Spatial and Temporal Heterogeneity in Founding Patterns

Abstract

A growing body of literature suggests that populations of organizations are not homogeneous, but instead comprise distinct subentities. Firms are highly dependent on their immediate institutional and competitive environments. The present paper further explores this issue by focusing on the spatial and temporal sources of industry heterogeneity. Our goal is three-fold. First, we explore founding rates as a function of spatial density, arguing that density-dependent processes occur along a geographic gradient ranging from proximate, to neighboring, to more distant contexts. Second, we show how multiple, local evolutionary clocks shape such entrepreneurial activity. Third, we provide evidence on how diffusion processes are directly affected by social contagion, with new organizational forms spreading through movements of individuals. Results from data on the Dutch accounting industry corroborate these patterns of heterogeneity.