The Effect of Initial Location Choice on Resource Assembly and First Sale in Nascent Firms
(with Linda F. Edelman, Tatiana S. Manolova)
The formation of a new venture includes initial choices that affect the process of start-up. Primary among these decisions is the choice of location whether to start from home or from an away location. This paper examines the impact of initial firm location choices and aspirations of the entrepreneur on the resource assembly process and the likelihood of first sale. Results show that home-based businesses assemble different types of resources from their away-based counterparts. Higher aspirations were associated with greater accumulation of organizational resources. The combined influence of location and aspirations showed that home-based firms with high aspirations were less likely to achieve first sale. A post hoc analysis examined these affects within a subgroup of service firms and confirmed the previous results. This study suggests that in the initial stages of the new venture, there are processes and routines that home-based businesses engage in that lead them to achieve first sales in a timelier manner than those businesses that are located away from home. Furthermore, high aspirations are associated with greater scale of organizational resources but not necessarily with achievement of sales. Implications are discussed.