Parent universities and the location of academic startups

Academic startups are thought to locate in their parent university's home region because being in the vicinity of a university provides cost advantages in accessing academic knowledge and resources. In this paper we analyze the importance of a different mechanism, namely, social ties between academic entrepreneurs and university researchers, for enabling and facilitating the access to academic knowledge and resources, and therefore for the location of academic startups. We employ unique data on academic startups from regions with more than one university and find that only the parent university influences academic entrepreneurs' decisions to stay in the region while other universities in the same region play no role. Our findings suggest that the mere local availability of a university may not per se guarantee access to knowledge and resources; social ties are additionally required. The importance of social ties implies that academic knowledge and resources are not necessarily local public good. This holds implications for universities' role in stimulating regional development.