March 26, 2019

People like to stay put when confronting new business challenge

Reasons why are seen as important in an era of energy industry transition in Alberta

A researcher at the Haskayne School of Business will be travelling thousands of kilometres around the world to find out why most people prefer to start businesses in their own hometown.

“It’s interesting they like to start their businesses where they grew up, but it’s not entirely clear what all the reasons are,” says Dr. Seok-Woo Kwon, PhD, adding the preference holds true even when other locations might be more advantageous economically.

Kwon, pictured above, will be heading to Sweden, where he has been invited to conduct research at the Institute for Analytical Sociology at Linköping University. As someone chosen to be one of the institute’s inaugural Robert K. Merton Visiting Research Fellows for 2019, he will be studying an issue of some relevance to Albertans.

“We are going through an energy industry transition,” he says, pointing not only to the recent plunge in provincial oil prices caused by lack of pipeline access, but also to growing global pressure on everything from international lenders to governments to nudge the world’s economy toward sustainable energy.

Success rate daunting

As unemployed Alberta energy workers increasingly seek to begin new livelihoods as entrepreneurs in entirely different fields, they are starting over in more ways than one, says Kwon, who is a Robson Professor in Entrepreneurship at Haskayne.

“I think the old social relationships that people have built over the years are very much geared toward the energy industry, so we are just beginning to develop the new contacts and social support system for things like hi-tech entrepreneurship. How do you go about building that social support when you don’t have it?”

Although Calgary has a strong culture for entrepreneurship, the success rate for establishing new businesses may be just as challenging as it is in other cities, says Kwon.

“We know that it is a very, very low percentage regardless of the specific numbers, so it can be a high-risk career choice,” he says. “People typically say it’s due to the funding available for businesses, but if I had to say one thing about why new businesses fail, it would be that coming up with interesting ideas and being able to execute them can be very challenging, and that’s true everywhere, not just in Calgary.”

Giving potential entrepreneurs the knowledge they need to successfully compete in the global marketplace is a top priority at Haskayne, says Kwon. “The university is putting a huge amount of emphasis on teaching future entrepreneurs,” he says.

“But at the same time, it is hard to know in some ways what really works. We are still at a very early stage in terms of scientific research about how we can encourage more entrepreneurship.”

Relationships important

As someone who is interested in studying such questions from a sociological perspective, Kwon will be using the extensive resources available in Sweden. “It’s a very well-organized country and they have very good record-keeping, so they have fantastic data that I can access to study why some people move from regular employment to entrepreneurship,” he says.

Kwon will be in Sweden starting April 1, where he will conduct research for one month. He plans to collaborate with several colleagues at the Institute for Analytical Sociology, including professor of management Dr. Karl Wennberg, PhD, to partly learn not only why most entrepreneurs start businesses in their hometown, but also why such people tend to be more successful.

“Is it because there is some store of resources that they could tap, for example, such as their families, or their social contacts?” says Kwon. “Starting a successful business takes economic ability, but it’s also very much related to the social relationships that people develop.”