The Spatial Ecology of Entrepreneurship
Michael S. Dahl & Olav Sorenson
Oxford University Press · Forthcoming, Summer 2027
Why does entrepreneurship concentrate in a handful of places, such as Silicon Valley, Boston, and London, despite repeated declarations of the death of distance? Why do booming hubs like Detroit lose their dynamism, while seemingly stagnant places like 1990s Boston sometimes roar back? Why do so many efforts to build entrepreneurial ecosystems fail?
Drawing on four decades of Danish registry data, covering every person and every firm in the country, we demonstrate that entrepreneurs do not emerge from the ether. Employers produce them. Founders start businesses in the industries they know, in the communities where they already live, close to their former employers. Small and young firms train generalists ready to run companies of their own. Large incumbents, by contrast, lock up talent and ideas.
These local organizational dynamics can explain why industries cluster, why some regions persistently have higher rates of entrepreneurship than others, and why economic dynamism can disappear and reemerge in short order. These processes, moreover, play out at surprisingly local levels: The neighborhood seems more the relevant ecosystem than the city or the region.
The findings also upend conventional policy. Rather than subsidizing founders or courting anchor tenants, regions that want more startups should cultivate the employers that create them and the environments that allow their employees to strike out on their own.