{"id":356802,"date":"2019-01-10T13:59:44","date_gmt":"2019-01-10T18:59:44","guid":{"rendered":"http:\/\/www.rochester.edu\/newscenter\/?p=356802"},"modified":"2019-06-06T10:28:46","modified_gmt":"2019-06-06T14:28:46","slug":"you-were-a-finalist-city-but-didnt-land-amazon-hq2-you-still-may-benefit-356802","status":"publish","type":"post","link":"https:\/\/www.rochester.edu\/newscenter\/you-were-a-finalist-city-but-didnt-land-amazon-hq2-you-still-may-benefit-356802\/","title":{"rendered":"You were an Amazon HQ2 finalist but didn’t make the cut? You still may benefit"},"content":{"rendered":"

Large companies in the US have been getting larger over the last three decades, at the same time that entrepreneurship has been on the decline. Those trends make it easy to assume that monster-sized companies have a way of squelching start-ups.<\/p>\n

But research out of the Ä¢¹½´«Ã½\u2019s Simon Business School<\/a> concludes that it\u2019s not that simple. Graduate student Zhao Jin studied entrepreneurial activity in the 20 cities that were considered as Amazon HQ2 finalists, the second headquarters for the online retail giant. His paper, \u201cHow Do Large Companies Affect Entrepreneurial Entry: Evidence From Amazon HQ2,\u201d<\/a> details how start-up companies were about seven percent more likely to incorporate in one of the Amazon HQ2 finalist cities.<\/p>\n

\u201cThe mere possibility of a large company entering a market encourages entrepreneurs to find profitable ways to be useful to that company,\u201d says Jin. \u201cThe main effects are concentrated in the larger cities, like Atlanta, Pittsburgh, Denver, and Los Angeles, where the sample size is larger.\u201d<\/p>\n

Over the past 30 years, while large companies have increased in size, there has been a steady decline in entrepreneurship. According to the US Census Bureau, the share of startup companies declined by nearly half\u2014from 15 percent to 8 percent\u2014from 1980 to 2015.<\/p>\n

\u201cThe paper addresses a fundamental question about the influence of large tech firms on startups and innovations,\u201d says assistant professor Michael Gofman,<\/a> who supervised Jin\u2019s research. \u201cAs Amazon, Apple, Facebook, Alphabet, Microsoft and other tech giants increase their investment in internal R&D and attract the best talent, some have argued that it discourages startups. Zhao shows that big tech firms actually foster the establishment of startups.\u201d<\/p>\n

There are complex reasons why that\u2019s the case. While some entrepreneurs look to make the larger firms important customers or clients, Gofman notes that others often hope to be bought up. \u201cEntrepreneurs seem to see acquisition by a large tech company as a successful exit strategy,\u201d he says.<\/p>\n

But many companies won\u2019t be acquired. And many of those that formed in Amazon HQ2 finalist cities are likely to stick around, Jin says.<\/p>\n

\u201cI certainly don\u2019t expect all of them to move or close up,\u201d says Jin. \u201cThey knew the risks when they founded their companies and are likely to continue operations.\u201d<\/p>\n

And if a startup is acquired by Amazon, Jin says there are still economic benefits for the region, despite a decrease in the actual number of companies. \u201cIf, for example, the startup company uses a proprietary technology, Amazon would want to keep the employees who are actually familiar with that technology,\u201d says Jin. \u201cAnd that part of the operation would grow as it becomes integrated into Amazon.\u201d<\/p>\n

While Jin specifically looked at Amazon, he believes other large companies would encourage entrepreneurial activity, as well. \u201cThe dynamics and business principles germane to Amazon apply to other dominant firms.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Research from the Simon Business School suggests that start-up and entrepreneurial activity increased in the 20 cities considered as locations for Amazon’s second headquarters.<\/p>\n","protected":false},"author":16,"featured_media":358112,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[456],"tags":[49,18572,10406],"class_list":["post-356802","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-society-culture","tag-entrepreneurship","tag-research-finding","tag-simon-business-school"],"acf":[],"yoast_head":"\nYou were an Amazon HQ2 finalist but didn't make the cut? 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