Do digital platforms create entrepreneurial opportunities? Evidence from marginal areas

Abstract

Research SummaryThis article enters the debate on the effects of digital platforms on entrepreneurial opportunities by estimating whether the entry of a home‐sharing platform shapes entrepreneurial decisions in marginal areas. We add a novel perspective to the literature, as we contend that when economic conditions are unfavorable, digital platforms, acting as External Enablers, stimulate entrepreneurship. We test these arguments on the unique setting of 270 Italian Borghi and the entry of Airbnb, employing a staggered difference‐in‐difference design. We show that, following the entry of Airbnb, the entrepreneurial activity of the surrounding area increases, with effects that are heterogeneous across sectors and stronger in more depressed areas. We also show qualitative–quantitative evidence of the mechanisms explaining these effects. Finally, we discuss theoretical contributions to digital‐entrepreneurship literature and implications.Managerial SummaryThis study provides implications for both prospective entrepreneurs and policymakers willing to incentivize the creation of new businesses in marginal and remote areas. First, we show that, in marginal locations, digital platforms act as facilitators for entrepreneurs facing a complex and risky decision to embark on new business activities, particularly, if these are along the scope of the platform. This happens because platforms create demand—if not existing—and reduce entry and operating costs by internalizing specific business processes. Second, we offer a clear recommendation to policymakers. We show that digital platforms represent an indirect and effective way of pursuing the development of entrepreneurship in marginal areas. This aspect is relevant as scholars have demonstrated that direct approaches are not always effective.