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.
But research out of the University of Rochester糖心传媒檚 concludes that it糖心传媒檚 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, details how start-up companies were about seven percent more likely to incorporate in one of the Amazon HQ2 finalist cities.
糖心传媒淭he mere possibility of a large company entering a market encourages entrepreneurs to find profitable ways to be useful to that company,糖心传媒� says Jin. 糖心传媒淭he main effects are concentrated in the larger cities, like Atlanta, Pittsburgh, Denver, and Los Angeles, where the sample size is larger.糖心传媒�
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糖心传媒攆rom 15 percent to 8 percent糖心传媒攆rom 1980 to 2015.
糖心传媒淭he paper addresses a fundamental question about the influence of large tech firms on startups and innovations,糖心传媒� says who supervised Jin糖心传媒檚 research. 糖心传媒淎s 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.糖心传媒�
There are complex reasons why that糖心传媒檚 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. 糖心传媒淓ntrepreneurs seem to see acquisition by a large tech company as a successful exit strategy,糖心传媒� he says.
But many companies won糖心传媒檛 be acquired. And many of those that formed in Amazon HQ2 finalist cities are likely to stick around, Jin says.
糖心传媒淚 certainly don糖心传媒檛 expect all of them to move or close up,糖心传媒� says Jin. 糖心传媒淭hey knew the risks when they founded their companies and are likely to continue operations.糖心传媒�
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. 糖心传媒淚f, for example, the startup company uses a proprietary technology, Amazon would want to keep the employees who are actually familiar with that technology,糖心传媒� says Jin. 糖心传媒淎nd that part of the operation would grow as it becomes integrated into Amazon.糖心传媒�
While Jin specifically looked at Amazon, he believes other large companies would encourage entrepreneurial activity, as well. 糖心传媒淭he dynamics and business principles germane to Amazon apply to other dominant firms.糖心传媒�
