Effects of ancestral populations on entrepreneurial founding and failure: private liquor stores in Alberta, 1994--2003

Until 1993, all liquor stores in the Canadian province of Alberta were government owned and run. In the fall of 1993, the provincial government exited liquor retailing, all government stores were shut down, and entrepreneurs were allowed to open private liquor stores. In this article, we take advantage of this abrupt regulatory change in the Alberta liquor-retailing industry to address two related issues that have received little empirical attention. First, we investigate how an ancestral population affects processes of legitimation and competition. While density-dependence theory predicts that legitimation effects outweigh competitive effects at low levels of density, will this be the case when a new population replaces a similar, ancestral one? Second, beyond density dependence, we investigate how ancestral populations affect the locations of new entrepreneurial ventures. Will entrepreneurs follow ancestral location patterns, and will these ancestral locations confer survival advantages? To answer these questions, we map all private liquor stores on the street map of Calgary, Alberta's largest city, from 1994 to 2003 and analyze store founding and failure. We use our results to draw implications for theories of density dependence, entrepreneurial behavior, and industry spatial structure. Copyright 2011 The Author 2011. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.