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COMMUN IT IES AND

ENTREPRENEUR IAL ACT IV ITY

!

N ICOLA PALLOTTA

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A SYSTEMAT IC L ITERATURE REV IEW

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MSc IN BUS INESS ADM IN ISTRAT ION

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4 May 2015

!

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FORMAL IT IES

Title: Communities and Entrepreneurial Activity: A Systematic Literature Review

Student: Nicola Pallotta

Erich-Weinert-Strasse 139a 10409, Berlin

Germany

Student Number: TU Berlin: 0354730 Twente: s1615335

E-Mail: nicolapallotta@gmail.com Telephone: +49 174 7439 888

Universityin Germany: Technische Universit Berlin Straße des 17. Juni 135 10623 Berlin

Universityin the Netherlands: University of Twente 7500 AE, Enschede

Study Program: MScin Business Administration

Facultyin Berlin: Wirtschaft und Management, Lehrstuhlfür Entrepreneurship &Innovationsmanagement Facultyin Twente: School of Management and Governance

Berlin Supervisor: Karina Zittel

(korinna.zittel@tu-berlin.de) Twente Supervisor: Dr. M.L. Michel Ehrenhard

(m.l.ehrenhard@utwente.nl)

Date: May 4, 2015

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AKNOWLEDGEMENTS

The purpose of this work was to complete the double degree master programinInnovation Management and Entrepreneurship at the Technical University of Berlin and the University of Twente.

The tight deadline of this study was setin relation to my work contract due to start May 5th, 2015. Meetingthis deadlineis of paramountimportancefor myfuture career andforthis reason I am very grateful to my supervisors Karina Zittel (TU Berlin) and Dr. Michel Ehrenhard(University of Twente)for enabling meto completethis workinthistimeframe.

Karina allowed me to use her database of papers on Networks and Entrepreneurship, and was always available to give advice and to help on very short notice. Before startingthis work,I had verylittle knowledge of systematicliterature reviews, but with Karina’s guidance Inow feel confident onthis subject.

Michel was always available to help and to offerinvaluable advicefrom thefirst dayI talked to him. He understood that I needed to complete this project efficiently, and always answered my queriesin aninstant.

I wasincrediblylucky to have Karina and Michel as my supervisors.I will always be grateful to both.

Finally,Ithank myfamilyfor supporting mefinancially and psychologicallythroughthis exiting journey.

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ABSTRACT

This paper presents the reader with an overview of the findings of the extant literature on the role of communities on entrepreneurial activity viathe use of a systematicliterature review. The selected literature was grouped into themes by using inductive thematic analysis, and the mainfindingsfor each theme were reported using a combination of tables and narrative synthesis. The objective was to provide the reader with a structured overview of countries,theories,themes,research methods, and analytical methods, explored by scholarsin this fieldin the past 20 years. There are four main results observable from the reviewedliterature: 1) understanding the process of entrepreneurship requires a deep analysis of social processes and social behaviours at both a community-level and at an individual-level, 2) communal social capitalis arecurring aspect examined by theliterature, and the effectsit has on entrepreneurship differ between different types of communities, 3) in absence of a pre-established entrepreneurial cluster, online communitiesin remote areas could hurtlocal entrepreneurs, and 4) thereis evidence suggestingthat communities and entrepreneurs benefit each otherin a reciprocal manner.

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CONTENTS

1

1! INTRODUCTIONINTRODUCTION**...*...*66!

1.1! FOREWORD!...............................................................................................................................!6!

1.2! THE!TOPIC!.................................................................................................................................!7!

1.3! RESEARCH!QUESTION!...............................................................................................................!9!

2 2! BACKGROUNDBACKGROUND*&*&*DEFINITIONS**DEFINITIONS*...*...*1010! 3 3! METHODOLOGY*METHODOLOGY*...*...*1212! 3.1! PLANNING!THE!REVIEW!..........................................................................................................!12!

3.2! CONDUCTING!THE!REVIEW!.....................................................................................................!12!

3.2.1!DATA(COLLECTION(..............................................................................................................(12!

3.2.2!DATA(EXTRACTION(.............................................................................................................(16!

3.2.3!DATA(SYNTHESIS(AND(INTERPRETATION(...........................................................................(17!

4 4! RESULTS*RESULTS*...*...*1818! 4.1! DESCRIPTIVE!ANALYSIS!...........................................................................................................!18!

4.2! THEMATIC!ANALYSIS!...............................................................................................................!24!

4.3.1!THEME(1:(SOCIAL(CAPITAL(&(ETHNIC(COMMUNITIES(........................................................(25!

