Sociologists have shown that “third places” such as neighborhood cafés help people maintain and use their network ties. Do they help local entrep

Third Places and Neighborhood Entrepreneurship: Evidence from Starbucks Cafés

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2024-11-18 16:00:06

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. When compared to census tracts that were scheduled to receive a Starbucks but did not get one, tracts that received a Starbucks saw an increase in the number of startups of 9.1% to 18% (or 2.9 to 5.7 firms) per year, over the subsequent 7 years. A partnership between Starbucks and Magic Johnson focused on underprivileged neighborhoods produced larger effects. Several analyses suggest the effect occurs through a networks mechanism. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

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