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Valentina Assenova and Olav Sorenson

Entrepreneurs in many emerging economies start their firm informally, without registering with the state. We examine how informality at the time of founding affected the growth and performance of 12,146 firms in 18 countries across sub-Saharan Africa. Our findings indicate that entrepreneurs who registered their firms at founding enjoyed greater success, in terms of sales and employment. But these benefits varied widely across countries. Countries in which people perceive the government as being less corrupt, those in which they have greater trust in the courts, and those with lower levels of ethnic conflict had larger performance benefits associated with being formal. The benefits of firm formalization therefore appear to depend on the socio-political legitimacy of the state.

Organization Science, 28 (2017): 804-818

Regional ecologies of entrepreneurship

September 11th, 2017 | Posted by admin in 2017 - (0 Comments)

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

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

Entrepreneurs and social capital in China

June 13th, 2017 | Posted by admin in 2017 - (0 Comments)

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

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