Creative Class

There’s an undeniable home-base effect for leading consumer brands. So, Starbucks does better in Seattle; Wal-Mart in Arkansas; Heinz ketchup in Pittsburgh. Here’s the abstract for the detailed study published in the Journal of Political Economy.

We document evidence of a persistent “early entry” advantage for brands in 34 consumer packaged goods industries across the 50 largest U.S. cities. Current market shares are higher in markets closest to a brand’s historic city of origin than in those farthest. For six industries, we know the order of entry among the top brands in each of the markets. We find an early entry effect on a brand’s current market share and perceived quality across U.S. cities. The magnitude of this effect typically drives the rank order of market shares and perceived quality levels across cities.

Tyler Cowen comments; and Andrew Gelman has maps which depict a similar diffusion away from home-base effect for Starbucks and Wal-Mart.

I wonder though if this is just a home-base effect, as brands take hold where they are established and get picked up more slowly elsewhere, or if there might be another (deeper) process which would explain why certain kinds of brands – say like Starbucks and Wal-Mart – crop up in particular locations to begin with.

Your thoughts?

Writing in the Wall Street Journal, Michael Malone argues that we are rapidly becoming one:

The most compelling statistic of all? Half of all new
college graduates now believe that self-employment is more secure than
a full-time job. Today, 80% of the colleges and universities in the
U.S. now offer courses on entrepreneurship; 60% of Gen Y business
owners consider themselves to be serial entrepreneurs, according to
Inc. magazine. Tellingly, 18 to 24-year-olds are starting companies at
a faster rate than 35 to 44-year-olds. And 70% of today’s high
schoolers intend to start their own companies, according to a Gallup
poll.

An upcoming wave of new workers in our society will
never work for an established company if they can help it. To them,
having a traditional job is one of the biggest career failures they can
imagine.

Hmmmm… to a certain extent or for a certain segment of society.  However, Google, Microsoft, Starbucks, Toyota, Wal-mart, the health sector, the defense-industrial complex, the public school system and the government still really do exist. In fact, education and health are the largest single employers in many large cities.  Honestly, while people change jobs frequently, I wonder to what degree the profile of the entrepreneurial and self-employed has changed over the past 2 or 3 decades. There are many people who prefer the security of a “job” to the risk of an entrepreneurial venture.  Our own personality studies, as well as those of others, substantiate that.  I could go on, but what do you think?