regional cultures and entrepreneurial resiliency
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REGIONAL CULTURES AND ENTREPRENEURIAL
RESILIENCY
BEN SPIGELPHD CANDIDATE
DEPARTMENT OF GEOGRAPHYUNIVERSITY OF TORONTO
PROBLEMS WITH CULTURE IN ENTREPRENEURSHIP RESEARCH
• Needed to explain divergent regional economic experiences (Audretsch et al., 2011)
• Under-theorized and treated as a black box (Castree, 2004)
Social & geographic conditions
Economic conditions
Outcome
ENTREPRENEURSHIP, CULTURE AND GROWTH
• Firm growth is reaction to both economic opportunity and willingness to take on risk
• Focus on growth therefore a cultural attribute
CULTURAL PROCESSES OF ENTREPRENEURSHIP
Local culture
Entrepreneurial Traditions
Outlooks of entrepreneurs
Practices
• Culture is a process through which people understand the worldSuccess
reinforces
ANALYTICAL METHODS
• Qualitative analysis of interviews with software entrepreneurs, investors and policy makers
Waterloo Ottawa Calgary Total
Entrepreneurs
Investors
Economic Development
Officials
Total
23 29 28 80
5 7 5 17
4 3 6 13
32 40 39 110
TECHNOLOGY ENTREPRENEURSHIP IN
OTTAWA
• Growth of major technology firms in 1970s and 1980s
• One of Canada's strongest tech economics by 1990
Population
% of labour force self-employed
% of labour force in software
occupations
Major technology anchors
1,133,633
9.65%
4.94%
Federal government,
telecom industry
TELECOM CRISIS IN OTTAWA
• End of internet bubble in 2001/2 hurts local telecom companies
• VCs pull out, hurting both entrepreneurs and angels
"In the past I couldn't get anyone [to] join my start-ups,
but now I can because they feel confident of getting $10
million within six months as we've got the thing
started" (Angel investor, quoted in Mason Cooper and
Harrison, 2002 p. 271)
TELECOM CRISIS IN OTTAWA
• End of internet bubble in 2001/2 hurts local telecom companies
• VCs pull out, hurting both entrepreneurs and angels
0
20
40
60
80
1996 1999 2002 2005 2008 2011$0
$250
$500
$750
$1,000
Venture Capital Investments in Ottawa
Num
ber o
f inv
estm
ents
Mill
ions
of D
olla
rs In
vest
ed (a
djus
ted)
# of Deals $ Invested (millions of dollars)
ENTREPRENEURS REACT TO NEW CONDITION
• Collapse of Ottawa's startup economy causes entrepreneurs' goals and outlooks to shift
• Focus turns to long term stability rather than quick exit
In 2002 you had the guys who were going to grow organically and the
guys who were going to go VC and so they’ll make money through the VC sale. It was a four or five year play, make lots of money and go
retire to the Bahamas...In 2009 I don’t see any of those guys. I
haven’t seen one guy. (Interview with economic development
officer)
ENTREPRENEURS REACT TO NEW CONDITION
• Collapse of Ottawa's startup economy causes entrepreneurs' goals and outlooks to shift
• Focus turns to long term stability rather than quick exit
I think the greatest success would be if we were
independent, but big and successful...If we’re profitable
and driving ourselves there’s no need to fish out a quick exit (Interview with software
entrepreneur).
NEW ENTREPRENEURIAL GOALS IN OTTAWA
0%
17%
33%
50%
Ottawa
37%37%
15%11%%
of i
nter
view
ed fi
rms
• Entrepreneurs prioritize and stability and innovation over economic capital
Profit FreedomOvercome Challange Stability
DEVELOPMENT OF RISK-ADVERSE OUTLOOKS
• Collapse of VC-backed firms makes entrepreneurs wary of uncontrolled growth
• Refocus on consulting rather than product development
"We don’t want to spend money we don’t have yet...I guess we don’t like high-risk because it’s risky. We prefer staying with the low-risk and expanding when we can and when things are
good." (Interview with software entrepreneur)
GROWTH THROUGH RISK-ADVERSE PRACTICES
• Entrepreneurs adopt Software as a Service strategies to grow while reducing risk
• Allows for growth without outside investment 0%
10%
20%
30%
40%
50%
Waterloo Ottawa Calgary
23%
50%
32%
Software Firms Employing SaaS
GROWTH THROUGH RISK-ADVERSE PRACTICES
• Entrepreneurs adopt Software as a Service strategies to grow while reducing risk
• Allows for growth without outside investment
"As far as [company] goes, it's really one that I
want to ride into a massive success and just
get every possible experience of that process
out of the way, then move on to something
next." (interview with SaaS entrepreneur)
New definitions of entrepreneurial success based
on sustainability
Risk adverse views of entrepreneurship
Influence
Habitus of growth-oriented
and lifestyle entrepreneurs
Risk-mitigatingpractices
Influence
Produces
Ability of firms to growwithout high levels of risk
legitimizes
Over time,reinforces
Decline of telecommunications
economyand local investment
environment
Contributed to
CONNECTING CULTURE, ENTREPRENEURSHIP AND
INNOVATION
• Entrepreneurs choose practices that make sense given their social and economic contexts
• Researchers have to understand why these practices make sense
• How can we identify regional cultural contexts that encourage or discourage innovative behaviour?
THANK YOUBen Spigel
University of Toronto
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