capital that is hardly transferable over space (Kalnins and Chung 2006; Varga and Schalk 2004)
The results of this investigation demonstrate that while entrepreneurs are, characterized by locational inertia, it is the location of individuals immediately prior to entrepreneurial entry and their extended spatial biographies that matter for their entrepreneurial activities
Summary
Entrepreneurship is predominantly a local event (Audretsch et al 2012). Individuals tend to start businesses in the regions where they have previously lived, studied, and worked (Dahl and Sorenson 2009; Michelacci and Silva 2007). Non-core regions provide a suitable setting for analyzing a possible complementarity/ substitution between local embeddedness and non-local knowledge accumulated through spatial relocation The results of this investigation demonstrate that while entrepreneurs are, characterized by locational inertia, it is the location of individuals immediately prior to entrepreneurial entry and their extended spatial biographies that matter for their entrepreneurial activities. The second set of hypotheses relates spatial biographies of individuals to the post-entry performance of their firms: H2a: Entrepreneurial entries by local individuals in non-core regions have a better post-entry performance than entries by individuals relocating to non-core regions; H2b: Individuals’ exposure to external knowledge acquisition has a positive impact on the post-entry performance of firms they start in non-core regions; H2c: The post-entry performance of new firms in non-core regions is positively associated with metropolitan employment experience of their founders. Hypotheses H1c and H2c aim at testing whether employment experience in metropolitan regions plays any particular role in individuals’ decision to become entrepreneurs in non-core regions and post-entry performance of their firms
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