Location choices of start-ups In Finland: A behavioural perspective
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Journal Title
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Volume Title
School of Business |
Master's thesis
Authors
Date
2022
Department
Major/Subject
Mcode
Degree programme
Management and International Business (MIB)
Language
en
Pages
131+2
Series
Abstract
Location choice is traditionally viewed as a fully rational optimization decision drawing on the thorough analyses of risks, costs, and benefits. Nevertheless, such implicit assumption about human’s perfect rationality is unrealistic, leading to the fact that several traditional theoretical methods might neglect the decision-makers’ personal background, experiences, behaviors, emotions and attitudes in their decision-making process. Utilizing the behavioral lens to theoretically complement the rational economic models on location choice, I examined how start-up founders made location decisions and whether apart from the universally recognized strategic factors, there are other behavioral and external factors influencing their location choices. Setting the research context in Finland, the study employed qualitative approach with semi-structured interview method and thematic analysis for data collection and data analysis, respectively. In detail, ten founders from growth-stage start-ups in Finland were interviewed to gain comprehension on how they found their venture, how they make location choices and what are the advantages and disadvantages that Finland as a start-up’s destination has to offer. The narratives were subsequently transcribed and coded with thematic analysis to pinpoint pertinent themes and meaningful insights. The thesis contributes three main findings. First, it extends the literature on start-ups’ location choice and the entrepreneurship process with the location decision-making model to explain how start-up founder makes location choices and how the choice is integrated into the entrepreneurship process. Second, entrepreneurs do not always follow the universally traditional location model evaluating the advantages and disadvantages of numerous alternatives, further reinforcing the role of managerial cognition in IB research while offering a more comprehensive picture of start-ups’ location choice. Indeed, the bounded rationality aspects such as entrepreneurs’ values, ethnic background and professional experience, cognitive limitations, and emotions all together pose a powerful impact on whether or not to engage in searching for information, choosing initial location and possible relocation and expansion. Third, and even more importantly, these behavioral factors, in some instances prevail economic ones (i.e., cost optimization) in start-ups’ location choice. Policy-wise, the study also highlights different locational advantages to attract would-be founders to Finland such as reputation for specialized industry and active student-led start-up ecosystem. Recommendations for an improved Finnish start-up ecosystem are promoting entrepreneurship to larger audiences regardless of their background, creating stress-free administration procedure and organizing awards ceremonies to appreciate founders’ contributions. Additionally, policymakers may leverage the findings of this study to engage with founders’ emotions to encourage them to choose Finland as their headquarters.Description
Thesis advisor
Kähäri, PerttuKeywords
start-up, start-up founder, location choice, location decision-making process, entrepreneurship process, bounded rationality, behavioral paradigm