Social Networks, Funding, and Regional Advantages in Technology Entrepreneurship

39 Pages Posted: 4 Oct 2015 Last revised: 19 Jan 2018

John Butler

University of Texas at Austin - Red McCombs School of Business

Rajiv Garg

University of Texas at Austin - Department of Information, Risk and Operations Management

Bryan Stephens

University of Texas at Austin - Red McCombs School of Business

Date Written: August 1, 2015

Abstract

Economic factors, funding opportunities and social networks have influenced entrepreneurs’ choice of their startup location. With increased penetration of digital technologies in startups, the traditional need for proximity to specific locations or large funding for infrastructure development have diminished. Digital entrepreneurs now pursue locations that provide more opportunities for funding and greater social support, and enable lower startup costs. In this paper, we use economic indicators made publicly available by the U.S. government, investment information from CrunchBase, and professional histories and network data from LinkedIn, to study regional and personal factors that influence digital entrepreneurs’ location choice. These digital entrepreneurs have a choice to establish a startup in their current location or move to a different location. When relocating, entrepreneurs decide to create a startup immediately or delay it by a short duration (possibly to be more embedded in the local environment). Analysis of 1,424 entrepreneurs, suggests that funding rounds per year play a significant and positive role in influencing startup creation and local social network density and tenure in location provide a stickiness to decision making and negatively influence entrepreneurs' decisions to relocate.

Keywords: Social Networks, Entrepreneurship, Regional Advantage, Startups, Innovation, technology entrepreneur

JEL Classification: M13, D71, D80, O15, O30, O51, R23

Suggested Citation

Butler, John and Garg, Rajiv and Stephens, Bryan, Social Networks, Funding, and Regional Advantages in Technology Entrepreneurship (August 1, 2015). Available at SSRN: https://ssrn.com/abstract=2668918 or http://dx.doi.org/10.2139/ssrn.2668918

John Butler

University of Texas at Austin - Red McCombs School of Business ( email )

Austin, TX 78712
United States

Rajiv Garg (Contact Author)

University of Texas at Austin - Department of Information, Risk and Operations Management ( email )

CBA 5.202
Austin, TX 78712
United States

HOME PAGE: http://www.RajivGarg.org

Bryan Stephens

University of Texas at Austin - Red McCombs School of Business ( email )

Austin, TX 78712
United States

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