Entrepreneurship and gentrification

Luisa Gagliardi and Olav Sorenson

How do startups influence the neighborhoods in which they locate? Using data from the Greater London area, we find a positive association between growth-oriented entrepreneurship and both demographic and organizational changes in these communities. Older, less-educated residents are replaced by young, more-educated ones. Restaurants become more expensive and more diverse. We also demonstrate that growth-oriented entrepreneurship predicts a subsequent rise in residential real estate prices. This price appreciation, however, does not seem to benefit long-term residents, as property values increase primarily in areas with high rates of renting. The gentrification of neighborhoods experiencing startup entry calls for deeper reflection on the role of entrepreneurship in inequality and the sustainability of entrepreneurial ecosystems.

Organization Science, 37, 1-16 (OPEN ACCESS)

The causal inference problem: When can managers use data to inform decisions and how can organizational design help them?

Michael D. Ryall and Olav Sorenson

Most research on organizations presumes that leaders can direct their organizations towards a set of goals, but that ability requires leaders to understand the consequences of their actions, a problem of causal inference. To explore this problem, we develop a formal model of the organization as a system of causal relationships. Managers observe some elements of this system but not others. Hidden (unseen) elements can bias managers’ assessments of the expected consequences of their actions, but they only do so under a specific set of conditions. Absent those conditions, simple and even incomplete theories prove sufficient for accurate assessments. Interestingly, the specificity of the problematic conditions also suggests several ways in which organization design could eliminate them. We introduce three types of organizational solutions to the problem of causal inference in the presence of hidden influences — experimentation, illumination, and substitution — and discuss how a variety of organizational design features might enact them.

Academy of Management Review, in press

Prosperous places: Processes, policies, and practices

Christof Brandtner, Olav Sorenson, and Maryann Feldman

Prosperous places provide more than just high levels of economic output. They also promote the well-being of their residents and ensure equitable access to community resources and opportunities. Prosperous places—picture Copenhagen, Melbourne, or Vienna—balance economic growth with social equity. Most communities, however, remain marked by stark inequalities. We examine the processes, policies, and practices that foster prosperity, a more equal distribution of resources and opportunities within places: diverse organizational demographics, shared ownership structures, spatial and social integration, and cross-sector inclusive governance. We call for reimagining prosperity as a collective achievement—one shaped by deliberate choices that distribute benefits widely rather than deepening divides.

Industrial and Corporate Change, in print (OPEN ACCESS)

Embedded Entrepreneurship

Olav Sorenson

In this chapter, I review and reflect on my most influential stream of research, on how social relationships influence the location choices of entrepreneurs and the economic geography of industries. I also offer some thoughts about why some scholars end up being more influential than others.

Published in A Journey toward Influential Scholarship

Preprint available

Talent and technology in creative industries: Introduction to the special issue

Ricard Gil, S. Abraham Ravid, and Olav Sorenson

This special issue of the Journal of Culture Economics focuses on the profound impact of technological change on creative industries, with a spotlight on artificial intelligence (AI) and streaming. It provides an overview of how AI and streaming have been reshaping the creative industries and speculates as to what the future may hold. The issue also delves into the challenges and ethical considerations that arise from these technological advancements, for areas such as copyright and job displacement.

Journal of Culture Economics, 49: 241-255 (OPEN ACCESS)

Theory, search, and learning

Olav Sorenson

When searching for a solution to a problem, having a theory—an underlying causal structure that explains outcomes as a consequence of antecedents and that allows for the prediction of potential consequences of combinations of choices not yet tried—changes the way in which people explore the solution space. Whether a theory proves useful to search, however, depends not just on its predictive precision. This essay argues that the internal structures of theories—their size, complexity, the extent of their elaboration, and the confidence that their users have in the assumptions—also influences how people search for solutions and the efficiency of their search processes. It offers several conjectures about how theory and theory structure influence search and about which types of theories prove most useful to success.

Strategy Science, 9(4): 372-381 (OPEN ACCESS)

The sociology of entrepreneurship revisited

Tristan L. Botelho, Ranjay Gulati, and Olav Sorenson

Over the last two decades, the sociology of entrepreneurship has exploded as an area of academic inquiry. Most of this research has been focused on understanding the environmental conditions that promote entrepreneurship and processes related to the initial formation of an organization. Despite this surge in activity, many important questions remain open. Only more recently have scholars begun to turn their attention to what happens to organizations, and the people connected to them, as they mature and move through the life cycle of entrepreneurship. These open questions, moreover, connect to many classic themes in the literature on careers, organizational sociology, stratification, and work and occupations. Using a framework that focuses on three phases of the entrepreneurial life cycle—pre-entry, entry, and post-entry—we summarize sociological research on entrepreneurship and highlight opportunities for future research.

Annual Review of Sociology, 50: 341-364 (OPEN ACCESS)

The new Argonauts: The international migration of venture-backed companies

Yuan Shi, Olav Sorenson, and David M. Waguespack

We use a novel longitudinal dataset, constructed from 16 downloads of VentureXpert records collected over 20 years, to characterize the international migration of venture-capital-backed startups. We find that: (i) 1078 firms in our sample (1.4%) migrate; (ii) countries with high levels of in-migration also have high levels of out-migration; (iii) migrating firms move to places with more investors; (iv) pre-move investors and their connections most strongly predict migration patterns; and (v) movers raise more money than non-movers, primarily from investors at their destinations. Overall, these patterns appear inconsistent with those expected if startups move primarily in search of talent or customers. Instead, the flows across countries look more like international trade, with startups seeking capital, and social connections between investors defining the shipping lanes.

Strategic Management Journal, 45: 1485-1509 (OPEN ACCESS)

Summarized in the UCLA Anderson Review

The shape and structure of entrepreneurial and innovative places

Geoffrey Borchhardt and Olav Sorenson

Interactions primarily occur between those living and working in close proximity to one another. This essay explores some consequences of that fact for places. It offers three principle propositions: (1) Compact buildings, neighborhoods, and cities, and denser places, should promote higher rates of entrepreneurship, innovation, and economic growth because they reduce the costs of interaction. (2) More integrated places should also promote entrepreneurship and innovation because the average person in those places interacts with a more diverse set of others. (3) In more segregated and unevenly distributed places, people diverge more, as a function of where within the place they live and work, in their propensities to innovate and to found firms.

Published in Entrepreneurial Ecosystems in Cities & Regions

Preprint available

Does diversity influence innovation and economic growth? It depends on spatial scale

Olav Sorenson

Diversity has been thought to influence innovation and economic growth in many ways. The mechanisms proposed as underlying these relationships interestingly operate at different spatial scales. Differing estimates across levels of spatial resolution therefore provide empirical insight into the processes underlying regional differences in innovation, entrepreneurship, and economic growth. After discussing these mechanisms and why they operate at different spatial scales, this essay revisits a number of the existing studies of diversity through this lens. Diversity appears to have had the largest effects at fine-grained scales, suggesting that its economic value to regions emerges most strongly from facilitating innovation and information exchange through serendipitous interactions.

Research in Organizational Behavior, 43: 100190 (OPEN ACCESS)

Summarized on the UCLA Anderson Review