Home sweet home: Social capital and location choice

INO Research Seminar

Seminar by
Olav Sorenson, University of Toronto - Joint work with
Michael Dahl, University of Aalborg.

Abstract:

We argue that social capital places strong constraints on an entrepreneur's ability to found a firm in a region in which he or she does not have connections. We examine this thesis using comprehensive data on the Danish population and find evidence broadly consistent with this claim. Entrepreneurs tend to open businesses in regions in which they have deep roots (`home' regions). We further find that their ventures perform better (survive longer) when they locate in these home regions. The value of social capital moreover appears substantial, similar in magnitude to the value of having prior experience in the industry entered (i.e. human capital).

Olav Sorenson (PhD Stanford University, AB Harvard University) is the Jeffrey S. Skoll Chair in Technical Innovation and Entrepreneurship at Rotman Business School, University of Toronto. Previously he was at University of Chicago and UCLA. He has published extensively on entrepreneurship, social networks and industrial geography. His most recent research has appeared in Administrative Science Quarterly, Management Science, Strategic Management, American Journal of Sociology, Journal of Evolutionary Economics, American Sociological Review and Industrial & Corporate Change.