Regional ecologies of entrepreneurship

Olav Sorenson

Why do some regions produce more entrepreneurs than others? An ecological lens provides insight into this question: The demography of organizations in a region – particularly the proportion of small and young em- ployers – shapes many aspects of the environment for would-be entrepreneurs: (i) beliefs about the desirability of founding a firm, (ii) opportunities to learn about entrepreneurship and to build the abilities needed to succeed, and (iii) the ease of acquiring critical resources. Births of new industries and the demise of mature ones can therefore catalyze rapid changes in the rates of entrepreneurship that become self-reinforcing.

Journal of Economic Geography, 17 (2017): 959-974

Preprint available

Community and capital in entrepreneurship and economic growth

Sampsa Samila and Olav Sorenson

We argue that social and financial capital have a complementary relationship in fostering innovation, entrepreneurship and economic growth. Using panel data on metropolitan areas in the United States, from 1993 to 2002, our analyses reveal that social integration – in the microgeography of residential patterns – moderates the effect of venture capital, with more integrated regions benefitting more from expansions in the supply of financial capital. Our results remain robust to estimation with an instrumental variable to address potential endogeneity in the geography of venture capital. We also find some evidence for a similar effect from business associations. Our findings support the idea that social structure may contribute importantly to regional economic differences.

American Sociological Review, 82 (2017): 770-795

Summarized in Yale Insights

Video summary from Yale Insights

Entrepreneurs and social capital in China

Olav Sorenson

Does social capital operate differently in China? A long and vibrant literature on the concept of guanxi suggests not only that social capital might have a different character in China but also that it might prove more valuable there to employees and entrepreneurs alike. Drawing on unusually high quality data on Chinese executives, Burt and Burzynska (2017) explore the question of whether the same structural configurations of relationships appear associated with success in China as have been found in the West. Their short answer is yes. In this response, I comment on their article.

Management and Organization Review, 13 (2017): 275-280

Temporal issues in replication: The stability of centrality-based advantage

Yuan Shi, David M. Waguespack, and Olav Sorenson

The results of archival studies may depend on when researchers analyze data for at least two reasons: (1) databases change over time and (2) the sampling frame, in terms of the period covered, may reflect different environmental conditions. We examined these issues through the replication of Hochberg, Ljungqvist, and Lu’s (2007) research on the centrality of venture capital firms and their performance. We demonstrate (1) that one can reproduce the results in the original article if one uses data downloaded at roughly the same time as the original researchers did, (2) that these results remain fairly robust to even a decade of database updating, but (3) that the results depend sensitively on the sampling frame. Centrality only has a positive relationship to fund performance during boom periods.

Sociological Science, 4 (2017): 107-122 (OPEN ACCESS)

Expand innovation finance via crowdfunding

Olav Sorenson, Valentina Assenova, Guan-Cheng Li, Jason Boada, and Lee Fleming

Using data on Kickstarter campaigns and venture capital investments from 2009–2015, we explored whether crowdfunding expanded access to financial capital, in the sense of supporting innovation in more geographically diverse regions than venture capital. Over this period, crowdfunding has supported projects in many regions that have attracted little or no venture capital. Within regions, moreover, the evidence suggests that successful crowdfunding campaigns attract future venture capital investments and that they have been doing so at an increasing rate. Crowdfunding therefore appears to be expanding access to capital to a larger pool of innovators.

Science, 354 (2016): 1526-1528 (OPEN ACCESS)

Supplemental Materials

Replication data and analysis files

Geography, joint choices and the reproduction of gender inequality

Olav Sorenson and Michael S. Dahl

We examine the extent to which the gender wage gap stems from dual-earner couples jointly choosing where to live. If couples locate in places better suited for the man’s employment than for the woman’s, the resulting mismatch of women to employers will de- press women’s wages. Examining data from Denmark, our analyses indicate (i) that Danish couples chose locations with higher expected wages for the man than for the woman, (ii) that the better matching of men in couples to local employers could account for up to 36% of the gender wage gap, and (iii) that the greatest asymmetry in the apparent importance of the man’s versus the woman’s potential earnings occurred among couples with pre-school age children and where the male partner had accounted for a larger share of household income before the potential move.

American Sociological Review,81 (2016): 900-920

Podcast on the paper (interviewed by Cristobal Young)

Author disambiguation in PubMed: Evidence on the precision and recall of Author-ity among NIH-funded scientists

Marc Lerchenmueller and Olav Sorenson

We examined the usefulness (precision) and completeness (recall) of the Author-ity author disambiguation for PubMed articles by associating articles with scientists funded by the National Institutes of Health (NIH). In doing so, we exploited established unique identifiers —Principal Investigator (PI) IDs—that the NIH assigns to funded scientists. Analyzing a set of 36,987 NIH scientists who received their first R01 grant between 1985 and 2009, we identified 355,921 articles appearing in PubMed that would allow us to evaluate the precision and recall of the Author-ity disambiguation. We found that Author-ity identified the NIH scientists with 99.51% precision across the articles. It had a corresponding recall of 99.64%. Precision and recall, moreover, appeared stable across common and uncommon last names, across ethnic backgrounds, and across levels of scientist productivity.

PLoS One, 11 (2016): e0158731 (OPEN ACCESS)

Financing by and for the masses: An introduction to the special issue on crowdfunding

Lee Fleming and Olav Sorenson

This introduction to the special issue on crowdfunding begins by providing some information about the history and nature of the phenomenon. It then summarizes some of the key advantages and disadvantages of crowdfunding for entrepreneurs and for investors, introducing the various articles in the issue that explore these topics in greater depth. It concludes with some speculations regarding the possible future of the industry and its effects on entrepreneurship, innovation, and inequality.


California Management Review, 58 (2016): 5-19

 

The present and future of crowdfunding

Valentina Assenova, Jason Best, Mike Cagney, Douglas Ellenoff, Kate Karas, Jay Moon, Sherwood Neiss, Ron Suber, and Olav Sorenson

We convened a group of experts to discuss their thoughts about the current state of crowdfunding, its future, important emerging trends in the field, and the opportunities and challenges facing investors and entrepreneurs in the space. Across the board, our experts highlighted the importance of crowdfunding as a means for mobilizing resources. They also maintained that crowdfunding has already emerged as an important force in global finance, which appears here to stay, but one where we have only begun to see the ways in which it will transform the financial sector.


California Management Review, 58 (2016): 125-135

Crowding, satiation and saturation: The days of television series’ lives

Alicia Barroso, Marco Giarratana, Samira Reis, and Olav Sorenson

The performance of firms depends not just on the structure of the industries in which they compete but also on their relative positioning within those industries, in terms of operating within particular niches. We propose that demand for these niches depends endogenously on the historical ecology of the products offered: Niches become saturated – reduced in their ability to support products – as a large number of previous offerings allows the audience to satisfy its desire for products of a particular type. Analyzing the survival rates of television series aired in the United States from 1946 to 2003, we found that the survival rates of future entrants fell with the extensiveness of recent offerings in the niche, and that the negative association between crowding and survival also weakened with this saturation.


Strategic Management Journal, 37 (2016): 565-585