New research from Columbia University suggests that Starbucks stores’ introduction in new territories boosts local entrepreneurship.
This study shows that Starbucks’ global visibility and commitment to local sourcing and social responsibility inspire more business creativity within communities, inherently encouraging the emergence of new small businesses and, in turn, economic growth.
The research, led by Professors Jinkyong Choi and Jorge Guzman of the Columbia Business School and Mario L. Small from Columbia’s Sociology department, shows that a new Starbucks has the potential to stimulate local entrepreneurial activities for up to seven years.
The impact of Starbucks’ expansion on local entrepreneurship was significant. The entrepreneurial growth rate ranged from 5 percent to 11.8 percent annually, leading to the establishment of approximately 1.1 to 3.5 new enterprises that wouldn’t have occurred without Starbucks’ influence.
Starbucks’ strategy of creating a ‘third place’ for customer socialization beyond their home and work environments significantly fosters local entrepreneurship.
Starbucks presence encourages local entrepreneurship.
Such a setting encourages interactions and ideas exchange, ultimately nurturing local businesses.
The innovative concept of Starbucks as a ‘third place’ is more than just a coffee shop; it serves as a networking platform for emerging entrepreneurs, fostering the creation of professional networks and driving novel business ventures.
A noteworthy observation from the study is the considerable influence of Starbucks’ collaboration with basketball superstar Earvin “Magic” Johnson on local business growth, leading to a projected 29.7 percent increase in new business start-ups. This signifies the incredible potential of celebrity endorsements and international brands in stimulating local economies.
To conclude, the research reveals social spaces’ significant and lasting impact on local economies, achieving local economic stabilization and innovation that lasts up to seven years after a new Starbucks opens.
