Max Planck Institute for Innovation and Competition, Munich, Room 313
Entrepreneurs learn from a variety of sources. One particularly important channel is learning from fellow entrepreneurs. In this study we examine the influence of close geographic proximity on new (to the entrepreneur) technology adoption decisions at one of the largest technology coworking hubs in the United States. To deal with endogenous geographic clustering, we rely on the random assignment of office space to the hub’s 266 startups. Using floorpans to measure geographic distance, we find that close proximity greatly influences the likelihood of adopting an upstream (production) technology also used by a peer firm. This effect, however, quickly decays with distance where startup firms that are more than 25 meters away are no longer influenced by each other. This proximity premium is largest for small firms and when startups are in different industries. Conversely, the distance discount disappears for startups in the same industry and for female-founder startups suggesting these startups rely on alternate mechanisms to overcome the negative effects of distance. We discuss the implications of the balance between concentration and diversity in promoting the diffusion of ideas within a fast-changing entrepreneurial ecosystem.
Contact Person: Fabian Gaessler