Date of Award
Doctor of Philosophy (PhD)
Sharon F. Matusik
Jeffrey G. York
Bret R. Fund
Michael J. Lenox
Entrepreneurship is a key driver of prosperity within the U.S. economy. It is also a geographically uneven phenomenon; while some regions have cultivated successful entrepreneurial ecosystems others have lagged behind. This regional divergence has important strategic implications for startup firms, in terms of where they choose to locate as well as their subsequent performance. In this dissertation, I therefore use a three-paper model to examine how geographic factors impact a) regional startup formation rates b) startup performance and c) startup decision making processes.
In the first paper I combine theoretical perspectives from sociological institutional theory and knowledge economics. Using the context of the cleantech industry sector, I study how community environmental ideologies moderate (i.e. structure) knowledge spillovers thus shaping regional entrepreneurship rates. The principal finding is that community ideologies are particularly important when the regional knowledge base is less specialized in cleantech. More broadly, I demonstrate that exogenous (i.e. beyond industry boundaries) sociocultural institutions dynamically moderate endogenous industrial dynamics. In the second paper, using data on venture-backed startups and a variance decomposition methodology, I examine the relative (i.e. in comparison to firm and industry-specific factors) impact that regions have on differences in startup valuation. I find that, on average, regions explain 2-3 percent of the variance in startup valuation. However, for startups at the earliest stages of development and for those operating in emerging industries, regions explain 14 and 7 percent of the variance in valuation respectively. The main implication is that regions play a supporting role in terms of contributing to startup performance differentials. In the third paper I look at how one specific regional factor, geographic clustering, influences startup decision making processes relating to business closure. The novel finding from this study is that the high rates of startup failure within geographic clusters can be explained, at least in part, by performance premium effects. For instance, startups within clusters are subjectively less satisfied and more likely to terminate operations for comparable, objective levels of performance.
Vedula, Siddarth, "Startups in a Spiky World: Three Essays on Geography and Entrepreneurship" (2015). Entrepreneurship & Small Business Management Graduate Theses & Dissertations. 7.