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Personal Preferences, Entrepreneurs’ Location Choices, and Firm Performance

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  • Elena Kulchina

    (Fuqua School of Business, Duke University, Durham, North Carolina 27708)

Abstract

Whereas early location work established the role of economic factors in entrepreneurs’ location choices, recent studies suggest personal reasons as another factor. However, because the places where entrepreneurs want to live are often the places where they will likely do well, it is difficult to empirically separate the two mechanisms. We focus on entrepreneurs founding firms abroad, allowing us to more effectively isolate the effect of personal location attractiveness. We leverage entrepreneurs’ decisions to relocate and manage their firms personally or to remain in a home country and hire a manager. We find that entrepreneurs who view a host country as an attractive location are more likely to relocate and manage their firms personally. However, such entrepreneur-managers have lower firm performance. These results are consistent with the idea that entrepreneurs are more likely to reside in personally attractive places and are willing to substitute benefits of living there for some firm profit. This paper was accepted by Jesper Sørensen, organizations .

Suggested Citation

  • Elena Kulchina, 2016. "Personal Preferences, Entrepreneurs’ Location Choices, and Firm Performance," Management Science, INFORMS, vol. 62(6), pages 1814-1829, June.
  • Handle: RePEc:inm:ormnsc:v:62:y:2016:i:6:p:1814-1829
    DOI: 10.1287/mnsc.2015.2199
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    References listed on IDEAS

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    2. Jae Teuk Chin, 2020. "Location Choice of New Business Establishments: Understanding the Local Context and Neighborhood Conditions in the United States," Sustainability, MDPI, vol. 12(2), pages 1-17, January.
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    4. Nam Kyoon N. Kim & Simon C. Parker, 0. "Entrepreneurial homeworkers," Small Business Economics, Springer, vol. 0, pages 1-25.
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    6. Nam Kyoon N. Kim & Simon C. Parker, 2021. "Entrepreneurial homeworkers," Small Business Economics, Springer, vol. 57(3), pages 1427-1451, October.
    7. Emir Malikov & Jingfang Zhang & Shunan Zhao & Subal C. Kumbhakar, 2023. "Accounting for Cross-Location Technological Heterogeneity in the Measurement of Operations Efficiency and Productivity," Papers 2302.13430, arXiv.org.

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