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Third Places and Neighborhood Entrepreneurship: Evidence from Starbucks Cafés

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Listed:
  • Jinkyong Choi
  • Jorge Guzman
  • Mario L. Small

Abstract

Sociologists have shown that “third places” such as neighborhood cafés help people maintain and use their network ties. Do they help local entrepreneurs, for whom networks are important? We examine whether the introduction of Starbucks cafés into U.S. neighborhoods with no coffee shops increased entrepreneurship. We find that, when compared to census tracts that were scheduled to receive a Starbucks but did not do so, tracts that received a Starbucks saw an increase in the number of startups of 5.0% to 11.8% (or 1.1 to 3.5 firms) per year, over the subsequent 7 years. There was no effect on neighborhoods with prior cafés. A partnership between Starbucks and Magic Johnson focused on underprivileged neighborhoods produced larger effects. Starbucks locations with more square footage and those with a higher number of visits also produced larger effects.

Suggested Citation

  • Jinkyong Choi & Jorge Guzman & Mario L. Small, 2024. "Third Places and Neighborhood Entrepreneurship: Evidence from Starbucks Cafés," NBER Working Papers 32604, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:32604
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    More about this item

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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