People or Place? Founder Intentions, Entrepreneurial Regions, and Technology Startups

Strategy & Business Policy

Speaker: Michael Roach

Professor - U. of Illinois

Conference  Jouy-en-Josas / room meeting (T015)

ABSTRACT

While prior research has focused on the effects of entrepreneurial regions such as Silicon Valley on firm founding rates, the extent to which these regions might attract aspiring entrepreneurs prior to founding has been overlooked. We take a first step at teasing apart whether entrepreneurial regions attract or create founders by using survey responses on the pre-existing stated founder intentions of STEM PhDs during graduate school and following their early careers into industry employment in different U.S. regions and their subsequent founding activity. We report three key findings. First, although one-third of aspiring founders move to entrepreneurial regions for their first industry job after graduation, this is only slightly higher than the share of individuals without founder intentions who also move to entrepreneurial regions. We show that this is because workers move to entrepreneurial regions for different reasons, with founder types doing so to work in startups while established firm types do so to work in large technology firms that offer attractive jobs. Second, we show that employees in entrepreneurial regions who become founders are disproportionately among those with pre-existing founder intentions. Additional analyses suggest that this is due in part to the combination of the right people (aspiring founders) being in the right place (entrepreneurial regions) with the resources that facilitate founding. Third, we find no evidence that entrepreneurial regions make individuals without founder intentions more entrepreneurial.  Instead, our findings suggest that the higher founding rates in entrepreneurial regions are due in part to aspiring founders self-selecting into these regions to work in startups prior to founding their own startups.