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Local and social: entrepreneurs, information network effects, and economic growth

Tessa Conroy () and Stephan Weiler ()
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Tessa Conroy: University of Wisconsin-Madison/Extension

The Annals of Regional Science, 2019, vol. 62, issue 3, No 10, 713 pages

Abstract: Abstract Information is an essential input to the entrepreneurial process. Information based on the trials of past entrepreneurial projects can be particularly useful as it reveals details about the local market, benefiting subsequent ventures. Through a formal model of entrepreneurial search characterized by information flows and networks, we hypothesize a diminishing returns relationship between entrepreneurial information, in the form of births and deaths of entrepreneurial projects and economic benefits in the form of employment growth. We leverage the natural experiment contexts of regional economies to explore the role of information as it varies across market scale. In addition, given that networks, an important channel for information, are most powerful and effective in localized settings, we use the regional socio-demographic variation to explore the role of networks defined by gender. We indeed find statistically and economically significant evidence for the information-growth relationship in terms of both market scale and gender, with larger positive employment effects in less dynamic markets and less-networked market contexts. After building the empirical case for the importance of information flows and networks, we conclude with policy implications with particular attention to broadening and deepening entrepreneurial ecosystems.

JEL-codes: R23 L26 J16 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1007/s00168-019-00915-0

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