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