Understanding the relationship between the regional context and the process of creation of new ventures

The creation of a new venture is a central topic in the entrepreneurial literature (Davidsson et al., 2020; Shepherd et al., 2021; Vogel, 2017) since it plays a role in the development and growth of regional economies (Gu & Qian, 2019; Xu et al., 2021). Scholars are considering the creation of a new venture as a process triggered by human intention and action to transform a business idea into a viable business activity (Baron & Markman, 2018; McMullen & Dimov, 2013; Shane & Venkataraman, 2000; Vogel, 2017). The process has been described as dynamic and may be linear or iterative and serendipitous in which can be identified three main phases, namely generation, development, and exploitation (Davidsson & Gruenhagen, 2021). Using the creation process as the paradigm helped entrepreneurial scholars overcome the discovery-creation stalemate (Davidsson, 2023) and extend the entrepreneurial phenomenon beyond the entrepreneurial-hero vision (Vogel, 2017). In this way, entrepreneurial scholars recognized the importance of other elements contingent on the new venture (Davidsson et al., 2020). In fact, the creation of new ventures does not happen in a vacuum, but it is embedded in an environmental and social context which influences the different stages of the process (Vogel, 2017). The importance of the context is highlighted by recent studies that have focused on the characteristics of the region in which the process of creation happens (Autio et al., 2014; Dahl et al., 2010; Garud et al., 2014; Muñoz et al., 2022), to better understand their dynamics (Marquis & Battilana, 2009). Studies in this stream focused on how elements of a regional context may foster entrepreneurial intentions (Davidsson, 1995; Kibler et al., 2014), favour the creation of entrepreneurial opportunities (Kibler et al., 2014), sustain new firms in acquiring relevant knowledge (Hussler, 2004), provide human, social, and financial capital (Audretsch & Keilbach, 2004), and facilitate the interaction within clusters and networks (Hervas Oliver et al., 2017; Spigel, 2013). However, studies in this area have mainly used a top-down approach, assuming that the regional context is easily malleable by highly hierarchical actors (Thompson et al., 2018). This approach overlooks the interrelationships between the regional elements and the new venture, assuming the latter as a passive receiver of the region. As a consequence, governments have tried to implement policies aiming to emulate stories of successful regions, such as Silicon Valley and Route 128, obtaining poor results (Thompson et al., 2018). Furthermore, while some regional structures and elements might be easy to replicate in different contexts (Aversa et al., 2021), some are idiosyncratic to a place, being “sticky” and accessible only being on proximity. All things considered, there is a lack of understanding of the interrelationship between new ventures and regional context, and in particular how the new ventures make use of the regional context, and in turn, how the regional context influences and sustains the creation of a new venture. Furthermore, there is a lack of a dynamic view of the role of the regional context in the different phases of the new venture’s creation. Accordingly, the aim of this PhD is to shed further light on how the regional context can influence and support the creation of new ventures. Particularly, the focus of this thesis is to provide a better comprehension of the relationship between regional elements and new ventures throughout the different phases of the creation process. The motivations behind this research lie in the scant attention to the dynamics of new ventures in interacting with the environment (Autio et al., 2014) and the effect of new ventures on economic, social, and innovative regional development (Gu & Qian, 2019; Xu et al., 2021). Therefore, a better understanding of how to support the creation of new ventures may provide benefits to both academics and practitioners. These gaps are addressed in this thesis through three main phases. In the first phase, through a single case study, this thesis aims to investigate how the regional legacy, a peculiar element of a region resulting from the industrial and business tradition and culture (Aoyama, 2009), supports the successful completion of the creation process. In this way, the thesis aims to describe how specific and idiosyncratic elements of a location are critical to a new venture, putting more emphasis on the importance of the location. In the second phase, through a multiple case study, the thesis looks at those elements of the regional legacy, that comprise the business and industrial tradition, and how they are diffused through entrepreneurship. In particular, by describing how new ventures leverage important knowledge developed by regional anchor firms, the thesis sheds light on how the new ventures interact with the environment exploiting traditional business elements while influencing regional development. Finally, in the third phase, the thesis aims to understand how new ventures behave when in the region where they are located, the relevant resources for the creation process do not fit with the new ventures’ needs. In this phase, I investigated the location decision of new ventures, providing insight into the entrepreneurial agency in an entrepreneurial ecosystem. The three stages described above correspond to the three chapters of this thesis. In detail, in the first chapter of the thesis titled “Regional Legacy Effects on Radically Innovative New Ventures’ Risks”, I performed a study on the influence of Regional Legacy (RL) on the process of new venture creation. Despite the existing research, there's a scant understanding of how RL supports the new venture