Location perceptions of early-stage startup founders in European ecosystems

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School of Business | Master's thesis
Degree programme
Management and International Business (MIB)
Even though establishing a startup company abroad has become easier in recent years, most entrepreneurs still establish their companies in their country of residence and often in the city they are already located at. In this case, the entrepreneurs usually do not systematically choose or search for an optimal location. Instead, they settle for a "good enough" operating environment. Previous studies have suggested several factors that drive this behaviour. This research exploits a theoretical framework to find out how the founders themselves experience and perceive the location in which they have established their startups following this behavioural pattern: do they feel that it offers them sufficient support during their entrepreneurial process and is the local entrepreneurial ecosystem functional and sufficient from their point of view? This study applies qualitative research methods. The research data has been collected through interviews and 30 European early-stage startup founders from Austria, Estonia, Finland, Germany, and Sweden have been interviewed. The data has been analysed using the ideal-type analysis method and interpreted with the help of the theoretical framework. As a result of the analysis, three categories of location perception, ideal types, are presented. Based on the three identified ideal types, it is found that the stage of the startup process and, in later stages of the process, the ability to use social capital to solve critical challenges affects the location perception of early-stage startup founders. The role of social capital in location perception is noteworthy, as its importance for entrepreneurial success has been identified in several previous studies. The effect of social capital on the location perception, and subsequently to the emotional status of the founder, probably strengthens the effect on entrepreneurial performance positively or negatively, depending on the existence of social capital or the founder’s ability to use it. The results also show that some startup founders lack the necessary social capital or the ability to use it and that they would need support from the ecosystem for this. The research applies an analysis method developed in the field of psychology and sociology, ideal type analysis, which is not commonly used in management or entrepreneurship research. The results of the work show that the method is also applicable to these disciplines and offers the opportunity to bring new psychological perspectives to the interpretation of the results, the need for which has been highlighted in previous publications in the field. Unlike regular master’s thesis, this research is reported in the form of an article and therefore has a somewhat different structure. Due to the requirements set for the thesis, it is presented here in a longer form, and the manuscript sent for peer review will be a condensed version of the work.
Thesis advisor
Kähäri, Perttu
startup founders, entrepreneurship ecosystem, social capital, location perception, ideal-type analysis
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