UCL School of Management is delighted to welcome Professor Daniel Armanios, University of Oxford, to host a research seminar discussing: Paving the Way: How Road Networks Shape Entrepreneurial Variety.

Abstract:

Does physical infrastructure influence the kinds of startups founded in geographical areas? We propose physical infrastructure impacts entrepreneurship via how the built environment influences ventures’ search for information. In particular, we posit that inward connectedness (total 3- and 4-way road intersections) facilitates narrower search, leading to convergent founding (i.e., new firms in similar sectors to existing local firms). In contrast, outward connectedness (a region’s centrality in the broader road and transit network) supports wider search, leading to divergent founding (i.e., new firms in sectors different from local incumbents). Using information from the U.S. Smart Location Database (SLD) and Crunchbase, we build a novel dataset at the census block group level (2010-2016) to examine how physical connectedness influences startup characteristics. We find support for our hypotheses. We provide further evidence for our search mechanisms in that higher organizational density attenuates the divergence from outward connectedness and amplifies the convergence from inward connectedness. Conversely, greater organizational diversity attenuates the convergence from inward connectedness and amplifies the divergence from outward connectedness. To address endogeneity, we use instruments based on historical city planning and topography. This study contributes a novel physical infrastructure perspective on search, thereby bridging organizational theory with microgeography and regional entrepreneurship.