4.3.2!THEME(2:(SOCIAL(CAPITAL(&(LOCAL(COMMUNITIES(..........................................................(27!

4.3.3!THEME(3:(ONLINE(&(PEER(COMUNITIES(.............................................................................(29!

4.3.4!THEME(4:(ACTIVE(INOLVEMENT(&(RECIPROCITY(................................................................(31!

5 5! DISCUSSIONDISCUSSION*AND*AND*CONCLUSION**CONCLUSION*...*...*3434! 5.1! KEY!FINDINGS!AND!IMPLICATIONS!.........................................................................................!34!

5.2! LIMITATIONS!...........................................................................................................................!36!

5.3! FUTURE!RESEARCH!.................................................................................................................!37! 6

6! BIBLIOGRAPHY*BIBLIOGRAPHY*...*...*4040!

7

7! APPENDIX*APPENDIX*...*...*4949!

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1 INTRODUCT ION

1.1 FOREWORD

This systematic literature review represents the first of a series of papers on the research topic of networks and entrepreneurship. The data used has beentakenfrom a database createdfor a PhDresearch project by Karina Zittel, aresearcher atthe department of Entrepreneurship andInnovation Management atthe Technical University of Berlin.

More specifically, this study cutsthrough 3056 papers on networks and entrepreneurship published between 1888 and 2014 from 232 peer-reviewedjournals, andis specifically designed to systematically explore and thematically organize extant academic efforts revolving around communities and entrepreneurship. Content analysis and thematic analysis are used to organize the literature, while narrative synthesis is employed to summarizetheresults. Obtainedfrom a final sample of 39 papersfrom 22 peer-reviewed academicjournals, theinsights gainedfrom the studies are used to shedlight on the status oftheliterature onthetopic,andto make recommendationsforfuture research.

Duetothelarge number of papers analysedit was not practicaltoincludethe database and the extraction tables in the Appendix. If interested, please contact Karina Zittel (korinna.zittel@tu-berlin.de) for access to the database with the 3056 papers and the respective coding, and Nicola Pallotta (nicolapallotta@gmail.com) for access to the extractiontables and supplementary database.

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1.2 THE TOPIC

There are severalreasonsfor researching the fields of networks and entrepreneurship.

From a theoretical perspective, Schumpeter, in his book Capitalism, Socialism, and Democracy (1934) held entrepreneurshipresponsiblefor drivingthe change processin a capitalistic society. Arrow (1962) presents entrepreneurship asthe processthrough which the entrepreneur converts technicalinformationinto products and services. More recently, Shane and Venkatamaraman (2000) point outthat “the absence of entrepreneurship from our collective theories of markets, firms, organizations, and change makes our understanding ofthe businesslandscapeincomplete”(p. 219).

From a practical perspective, it is hard to argue with the fact that entrepreneurship

“contributestojob creation, productivity and economic growth” (Hopp & Ute, 2012, p. 917). Despite general agreement on the matter, mature economieslike the USA and Europe are struggling to encourage ambitious entrepreneurs. As a matter of fact, statistical data from the latestKaufmann Index of Entrepreneurial Activityshows that entrepreneurshipin the US has been steadily decliningin the pastfive years (Fairlie, 2013).The situationis notless dire in the Old Continent, where despite laptop-friendly hip-cafesin Berlin and London’s start- ups districts, “European culture remains deeply inhospitable to entrepreneurs” (The Economist, 2012).

From a policy perspective, it can be arguedthatthe majority of policymakers account entrepreneurshipresponsiblefor economic development, andtherefore design policiesin support of entrepreneurial activity. In the European Union forinstance, entrepreneurshipis onthe agenda ofthe current competitiveness and growth strategy describedin detailsin theEurope 2020” policy plan, andin the“Entrepreneurship 2020” action plan, “a blueprint for decisive action to unleash Europe's entrepreneurial potential, to remove existing obstacles and to revolutionise the culture of entrepreneurship in Europe” (European Commission, 2015). Furthermore, on a moreregionallevel,local policy makers and other localinstitutions seek politicalfame bytryingtoimitatethe success ofthe Silicon Valley, without having sufficient understanding ofthe mechanics behind entrepreneurial activities (Lerner, 2009). General advice onthe matterinstructs local administratorsto endowtheir constituencies with all the necessaryingredients needed to bake a thriving entrepreneurial cluster - goodICTinfrastructure, excellent universities, available venture capitalfunding,tax breaks, businessincentives, andincubation programs (Feldman & Braunerhejelm, 2008; Lerner, 2009). Often, despite the effort, such initiatives fail to propel successful and

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