to overcome the risks related to the lack of legitimacy and liability of newness that threatens the survival of new ventures (Kuratko et al., 2017). The lack of legitimacy arises from an inadequate understanding of what a new venture does among crucial stakeholders (Aldrich & Fiol, 1994; Zimmerman & Zeitz, 2002), hindering their potential exploitation. The liability of newness, on the other hand, stems from the lack of resources and capabilities of new ventures compared to more established firms (Soto-Simeone et al., 2020; Stinchcombe, 1965). To better address the risks, this chapter focuses on Radically-Innovative New Ventures (INVs), a typology of new ventures that are characterized by a unique value proposition and face the highest degree of risk (Kumar et al., 2000). In this way, this study aims to bridge this gap by investigating how RL sustains radically-INVs in gaining legitimacy and reducing the liability of newness. To do so, I performed a qualitative approach through a single case study in which I addressed the research gaps in two phases. In the first one, I identified the mechanisms used by radically-INVs to increase their legitimacy that use the elements of the regional legacy. Similarly, in the second phase, there are describes those elements of the RL that are used in the mechanisms to reduce the liability of newness. This research contributes to the field by elucidating the dynamics affecting the creation of new ventures and their likelihood of survival (Shepherd et al., 2000; Soto-Simeone et al., 2020). The second chapter, titled “The Recycling of Individual Knowledge for the Creation of New Ventures in the Aftermath of the Crisis of the Anchor Firm”, investigates how the knowledge developed in an anchor firm is used for the creation of a new venture. In particular, the study focuses on a specific condition such as the crisis of the anchor firm that can have profound and far-reaching effects on a region. In fact, in addition to the loss of employment opportunities (Blanchard & Katz, 1992) and disruptions in local supply and demand (Sorenson, 2017), it can lead to the loss of valuable knowledge which significantly influences innovation within the region (Hoetker & Agarwal, 2007). Studies on crises have found how labour mobility can be a mechanism to keep the diffusion of knowledge within a region (Jofre-Monseny et al., 2017). However, long unemployment, operating under different routines and emigration hinder this mechanism (Hoetker & Agarwal, 2007). The transition to entrepreneurship has been identified as a way to preserve crucial knowledge while reducing the other negative impacts of anchor firms’ crises (Nyström, 2020; Spigel & Vinodrai, 2021). Despite acknowledging the relevance of the transition of individuals from employment to entrepreneurship following a firm crisis, there remains a gap in understanding the specific knowledge and skills leveraged by individuals during the creation of new ventures. To address the gap, I performed a multiple case study collecting primary data through interviews. In this way, the study relies on data that offer a more nuanced understanding of individual experiences and the new venture creation process (Beer et al., 2019). By delving into technological, managerial and market knowledge (Acs et al., 2013; Qian & Acs, 2013), I developed a framework that describes how each of this knowledge, and their degree of expertise, are used in the different phases of new venture creation. In this way, this thesis also contributes to understanding how resources are recycled within an entrepreneurial ecosystem and explores the dynamics of new venture creation as a response to anchor firms’ crises (Spigel & Vinodrai, 2021). In the third chapter, with the title “Entrepreneurial mobility: a resource-based investigation about the decision to leave”, I investigated the phenomenon of new ventures deciding to leave their region during the creation process. Selecting an appropriate location for a new venture is a critical strategic decision that significantly influences the venture's resource availability and utilization (Sirmon et al., 2011). Extant research has highlighted the preference of founders to locate their ventures in their home regions, often driven by the advantages of being embedded in a familiar context (Dahl & Sorenson, 2009; Dahl & Sorenson, 2010, 2012). However, new ventures opt to move, seeking advantageous ecosystems with abundant resources and supportive entrepreneurial environments (Butler et al., 2020). While studies have acknowledged that the location decisions for new ventures can happen during the different phases of creation, the phenomenon is studied as a static event occurring at the inception of the creation process (Butler et al., 2020). This perspective overlooks the dynamic nature of location decisions and how the decisions may vary in response to changing resource needs and goals throughout the venture creation process. Additionally, existing studies have often focused on specific types of resources, such as financial or social capital (Butler et al., 2020), without providing a comprehensive understanding of the different resources. This study addresses the research gap by using a qualitative study approach. In particular, I performed multiple case studies interviewing founders of new ventures that have moved during the creation process. As a result, I constructed a framework that describes how the influence in the location decision of the different resources such as financial, social, innovation, organisational, physical, and human (Marcon & Ribeiro, 2021) changes in each phase. By exploring the interplay between resource needs and local resource availability, this research aims to provide a nuanced understanding of how new ventures navigate location decisions and how resources influence the creation process.